Ten months after making its regional debut in the Philippines, regional SVOD startup Hooq is grappling with the ups and downs of rolling out paid video across Asian growth markets.
Hooq’s reach has broadened to include India and Thailand. Imminent entry into Indonesia will mark out an impressive initial footprint across South and Southeast Asia.
The company has also fared reasonably well in persuading viewers trialing the service via its telco partners (Airtel, AIS and Globe) to become paying subs.
Pure OTT viewers – usually a younger more digitally savvy crowd, who represent about half of Hooq’s total base – are proving harder to convert.
At the same time, content and localization costs, as well as competitive intensity, have escalated, while executives are contending with formidable growth challenges in India, a cornerstone market.
“How much do you go all in on the investment costs,” ponders CEO Peter Bithos.
“We talk about this a lot – how much fixed cost do you build into the business ahead of the curve,” Bithos adds. “It’s a tough call, because it’s a race to scale.”
Once Indonesia is up, the focus for the first half of 2016 will be on deeper localization, product improvements and easier ways to pay, in order to bed down existing territories before embarking on the next wave of market expansion in the second half of the year.
In a bid to expand Hooq’s addressable base, the platform recently made its first foray into the mobile prepaid market, signing a bundled deal for international and local content with Airtel in India.
Having secured agreement from all Hooq’s content suppliers to experiment with sachet pricing, Bithos is working on similar deals across the region.
“These are very different market segments,” Bithos tells Media Business Asia. “The prepaid market is never going to buy the monthly pack.”
This will be matched by changes to Hooq’s local catalog, including more exclusivity, more tentpole properties and more catch-up rights for linear content.
In August, the platform unveiled a catch-up deal, its first, to stream primetime TV series from Philippine broadcaster GMA, 24 hours after the initial broadcast.
“We think we complement linear very well,” Bithos says. “It will be a long time in Asian emerging markets before linear and OTT start conflicting.”
At the same time, Bithos is aiming to have all core Hollywood content subtitled over the next few quarters, having seen how that can drive usage, with about 50% of tentpoles localized today.
Hooq’s CEO is also trying out more exclusivity for day-and-date local and Hollywood content, a costly bet on driving uptake and usage.
“They are very expensive,” Bithos says.
“It’s too early to tell whether it’s a loss leader or a positive ROI,” he adds. “We’re going to have see viewing over time, because you commit to these things for a long time.”
Overall, greater spend on exclusive rights and tentpole programming in a seller’s market have pushed content costs for Hooq’s first year 50% higher than first planned.
Bithos is undeterred.
“We have very long-term shareholders, we have a five-year and a ten-year horizon,” he says. “We’re interested in building a great product.”
India meanwhile represents a pressing priority. It is potentially Hooq’s biggest market, but is a difficult market to crack for SVOD.
Pay-TV, the traditional source of premium local content, is cheap enough to be a mass proposition in India, while broadband infrastructure, as well as per-capita GDP, lags Southeast Asia.
At the same time, India’s major broadcasters have made much of their own content available on their own ad-supported video platforms, making it harder for paid alternatives to build traction.
Bithos pledges to double down on content and distribution in India, starting January, while ramping up local marketing and striking more deals with payment gateways, a key market enabler.
“We want, and we need to scale India faster,” he says. “That’s one market that has changed dramatically over the last 6-12 months.”