Elang Mahkota Teknologi, better known as Emtek, is betting heavily on the growth of Indonesia’s digital economy, notably streaming service Vidio, which got a boost under last year’s COVID conditions. But it continues to do well with traditional TV, and production activities that can serve both.
The mixture has propelled Emtek into the ranks of Indonesia’s ten largest companies with a market capitalization of $10 billion (IDR146 trillion). In the last month Emtek has found further favor with two of Asia’s hottest tech firms, Korea’s Naver and Singapore’s Grab, both of which bought minority share stakes through a private placing.
President director Alvin Sariaatmadja explains that Emtek got to know the Korean social media giant through Naver’s Webtoon business. More recently Naver has announced the $600 million acquisition of digital story firm Wattpad, with which Vidio is already partnered.
“Vidio did a 10-title collaboration with Wattpad. The first show ‘Turn On’ was launched recently as an ‘Original’ and has been a tremendous success,” said Sariaatmadja at this week’s APOS conference.
Indonesia, which has a huge population, a massive geographical area and is under-served by cinemas, has often been an afterthought for international media groups. But it has recently become a key growth target for global streaming giants Disney Plus and Netflix, as well as for regional players Catchplay and Viu. Sariaatmadja says their arrival is opening up the marketplace.
“Content (distribution) is changing thanks to the arrival of the global guys in Indonesia in the OTT space. Back in the TV era they could not come in. This is more democratic and makes a bigger market,” he said.
“We are approaching 1.5 million paying subscription, but it is still early days. We are now focused on paying subscriptions and direct paying subs. We need quality content to drive that. Sports went away during COVID, and we had to fill the void with our original content. Our Vidio Originals are increasingly popular. We now have to think more about budget, and how we release them.” He said that the company plans to deliver 30-40 originals per year, meaning more than three per month.
Vidio’s emphasis on direct consumer relationships, rather than through telecoms firms, is part of the process of developing and educating the market. “As the country moves to the right side of the GDP curve, people get wealthier and the middle class grows, expect more willingness to pay. To get there we are doing discounts and promotions. But we are confident that in time we can build a great business if we have the right content,” said Sariaatmadja.
Proof of that comes from the faster uptake of paying subscriptions in urban areas. But the company would dop well not to abandon linear TV too quickly. “I’m surprised and grateful that TV advertising is holding up better than we expected. DTH boxes for people to access FTA in remote areas too. We sold half a million in January,” said Sariaatmadja. “Demand for free entertainment is resilient. If it can continue to provide entertainment and news it will continue to be relevant.”
Emtek owns several production and service companies and Sariaatmadja says that these can serve both sectors. He hinted that partnerships, rather than a control structure, can expand opportunities and spread capital. That said, Emtek will also be launching a holding company that enables it to better co-ordinate production and talent.
Away from media, Emtek is keen to build up its medical businesses (it operates nearly 1,000 hospital beds) and help others digitize healthcare management.
Local media has also speculated that the connection with Grab, which has evolved from ride hailing into a $450 billion Southeast Asian super app, could also see Emtek expand its digital payments business. In China, expansion of online payments was the trigger for hyper-expansion of digital streaming.