China drives growth as APAC online video sector eyes US$27BN in 2019 | Media Analysis | Business
By continuing to use this site you consent to the use of cookies on your device as described in our privacy policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them. [Close]
China will represent 59% of the US$27 billion generated by the entire Asia Pacific online video sector in advertising and subscription revenue this year, according to according to analysts Media Partners Asia (MPA) in the Asia Pacific Online Video & Broadband Distribution 2020 study.
MPA 19Sep2019
The study showed that regional revenues have grown 24% year-on-year from 2108 and are expected to increase by 13% CAGR TO US$50 billion by 2024. The growth is attributed to rising investment and competition, widening broadband access and ongoing development of local content, payment infrastructure and IP protection across the Asia Pacific (APAC).

In the region’s largest market, China, online video revenues are forecast to reach US$27 billion in 2024 up from US$16 billion in 2019 – representing an 11% CAGR. Earlier China forecasts have been reduced by analysts as a result of economic deceleration, market maturity and regulatory oversight.

China’s highly developed online video ecosystem enjoys “sizable investments” from the three main players Alibaba, Baidu and Tencent, with losses in the video sector being absorbed thanks to profitability in their other business divisions. “This allows them to buy and create local premium content in volume, as well as exclusive sports rights, while developing innovative technologies and large talent pools,” said MPA .

A fourth player, ByteDance, has now also become a force in China’s online video market, said MPA. Together, these four players are forecast to account for 69% of online video revenue in China this year.

Excluding China, online video revenues in the Asia Pacific are projected to grow from US$11 billion in 2019 to US$23 billion by 2024 – a CAGR of 16% - according to MPA. The biggest geographical markets, in terms of revenues are Japan, Australia and New Zealand, India, Korea, Taiwan, and Thailand. Indonesia, however, is expected to leapfrog Thailand by 2024.

“The online video industry is evolving and growing rapidly across Asia Pacific. This is especially true in countries with a significant addressable broadband market, developed payment infrastructure and a dynamic local content ecosystem, as entertainment and, in some cases, sports rights move online. Government-enforced IP protection has also been relatively effective in some markets, helping drive the market forward,” said Vivek Couto, executive director, MPA.

“At the same time, deep investments in content and technology have helped a handful of homegrown and global players to scale and dominate market share. Some of these players have access to abundant capital, with content and video distribution forming part of larger ecosystems in some cases, subsidizing costs and investment. Standalone OTT video remains loss-making in Asia Pacific on the whole, although some operators should start to see profits over the next three to five years, either in large domestic markets or as part of an expanding global and regional footprint.”

Advertising video-on-demand (AVOD) models will remain dominant across most of APAC over the next five years, with the exception of China, Australia and New Zealand, said researchers.
Ultimately, said MPA’s Couto, “deft regulation will be key to fulfilling online video’s potential” in the region.