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Techgoondu > Blog > Enterprise > Q&A: Riding the OTT wave in Asia
Enterprise

Q&A: Riding the OTT wave in Asia

Aaron Tan
Last updated: August 20, 2015 at 11:36 AM
Aaron Tan Published August 19, 2015
10 Min Read
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The rise of over-the-top (OTT) video streaming services has radically changed the way we consume content.

To tap on the growth of the Asian OTT video market, which is slated to hit US$8 billion by 2020, up from US$3 billion today, both OTT and pay-TV service providers across the region have been aggressively launching new services over the past two years.

But will all of them capture the attention of fickle-minded consumers who now have an array of video entertainment options to choose from? What will it take for them to succeed?

In this month’s Techgoondu Q&A, we sat down with Jay Fulcher, chief executive officer of Ooyala, which provides online video technology products and services, to find out what he thinks about the state of the OTT video market in Asia.

(Note: The responses have been edited for brevity and house style)

Q. There’s been a surge in the number of OTT service providers in the region – from PrimeTime in Thailand and iflix in Malaysia to Stan in Australia – in recent years. How do you see the OTT market playing out?

A. Netflix’s expansion outside the US has been a very good thing. We continue to help launch over-the-top (OTT) providers who want a headstart over Netflix in different markets. But I think you’re right, there is probably an over-abundance of OTT services. In Australia alone, I think there are seven services for 22 million people. It’s a pretty inundated marketplace for OTT services.

That said, there are some players right here in Singapore who have a critical mass of subscribers. They’ve got a way to reach their audience in a way that’s culturally appropriate, with local content that attracts a loyal following.

And with high quality bandwidth, these guys can deliver a near TV-like service, where consumers can access content seamlessly. In our experience working with customers, the quality of OTT deployments and the ability to create a good user experience has come a long way over the past few years.

I think over time, you’re going to see some level of consolidation around three or four major OTT players in every region. That’s kind of where things are before the explosion of OTT. It still boils down to providing great content, and making sure you know as much as possible about your audience. That will attract advertisers and other people who want to be a part of promoting the content.

If you have all that pulled together, we all know that the mobile audience is eventually going to be the audience that matters the most. We made a projection that by the end of this year, 50 per cent of online video is going to be viewed on a mobile platform. Traditional broadcast companies are now transitioning from a traditional broadcast workflow that delivers linear channels, to making sure they can make content available to audiences wherever they are and on any device.

Sure, mobile video adoption is growing, but many users in Asia still prefer to download rather than stream content to their devices. The obvious reason for this is the data caps imposed by mobile operators. What are your thoughts on this?

The companies that base their business models on data caps are going to come to a point where they have to make it easier for people to consume the content. Ultimately, the easiest way to do that is streaming. I remember a few years ago, everybody was talking about the constraints of online video from a bandwidth perspective. Interestingly, the market seems to be able to technologically keep pace with the bandwidth that’s necessary. That’s not to say that data caps are not a concern or limitation. I see it as an artificial constraint, as investments in networks are still being made. The dollars associated with the demand for mobile streaming are just too attractive to not keep pace with it.

How are traditional cable TV companies responding to the growing number of cord-cutters in the region?

It’s an interesting challenge for them. When you look at the amount of cord-cutting or cord-shaving that’s going on, you’ll see that in some ways it involves some of the big media properties like ESPN. Inevitably, the cable companies are going to have to figure out how to continue to evolve their business model in a way that gives consumers control over content choices.

For the longest time, media businesses have dictated to the customer what’s available, when, and on which device. Those boundaries no longer exist. And so, the cable companies are embracing rather than fighting OTT. They understand that the consumer is now in charge. Most of our customers know that they have to morph their business models to meet the needs of consumers who demand a degree of flexibility that was not available before.

Companies like Foxtel in Australia, for example, are rethinking and re-deploying a set of services and capabilities that will do the things creatively for consumers that we talked about, and steal some time for themselves before Netflix was launched in Australia. That does not mean that if you do all these things, you don’t enter into a competitive battle, because Netflix is doing well in Australia. But at the end of the day, you are better equipped with the ability to compete.

The challenge for cable providers is to provide some degree of transition for those who don’t want to continue paying a cable bill. This could be mean offering capabilities and features that are not available in a linear environment. One example would be using our discovery and recommendation product that makes content stickier, so when users are recommended a piece of content, they stick with it longer. That enables the content to be monetised thoroughly.

What do you think Asian OTT providers that contend with issues like piracy – and to a certain extend spotty infrastructure – need to do before they can become successful?

The infrastructure part is changing rapidly. We have sophisticated companies that know what they need to accomplish and they all have a fairly large audience. There’s no question that piracy is a big issue, as are any number of things that are related to content and content rights. I don’t think piracy will ever go away and it will remain a concern for the industry. The whole ecosystem has to work together, because it’s related to the cost of bandwidth, the cost of SVoD (subscription video-on-demand) services and the quality of experience. If the quality of experience is there, and the content is available and of high quality, the potential for people to go out of their way to steal content will become lesser.

What about China? It’s an interesting market that’s currently being dominated by local players like LeTV. The Chinese government is even planning to launch a state-run streaming service.

We take a very deliberate approach to China, like many American companies do. We are in Seoul and Tokyo, with Singapore as our hub for the region. We’ve been slow and deliberate in trying to understand how best to approach China, primarily because it takes a relatively careful approach to who we want to partner with to enter that market properly. Without disclosing specifics, we’ve been in discussions with a variety of partners to figure out the best way to go to market. The Chinese opportunity is huge, and despite the fact that there are some people who are already on the ground doing some things, we don’t think we’re late to the market at all. Over the next six to 12 months, we’re expecting to do something in the Chinese market and we’ll do it in cooperation with a couple of key strategic partners.

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Aaron Tan August 19, 2015
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