Guest post from Amrish Kacker (Partner, Head of Asia-Pacific Analysys Mason)
When you look at wireless traffic in Asia, a very large proportion of it is video. The numbers vary but it could be anywhere between 40-50% of the data traffic.
A lot of this could be free video – things like YouTube and so on – and there will be a reasonable amount of piracy in there as well. But there are also some new companies like Viki providing some form of curated OTT within an advertisement model.
Challenges and opportunities in the developed markets
A key distinction between developed and developing markets in Asia is that in the developed markets people are more willing to pay for content.
If you think about some of the challenges for developed market players, for some of the relatively long-standing markets like Singapore and Hong Kong, they’ve had a reasonably good run at offering traditional broadcast TV, typically bundled with some broadband.
These markets also have fantastic connectivity. In Singapore and Hong Kong, 100Bps broadband connectivity is fairly common: OTT services are something that a lot of operators are looking at, both as a threat and an opportunity.
The general challenge has been about the flattening of revenues and concern about cord cutting. People are worried about this. And in terms of opportunity, of course, the question is whether they could be the ones participating in OTT delivery.
Challenges and opportunities in the emerging markets
I think the bigger challenge on the emerging market side is that people have not traditionally paid a significant amount for content. This has either been because pirated content is available free of charge, or because of the way content is structured. Either way, in many of these markets you get a lot of content for very little money. As such, it’s a difficult business to scale up.
I think there are a lot of operators currently asking if they can become OTT players. Typically, however, such interest in usually confronted by the lack of infrastructure. After all, you need a fantastic infrastructure to deliver OTT, and from an emerging market perspective, high quality fixed broadband is not ubiquitous.
Malaysia is a good example. It is a middle income country with a reasonably good infrastructure in the big cities – but not much else. Then in other emerging Asian markets, such as Indonesia, there’s a lack of decent fixed infrastructure even within the big cities.
Again, there’s no clear business model. There was a recent announcement by Singtel, one of the region’s largest players, and they tied up with some of the large US content players including Sony Pictures and Warner Brothers to create an OTT-service to rival Netflix called HOOQ. This is expected to launch in the first quarter of 2015.
Broadband and TV Connect Asia is one of the few forums where you have a lot of technology innovation coming to the forefront: the companies innovating around OTT and helping to optimise it. It’s a great chance to see some of the enablers in action.
Amrish Kacker will be appearing at Broadband and TV Connect Asia (12th-13th May 2015, Suntec, Singapore)