Giving viewers what they want

By Nickhil Jakatdar/ Vuclip
21 Mar 2016

There’s never been a better time to be a screen­ addict in Southeast Asia. Video­ on-
demand (VOD) sees more players each month and traditional industry players such as broadcasters and telcos are providing new offerings, along with new international players making a beeline for the region.

Economics teaches us that competition is good. It benefits not just end consumers, but also those businesses that are willing to work much harder to satisfy consumer needs through innovation that leads to a differentiated product or service offering, or through improved efficiencies in doing the same business differently. In the VOD space, this translates to video catalogue diversity, freshness and exclusivity to convince the target audience to experience your service.

Video streaming OTT players are, in essence, purveyors of entertainment. The more we are tuned into what our audience demands, and consequently work towards their fulfillment, the better the chances are of success. Acting on consumer insights and analytics therefore needs to be an integral part of the business strategy. The more the viewers’ experience on the platform is personalized, the better the engagement quotient.

Personalization entails understanding consumers’ preferences in terms of the types of videos they wish to watch, based on their viewing history.

More and more consumers are using Internet connected digital devices to watch their favorite shows, and every device is a data generator. How VOD players make sense of this user data and translate that into a great user experience will be a key differentiating factor in a hyper competitive market such as Southeast Asia.

Shift from ‘What’s on TV?’ to ‘Streaming a video of my choice’

The demographics that VOD players cater to are people of the “Experience Generation” – those in the 18-25 age group who love to consume entertainment on the go and watch videos of their choice at a time and place of their convenience. Unlike a TV­-watching audience, they do not schedule their lives on the basis of when a program or film is being broadcast. Curating content that is youth-­centric, trendy and that strikes a chord with this generation is of paramount importance to ensure the VOD players to stay competitive.

In Southeast Asia, we’ve seen increasing interest in Asian content. Korean content in particular has been gaining in popularity. According to research conducted by PCCW, between 53% to 80% of viewers from Singapore, Malaysia and Jakarta are watching Korean dramas regularly. We’re also seeing a preference for localization of overseas content. This insight is backed by our GVI surveys showing the importance of subtitles for many VOD consumers in the region.

Viewers also want to watch videos anywhere and anytime they want. Our data shows that almost half of viewers in Malaysia and Indonesia watch videos on their laptops/PCs and smartphones daily. Coupled with the explosive rate of smartphone penetration in the region, we are going to see an audience that wants to watch what they want, when they want it and wherever they are.

But there is a need to recognize that Southeast Asia is not a homogenous region. The Hong Kong youth who enjoys watching the latest subtitled Korean drama on her smartphone while taking the MTR has very different “wants” from the Malaysian youth binge-­watching entire seasons of a US series on his tablet in a café. Content preferences, language needs, affordability differs from country to country, and each country’s telecommunications infrastructure has an impact on devices and viewing habits as well. One size does not fit all.

Monetizing VOD

So how does a VOD player monetize in such a challenging scenario, especially when there are so many “free” alternatives available for consumers?

The solution is to treat each country for what it is, with the VOD strategy adapted for the unique needs of each country and not for an entire region. This means a strategy where content acquisition, service delivery and technology are based on deep insights into local consumer behavior.

Content is an expensive proposition, especially content that is the latest and in demand. That entails high licensing fees for VOD service providers. This cost needs to be recovered in order to make the business viable, but with pricing that is designed to be relevant and appealing to each market.

This is done either through advertising revenue or through a subscription model. The challenge with advertisements as a revenue source is that mobile video and VOD platforms still do not command the same rates as those of television broadcast channels.

The challenge with the subscription model is the low proclivity among viewers to pay. This can be addressed by adopting a “freemium” revenue model, wherein a certain proportion of the catalogue content is kept free while the rest is accessible through subscription. We have seen that a vast majority of viewers who log in to view free videos turn into subscribers after having a positive viewing experience. Moreover, seamless payment methods such as carrier billing in addition to digital payment options make it easier to facilitate this transition.

Who will win in Southeast Asia?

With such a competitive landscape, every VOD service provider will aim to provide the best viewing experience with the most relevant content – all in favor of the viewers. It’s about delivering locally relevant content and pricing through local operations and partnerships that understand their customers.

As for who stands out among the competition, it really depends on who can provide the best viewing experience while understanding the nuances of a “glocalizing” population in Southeast Asia – increasingly global in outlook, but appreciating localized content that suits their entertainment needs. The show will go on.

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