APAC online video revenues set to soar | Media Analysis | Business
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The scale and velocity of investment in premium content should ensure that net new customer additions in the online video market in the Asia Pacific region will remain robust over the medium term says research from Media Partners Asia (MPA).
Viu Mediacorp 20March2020
Yet, the Asia Pacific Online Video & Broadband Distribution 2021 report also assured that profitability should grow more rapidly than revenues and subscribers as online businesses scale.

The study found that by the end of 2020 revenue in the Asia Pacific online video industry had grown 14% year-on-year to reach US$30.5 billion. Asia Pacific online subscription video-on-demand (SVOD) grew 34% in 2020 to reach US$16.3 billion in revenues with China contributing 58%. Ex-China, the Asia Pacific SVOD sector grew revenues by 47% to US$6.8 billion in 2020. SVOD revenue is projected to reach US$15.3 billion in APAC ex China by 2025 ex-China and US$31.3 billion with China. SVOD overtook AVOD to contribute 53% of total revenues.

China’s SVOD subscribers, described as unique, are projected to grow from 298 mil. in 2020 to 375 mil. in 2025. Driven by ARPU expansion, China’s SVOD revenues are forecast to grow at an 11% CAGR between 2020-25. While mobile consumption of content initially drove VOD demand, big screen TV consumption is an increasingly important driver of demand. ARPUs will climb with greater consumption of VOD. SVOD benefited significantly in India as the country went into its Covid-19 lockdown. Key players continue to invest in premium local content while leveraging sports, movie rights and aggressive consumer pricing to drive adoption.

However, the study also showed that the sector’s current rapid subscriber growth will likely decelerate in 2021 and the production of new content will remain impacted in the first half of this year. Weak advertiser demand resulted in Asia Pacific online advertising video-on-demand (AVOD) revenues declining 3% in 2020 to US$14.2 billion. Yet the study also showed that AVOD outlook was actually improving with a recovery evident in China, India, Korea and Southeast Asia. 2021 Asia Pacific AVOD revenues are set to expand 13% to US$16.1 billion and grow to US$23.2 billion by 2025.

Total online video revenues are projected to grow at a CAGR of 12% to reach US$54.5 billion by 2025, with SVOD contributing 57% and advertising, 43%. Ex-China, total Asia Pacific online video revenues grew 14% in 2020 to reach US$14 billion with SVOD contributing 48% and AVOD, 52%. Ex-China Asia Pacific online video revenues are forecast to climb at a CAGR of 16% to around US$30 billion by 2025 with the SVOD:AVOD ratio moving to 52:48.

The study also found that the region’s leading 13 over-the-top (OTT) operators accounted for more than 70% of total online video revenue in APAC in 2020. The list included Tencent, ByteDance, Netflix, Amazon, Disney, iQiyi, UNext, Nine, Wavve and PCCW Media.

“During 2020, the COVID-19 pandemic created a work-from-home (WFH) environment that scaled the adoption of online services, including SVOD,” said MPA executive director Vivek Couto Commenting on the findings of the report. “While subscriber growth will decelerate in 2021 and the production of new content will remain impacted in 1H 2021, the scale and velocity of investment in premium content should ensure that net new customer additions will remain robust over the medium term. Moreover, profitability should grow more rapidly than revenues and subscribers as online businesses scale. This is particularly true in larger markets such as Australia, China, Japan and Korea. In the emerging markets of India and Southeast Asia, the landscape for SVOD is promising but is still being shaped because of growing competitive intensity with increased investment in content and distribution.”

MPA also noted that theatrical windows were narrowing for online video operators while key genres are moving rapidly and exclusively online. It added that mobile plans and low ARPU pricing are becoming common to drive affordability, reach and customer adoption across large pre-paid consumer segments. The Asia Pacific Online Video & Broadband Distribution 2021 report predicted that the future will also see more distribution deals with mobile, fixed broadband, pay-TV and smart TV operators to drive consumption and payment on small and big screens. Evolving regulations may impact content creation and investment as governments look to introduce censorship and impose content quotas.