OTT in Emerging Markets

On the heels of Netflix’s CES announcement, OTT video in emerging markets has become a big topic, and for good reason. Emerging markets represent over sixty percent of the broadband population[i], and almost twenty percent of projected OTT revenues in 2019[ii].

While emerging markets are largely untapped, they present a promising opportunity. In March 2015, Quickplay launched HOOQ, a joint venture between SingTel, Sony Pictures and Warner Brothers, in Asia Pacific almost a year ahead of Netflix, the world’s largest subscription video on-demand (SVOD) provider, in a first mover advantage.

Targeting 500 million subscribers, HOOQ aims to make it easier for consumers across its footprint to access quality streamed video content at an affordable price. Our work with HOOQ just won the prestigious GSMA award for best app in TV, Media and Film. HOOQ was built with emerging markets in mind and while many of the challenges stated ring true in established markets, they are defined differently in emerging markets, with their own unique problem set:

Challenge 1: Monetization

In emerging markets, you are building for a different consumer. Markets are not as established as they are in Western Europe or North America, and so a monthly draw from a credit card for a subscription payment of $7-$10 is just not practical. Quickplay built HOOQ to leverage existing billing relationships to integrate subscriptions directly into the carrier billing model. Being able to leverage an existing billing relationship between a carrier and a subscriber is much more important, more so than in established markets where credit card penetration is high. Unlike traditional SVOD services, HOOQ leverages a variety of channels to drive adoption, including creative bundling – i.e. when you by a Chromecast dongle or if you open up a bank account – you get a trial subscription to HOOQ. Here, there is a lot more creativity in terms of getting the service out to viewers.

Challenge 2: Infrastructure

In more established markets data network infrastructure is generally reliable and robust. In emerging markets, you might be lucky if you hit 1 mbps in some areas, which is a challenge since delivering a quality stream is a resource and bandwidth intensive process. Networks are not as quick as they should be and 4G rollouts are sparse in regions like India. You must build your service for low bandwidth streaming while maintaining a quality user experience. There are a number of delivery optimizations you can put in place and we’ve experimented with a number of these to offer a truly compelling experience for the subscriber. Alternatively, users have the ability to download content directly to their device when network coverage is good and watch it later when the network coverage might be inferior or non-existent. From a software standpoint, you must focus on offering your subscribers options and on building for app performance.

Challenge 3: The Content Mix

Sooner rather than later, entrants like Netflix will need to begin building out their local content libraries, and in a war of content, partnerships and exclusive content are key. HOOQ, for example, works with Sony Pictures, Warner Bros. and other Hollywood studios to promote a number of exclusive marquee titles.  HOOQ, more so than any other OTT player in the region, also offers one of the (if not the) most robust catalogs in the region for locally-produced Asian content. Partnerships with leading production studios in each of the regions covered by HOOQ allow it to offer the “best of Hollywood and the best of Local”.  For emerging markets specifically, being engrained in content, with deep partnerships is an absolute must for adoption. Despite the significant press that Netflix’s expansion into the region has garnered, the Netflix content catalog in Asia is still geared towards Hollywood content and exclusive Netflix titles. For a region so steeped in tradition and culture, it is difficult to imagine Netflix flourishing without offering content suited to local tastes and culture.

Account Director, Strategic Account Management