“The future of TV across Asia is online” | Takeaways from the APOS media conference, Part I

SportBusiness reports back from the APOS 2020 Virtual Series, the online incarnation of the leading Asia-Pacific media, telecoms and entertainment industry conference hosted by Media Partners Asia.

Uday Shankar of Star India CEO at Star TV office. (Photo by Manoj Patil/Hindustan Times via Getty Images)

APOS usually gathers leading executives from the Asia-Pacific and global media industries to discuss business direction at an annual get-together in Bali. This year, Covid-19 forced the event online, but it still attracted a host of stellar names, including Uday Shankar, president, The Walt Disney Company APAC and chairman, Star and Disney India; JB Perrette, president and CEO, Discovery Networks International; Hugh Marks, CEO, Nine Entertainment; Janice Lee, CEO, Viu and Managing Director, PCCW Media Group; and Ajit Mohan, VP and MD, Facebook India.

SportBusiness tuned in across the three-day conference last week to draw out the most important takeaways for the sports industry. This is the first of a two-part report from the conference.

“The future of TV across Asia is online”

Media Partners Asia executive director and co-founder Vivek Couto is confident that the Asia-Pacific video entertainment industry will continue to grow strongly in the coming years, following a dip in 2020 due to Covid-19. Growth will be powered by online services and products.

He said: “The future of TV across Asia is online. It’s a challenging time for some of the incumbents. But it’s a great opportunity to move online, to monetise online and have a business that lasts the next 50 years as we really move into this new era…There’s a lot of potential in these markets, a lot of growth.”

MPA predicts revenues across the industry – covering advertising and subscription-funded television and online video services – will drop three per cent this year due to Covid-19. Growth is expected to resume thereafter, except in TV advertising, which the company does not expect to have recovered to 2019 revenue levels by 2025. 

Underpinning the projected growth in revenues online is a huge growth in connectivity. There are expected to be 3.6bn 4G and 5G mobile customers in Apac by 2025. Japan and Korea will lead the way in 5G penetration, with each market hitting around 30 per cent by 2025. MPA expects 600m fibre internet customers in the region by 2025, giving these homes access to big-screen video entertainment products delivered over the internet. This will not just be the preserve of developed markets – fibre penetration in Thailand is expected to hit 50 per cent by 2025, and the Philippines and Indonesia could both be close to 20 per cent.

Perhaps with positive implications for sports media rights sellers, telcos delivering 4G, 5G and fibre services will use video content to drive growth. “Video is often the glue that holds the telco differentiation and data propositions together,” Couto said. Telcos in the region are already busy striking exclusive and non-exclusive deals with entertainment content providers including Netflix and Disney Plus.

MPA expects local and regional subscription video on demand (SVOD) services to grow strongly, in some cases more strongly, than the international giants like Netflix and Amazon. These local services will focus on more local content, which the international companies are unlikely to delve deep into in every market.

China’s streaming ‘majors’, iQiyi and Tencent, are both seeking growth with expanding new services in Southeast Asia. There is still room for iQiyi and Tencent to grow in their home market, but the focus will be more on improving revenues per subscriber (ARPUs), including by securing premium content, Couto said. They are both at around 120m subscribers in China, and both have ARPUs of just under $4 per month.

Viu, owned by Hong Kong telco PCCW, was highlighted as another strongly growing regional player, with around 3.75m subscribers and an arpu around $2.80 per month. Netflix, by comparison, has around 22m subscribers across the region and an arpu of $9 per month.

A passenger watches cricket on a smartphone while travelling by train in Mumbai, India, on Saturday, Feb. 15, 2020. Photographer: Dhiraj Singh/Bloomberg via Getty Images

Jio lays the foundations for Indian digital growth

Several speakers mentioned the stunning growth in access to high-speed internet in India in the last five years. Much of this has been achieved by telco Jio’s successful marketing of its 4G mobile network. Facebook’s Ajit Mohan noted that, in September 2016, when Jio launched its 4G services, there were fewer than 50m 4G customers in India. Today, the figure is over 500m.

“One thing that really stands out is the extent to which [Jio] had an impact on the internet ecosystem in India in a short period of time,” Mohan said, adding they “created a new model of access to affordable mobile broadband. I think they set the foundation for the 500m or 550m-plus people who today have access to high quality mobile broadband.”

Uday Shankar of Disney echoed the sentiment: “What Jio has done is to completely transform one of the world’s biggest laggard markets in data, to probably the most exciting data market in the world. And we have benefited from it.”

Jio’s success has brought it massive investment this year from a host of leading private equity and digital media companies, including Facebook and Google. Since April, about $20bn worth of stakes have been taken in the firm, taking its valuation close to $60bn.

