Navigating the payments minefield is crucial for Asian OTT services

Earlier this month, English Premier League chief executive Richard Masters announced that the league is developing its plans for an OTT service and moving toward a “a mix of direct-to-consumer and [traditional] media-rights sales”.

It’s been an open secret for some time; the league came very close to launching a direct-to-consumer product in Singapore for the 2019-20 to 2021-22 media-rights cycle, before the clubs nixed the idea. Singapore, with its unique content-sharing regulation and high per-capita income, is understood to remain at the forefront of the Premier League’s plans to ready an OTT service in time for the 2022-23 to 2024-25 cycle.

Asia is also still awaiting the launch of OTT sports broadcaster DAZN, which despite holding Uefa Champions League rights in Thailand, Laos, Cambodia, Taiwan, Singapore, Malaysia, Brunei and the Philippines, is currently only operating its own OTT streaming service in Japan.

The multiple, varied markets in Asia makes life difficult for international OTT platforms, and it’s telling that it’s only in the largest markets – with DAZN in Japan and Star’s Hotstar platform in India – that the model is thriving. The unique form of China’s broadcasting sector makes it a different beast entirely.

Pricing, piracy, and payments

The right mix of economic, social and technical conditions as well as localization, timing, competition, partnerships, regulation and the impact of piracy play a major part of any OTT platform achieving success, says David Scott, APAC associate director for London-based technology research and solutions company IHS Markit.

“There is a broad gap between spending ability of countries in the Asia Pacific. GDP per capita is far lower in Thailand, Indonesia and Vietnam, which is indicative of lower average household incomes and subsequently has a negative impact for take up of digital video services in these countries.

“Major challenges also exist in the region, particularly piracy, which continues to plague many Asian markets as authorities struggle to combat the impact of set-top boxes offering illegal access to copyrighted content including sports.

(Maja Hitij/Getty Images)

“These devices are pre-loaded with pirated applications [e.g. LiveStream TV and LK 21 Reborn in Indonesia] which is used to access content for free. As a result, consumers’ propensity to pay for legitimate content is still low.”

Payments are also a challenge, with credit-based forms of payment still uncommon in Southeast Asian countries like Thailand, Indonesia and Vietnam. In Vietnam, for example, only 40 per cent of the population has a bank account.

This has led Asian OTT leaders into partnerships with telcos and multi-channel platforms.

According to an S&P Global market report released last year, as of June 2019, there were 120 partner deals between telcos and multi-channel operators across 21 markets in the region, with telcos in Southeast Asia being the most common targets of the OTT broadcasters.

Such partnership agreements are win-win. Telcos leverage their infrastructure advantage and customer base with OTT partners’ premium, on-demand content libraries, while OTT platforms become more accessible to telcos’ existing mass customer bases via built-in video apps with integrated billing mechanisms over existing fixed or mobile connections known as Direct Carrier Billing (DCB).

DCB enables anyone with a phone to charge a service to their bill and as a result are ideally suited to serve more credit-payment scarce Asian markets.

Srivathsan A R, a senior analyst at Media Partners Asia, which specialises in consulting and research services on the Apac media and telecoms sector, tells SportBusiness: “We have observed a shift in these partnerships over the last couple of years from wholesale lump sum deals to cost-per-subscriber arrangements.

“Platforms have also been proactive in partnering with other key marketing vehicles with the ability to bill their customers – app stores from Google and Apple, e-commerce platforms such as Tokopedia, Shopee and money wallets like Line Pay and OVO.

“Money wallets, with favorable revenue share (one to two per cent), are still in the growth phase though an inflection point is expected in the next couple of years.”

A worker introduces JD payment during the 2015 Global Mobile Internet Conference (Photo by VCG/VCG via Getty Images)

Ultimately, says James Brighton, partnerships director at UK-based mobile payments solutions company PM Connect, the brands most likely to succeed are those providing sustainable pricing options, using in-depth market knowledge to craft territory-specific price points rather than pursuing a quick profit.

“The right service – for example, the touted Premier League offering, which Masters suggests we could see launch as early as 2022 – would normalise OTT products and create market conditions to see others flourish.

“It is crucial that new OTT products evolve in tandem with payment methods to suit the local population – with the right financial technology potentially key to cracking the Asian market.”

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