OTT a troublesome marketplace for Malaysian gamers to crack

Telco Deep Dive 2018: OTT a tough market for Malaysian players to crack

THE time period OTT or Over-The-High conjures to thoughts companies like Netflix, iflix, Spotify, Joox and Dim Sum, amongst others. It’s a networking time period that describes the wi-fi supply of content material, companies or purposes over the web.

That actually encompasses a variety of verticals and even PwC Malaysia consulting companion Michael Graham doesn’t just like the time period ‘OTT’ because it implies it could possibly be every part. However essentially, in his opinion, it has had the most important affect within the Video on Demand (VOD) space.

Even analysis home Gartner’s principal analysis analyst Fernando Elizalde has described it as video and TV choices delivered over the Web. This may be categorised below three companies: Web delivered linear TV (IDLTV), OTT transactional video on demand (OTT T-VOD) and OTT subscription video on demand (OTT S-VOD).

Elizalde estimates that these three forms of companies will develop on common 22.2% year-on-year from simply US$30 billion in 2017 to virtually US$84 billion globally in 2022.

PwC has extra bullish projections, believing that the OTT market as an entire shall be value US$100 billion in 2019 and is predicted to develop to US$150 billion by 2022.

Nearer to residence, PwC’s report in Could 2018 titled ‘The Future of Asean – Time to Act’ states that OTT VOD income is projected to extend by roughly 80% to 90% between 2016 to 2021. In the meantime, the estimated penetration charge for OTT in 2016 was 36% in Southeast Asia and is about to develop to 64% by 2020.

These sturdy OTT numbers journey on the rising worldwide adoption of smartphones, thanks partly to the supply of low-cost smartphones. Smartphones priced under US$99 are stated to have been shipped in portions of over 500 million models in 2018 alone.

Telco Deep Dive 2018: OTT a tough market for Malaysian players to crack

Video-based OTT could also be all the fad right this moment however Forest Interactive chief govt officer Johary Mustapha (pic, above), who has been within the ICT companies enterprise for greater than a decade, remembers that way back, when his firm supplied Valued Added Service (VAS) companies, the precursor to OTT, it consisted of ringtones and film messages used on function telephones.

“For companies like us, we had to reinvent ourselves from providing basic feature phone services to publishing games and creating mobile apps,” he stated of the market as VAS is turning into extinct and his enterprise strikes in direction of OTT.

Apart from cheaper smartphones, cheaper information costs are an element as properly in driving video-based OTT. In 2014, Indonesia, on common, charged US$four per gigabyte of knowledge. That was decreased to simply below US$2.50 in 2015, and in 2016 was across the US$2 mark. The identical development might be seen in Singapore, the place the cost per gigabyte was greater than US$12 in 2014 and 2015 however dropped to round US$7 in 2016.

Gartner provides that there’s additionally a shift in shopper patterns as a result of entry of the youthful and extra digitally-savvy technology. The low obstacles to entry and a rise within the providing of sports activities content material delivered over the Web are a few of the elements within the dramatic progress of OTT lately.

A brand new streaming actuality

Whereas streaming companies like Netflix and Amazon have grown quickly in developed markets, the identical mannequin gained’t work in Southeast Asia. Relating to a selection between a subscription and commercial mannequin, audiences are extra doubtless to decide on the latter.

Johary concurs that inside the OTT market in Malaysia, not many individuals are prepared to pay high greenback for content material as many anticipate it to be free. “The only exception to the rule here is Astro where people are willing to pay for its services,” he stated.

Astro made its mark within the Pay TV sector when it entered the market within the late 1990s and cornered the scene. This has resulted in companies that got here after Astro like Telekom Malaysia’s HyppTV or UnifiTV being bundled collectively free of charge with Unifi as folks didn’t need to pay.

Graham says that there’s a willingness amongst Malaysians to look at adverts in the course of the course of watching content material.

In keeping with him, Malaysians have a voracious urge for food for video content material as they watch as a lot as 260 minutes of content material throughout a number of platforms day-after-day. Actually, that variety of minutes spent watching is the best in Southeast Asia.

Nevertheless, out of that whole variety of minutes, solely 24% is definitely stay TV. So does that spell hassle for conventional TV broadcasters?

Not essentially says Graham, as folks are likely to gravitate in direction of bigger screens and this sometimes consists of huge TVs. He additionally identified that stay TV remains to be one of many solely methods advertisers, particularly these promoting fast-moving shopper items, can attain out to hundreds of thousands of individuals at scale.

