Tuesday, 24 April 2018 00:37

Collaboration critical for OTT video providers, telecoms: report

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Collaboration critical for OTT video providers, telecoms: report Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Intense market competition in the Asia Pacific region means that over-the-top video platform providers, content creators and telecom operators must collaborate to boost revenues and profits of their respective businesses, according to a new report.

According to data and analytics company GlobalData, the Asia-Pacific OTT video market is crowded and led by regional players, who provide diverse content across multiple languages and genres at competitive price points.

But the firm warns that against this backdrop, OTT video platforms, content creators and telecom operators must collaborate.

GlobalData issued its warning, pointing out that the market featured strong competition between regional players such as iflix, Viu and Hooq and international players such as Netflix, Amazon and YouTube. In addition, there is intense competition in local markets like China and South Korea.

The GlobalData report — Over the Top Video in Asia Pacific —  reveals that due to high costs of content rights acquisition, OTT players are opting for more margin friendly content production strategies to secure subscribers and viewers.

Malcolm Rogers, telecom analyst at GlobalData, says: “Exclusive content deals such as those for sports broadcast rights secures loyal viewers, but at high cost. Embarking on content production enables providers to better tailor content to target demographics while offering more cost control compared to buying from major studios. Alternatively, rather than investing in labelled content, some OTT platforms focus on live streams from amateurs and professionals, a strategy with a very low relative cost base.”

According to GlobalData, in terms of models, most OTT providers in APAC offer a hybrid of live and on-demand content, as well as a hybrid of advertising video on demand, subscription video on demand and transactional video on demand.

GlobalData says OTT video platforms that focus on offering live streams of both professional and amateur content creators in niche categories like gaming, fashion and makeup have mostly been successful – and the new content format has wide appeal among young viewers, while investors are encouraged by the potential for quicker returns compared to traditional OTT video, due to relatively lower costs.

“OTT providers in the APAC region face heavy competition for both content as well as customers. One common strategy to combat rising costs of content is to invest in own content production. However, this requires large amounts of investment capital and may require years before profitability is reached,” Rogers says.  

“Another strategy is to focus on niche content with either lower content costs, or a dedicated and loyal fan base willing to pay a premium for niche content. Larger OTT players that are part of a wider group of media or technology companies may be the best poised for own content production.”

GlobalData also observes that in terms of pricing trends, APAC regional OTT video challengers price their SVoD services below the international giants Netflix and Amazon, while single market video platforms tend to price SVoD the lowest.

According to the report, OTT companies need to consider their assets, the overall goal of the platform (e.g., becoming profitable as a standalone service, generating synergy with a sister business etc.), the offers of competing platforms in their footprint, and choose an appropriate content and pricing strategy.

“OTT video is increasingly gaining viewership over traditional content distribution channels. Content production houses with related distribution businesses should not be afraid of OTT, but rather forge partnerships with OTT platforms and telecom operators for content distribution,” Rogers said.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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