In this photo illustration, the logo of Disney+ is displayed on a laptop screen. (Photo by Hakan Nural/Anadolu Agency via Getty Images)

Disney Plus Hotstar aims to capitalise

Disney’s Disney Plus Hotstar OTT service in India, a sister company of pay-television platform Star, stands to be one of the big winners from India’s connectivity boom. MPA believes Disney Plus Hotstar has the potential to add a further 100m subscribers, equating to $1bn in annual revenue. Premium sports rights will remain central to this growth, Couto said.

Hotstar and Star are together the market-leading sports broadcasting platform, and have rights for India’s biggest cricket properties through deals with the Board of Control for Cricket in India for domestic internationals and the Indian Premier League T20 tournament, and the International Cricket Council.

Uday Shankar leads both Hotstar and Star, as well as Disney in the wider Asia-Pacific region – meaning he’s also responsible for the rollout of the Disney Plus OTT platform in markets beyond India. He told the conference that, in India, Disney Plus Hotstar was in direct competition with television, and was aiming to match or beat the reach of the biggest television platforms, including his own Star:

“Today, we are by far the biggest streaming service in India…Internally, for us, the only benchmark is can Disney Plus Hotstar compete with our television channels in terms of our reach and consumption. That’s the only metric – can it become a real alternative to pay television and broadcasting?”

The Indian streaming business will ultimately be bigger than the television business, he said: “There are only about 150-160m homes connected to TV. Streaming is…largely mobile driven, and there are already many more smartphones and video-enabled phones [than television sets]. That number over the next few years can be 700-750m. Streaming, if done right, has the potential to be bigger than TV in terms of the number of consumers and the amount of time they can spend.”

He confirmed that sport would be front and center of the Disney Plus Hotstar strategy. The business’s aim is to be the “leader in every segment”, he said, including sport: “That is what we did in TV. We will have the best destination for sports, we will have the best destination for drama, and we will have the best destination for movies as well.”

Shankar noted that Disney Plus Hotstar’s success – and Star’s before that – had defied the recommendations of analysts, who had not believed that the Indian market was ready to pay for content, and that sports content had proven particularly successful.

“When Star started, the wisdom was ‘people won’t pay for content’. When pivoting from AVOD (advertising video on demand) to SVOD (subscription video on-demand), we were told no one will pay for content. Research agency after research agency told us that, when people pay for data, they believe they have paid for content as well, so they’re not going to be ready to pay a second time. Especially because…companies that offered user-generated content [social media platforms like Facebook], don’t charge anything. 

“But in our experience our sports service has taken off remarkably well, and that is why we have the confidence and the courage to invest more in it and ramp it up further.”

It appears Rupert Murdoch’s ‘battering ram’ logic for sports content still applies, 25 years on in a developing economy.

Looking beyond India, Disney Plus has launched in Australia, Japan and New Zealand. A launch in Southeast Asia is considered imminent. Shankar stopped short of confirming the location of the next launch, saying, “Very soon we will be able to take some really impressive initiatives in other parts of the continent.”

A logo for Facebook at a shop front in Singapore on March 22, 2018. (Photo credit: ROSLAN RAHMAN/AFP via Getty Images)

Facebook focuses on its communities

Facebook’s VP and managing director for India, Ajit Mohan, essentially confirmed the weakening of the social media platform’s focus on acquired video content. When asked “What is the glue for your communities?” he responded, “I don’t think the conversation starts with content. I don’t think it starts with, ‘should we use video to attract users?’”

Facebook’s retreat from the sports media-rights market has been well-documented, to the chagrin of rights sellers. But the platform remains hugely important to sports properties and marketers globally, and Mohan hinted at interesting opportunities ahead, in India and beyond.

Video content partnerships are not out of the picture. He used the example of the company’s deal for International Cricket Council clip rights to illustrate how Facebook wants to use content partnerships to encourage communities to form on its platforms around topics of interest. As he put it, to “ignite the interest that’s already there with partners we can collaborate with deeply”.

Facebook Watch was a couple of years ago investing in original content and being touted as competition for YouTube, Netflix and other digital video content platforms. It failed to get traction and Mohan said the focus of Watch is now, “Could we invent the future of social video?…How do we create new ways of consuming?” He hinted at one potentially interesting future avenue for sport: “We are really exploring a Watch Party – for people that are already connected with each other can they come together and watch something that is of shared interest?” It is an old idea, that no one has ever quite cracked; with Facebook’s focus and resources, perhaps they will.

Mohan also spent much time talking about Facebook’s positioning as a platform for small businesses in India, including on its Instagram and WhatsApp platforms. The company is putting a big focus on this, and trying to offer the businesses and their customers greater connectivity, including online payment options.

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