The consumption behavior of viewers can be evolving to at least one the place they’re watching and browsing the web on the similar time on their smartphone, both trying up particulars associated to what they’re watching just like the biography of an actor or performing some on-line purchasing.

Whereas OTT is clearly right here to remain, the massive query is whether or not the OTT mannequin of doing enterprise is definitely sustainable? Many OTT are choosing the freemium mannequin, popularised by companies like Spotify. To this extent, iflix has began providing totally different tiers to its service with a fundamental free tier that enables customers watch a few of its content material free of charge but it surely additionally has a VIP tier for extra unique content material.

Johary nonetheless is sceptical of this mannequin because the technique of giving content material away free of charge with a view to purchase extra customers simply can’t proceed, he believes. Having labored within the broadcast business, he factors out the excessive prices to accumulate rights for programmes, particularly premium content material.

PwC’s Graham is inclined to agree as OTT gamers like iflix are likely to burn a variety of money to accumulate customers within the preliminary levels. Launched by Patrick Grove and his Catcha Group, iflix has raised a number of rounds of funding, although being a privately held firm, there isn’t a earnings visibility and the market can not inform how it’s truly doing.

Past simply video

In everybody’s thoughts, OTT means music, video and video games. However there are additionally a variety of streaming companies like BIGO Reside, a broadcasting and stay streaming service much like Twitch and even short-form video companies like TikTok that permit customers to report movies for sixty seconds.

Graham predicts that OTT platforms are going past simply content material and taking intention on the buyer’s pockets, getting them to pay for the companies that they eat.

This might come within the type of cellular wallets like Razer Pay the place Berjaya Group partnered with international gaming hardware producer Razer to push out the e-wallet in Malaysia and Singapore.

It’s going to be a bumpy journey nonetheless as there are 40 totally different cellular wallets in Malaysia with the likes of Alipay, Increase, GrabPay simply to call a couple of. “There is bound to be consolidation as no customer wants to load their payment credentials into 15 different apps,” stated Graham.

Whereas it isn’t often known as one, Johary contends that Seize could possibly be an OTT play as properly. In spite of everything, it provides companies which are delivered over a cellular community. They’re one instance of a service that connects the bodily and digital world collectively.

On the again of ever-increasing smartphone penetration in Malaysia, with virtually 80% of cellular customers on smartphones, Johary sees this as a possibility to convey a portion of the inhabitants that’s unbanked into the fold whereas altering their mindset from anticipating free companies to really paying for them.

“As the market becomes more mature, people’s mindset will shift towards spending in this market via different payment channels such as operator billing. We will be seeing an influx of first-time spenders thanks to smartphones as they come online,” he confidently predicts.

The way forward for the OTT market in Malaysia

Telco Deep Dive 2018: OTT a tough market for Malaysian players to crack

Being within the OTT market might be fairly robust in line with Cell Content material Supplier president Johnson Lim (pic, above). “There is no government protection and companies are forced straight out of the gate to compete with the very best such as Netflix.”

To remain within the sport, native OTT gamers must suppose creatively to provide you with content material that’s compelling however cost-effective. One factor going of their favour is the actual fact that there’s a wholesome demand for localised content material, stated Lim.

However on the similar time, the market in Malaysia is simply too small, so corporations must suppose on a regional scale to make any vital good points, which is what iflix has finished.

He does, nonetheless, word that OTT gamers are held again by the slower Web speeds that are about 20-30Mbps as in comparison with Singapore the place the common obtain velocity for broadband is 175.13Mbps.

However with initiatives by the present authorities, particularly Gobind Deo Singh, the Minister of Communications and Multimedia, to advertise quicker and cheaper broadband speeds, that is more likely to spur better innovation from startups and firms.

“It is good to see the government playing an active role in spearheading transformation compared to previously when they had been passive and let the industry take the lead, depending on supply and demand,” notes Johary.

With broadband infrastructure being the spine of the digital financial system, getting Telekom Malaysia Bhd and different broadband gamers to cut back their pricing will assist all cellular customers get pleasure from higher speeds.

With common cellular information utilization at present standing between 7GB to 9GB a month, Johary believes a ten instances improve in velocity might push that utilization to 20GB or extra and that may result in a growth in demand for OTT companies with native gamers hopefully in a position to capitalise on the rise.

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