Indonesia’s nascent SVOD market, one of the smallest among major economies in Southeast Asia, has become a lot more competitive.
Up to six international players – Netflix, Tribe, Hooq, Iflix, CatchPlay and Viu – are expected to join two domestic incumbents, Genflix and USeeTV with local services in the first half the year, effectively quadrupling the number of SVOD options for Indonesian consumers within the space of a few months.
Netflix, Tribe (backed by Astro) and Hooq (backed by Singtel) have already launched local services in Indonesia this year, in January, March and April respectively.
Meanwhile, both Iflix (backed by Malaysia’s Catcha Group) and Taiwan’s CatchPlay have confirmed Indonesian distribution deals. PCCW-backed Viu is also targeting a local launch in the first half of the year.
All in all, it promises to be long-term battle, waged in an online video marketplace that will favor ad-based rather than subscription-based revenue models for the foreseeable future.
Despite low pay-TV penetration and expected rapid expansion in mobile broadband, Indonesia’s SVOD market will still be the smallest in Asia-Pacific by direct consumer spend in five years’ time, according to research and consulting company Media Partners Asia (MPA).
MPA has published its latest forecasts for broadband and online video across 14 markets in the region in its new report, Asia Pacific Online Video Distribution 2016.
Low levels of fixed broadband penetration, combined with sluggish mobile broadband speeds outside the main cities, have held back SVOD growth in Indonesia so far.
Furthermore, significant growth in the future is only likely with exclusive driver local content, a segment that remains heavily anchored to free TV for the time being.
By contrast, online video advertising will flourish, expanding in Indonesia by a 38.1% CAGR from 2016 to 2021, according to MPA, eclipsing India to become the fastest growing online video ad market in Asia-Pacific over the next five years.
A LOCALIZED PLAYING FIELD
Meanwhile, Indonesia’s regulatory landscape for online video is about to be reshaped.
New rules, announced at the end of March, require online video services to set up local operations, in partnership with a domestic company or by themselves, as well as to self-censor content and use Indonesia-based payment gateways.
That’s a particular challenge for Netflix, which launched its Indonesian service as part of a simultaneous 130-country rollout at the start of the year.
The global major is likely to face similar scenarios in other countries around the world, and must decide where to prioritize deeper localization.
Netflix has yet to sign any local distribution or payment deals in Indonesia, where, as in many growth markets, its initial pricing tiers are significantly higher than rival services.
Tribe, Hooq, Iflix and CatchPlay have all secured local distribution deals.
Tribe, an Asean-oriented mobile play which leverages Astro’s existing content partnerships, has tied up with Axiata XL, the local affiliate of Malaysian telecoms group Axiata.
XL, Indonesia’s third-largest telco by subscriber numbers, had 22.5 million mobile subs on data plans at the end of last year.
Hooq followed soon after, offering carrier billing with Indonesia’s five biggest telcos: Hutchison 3G, Indosat Ooredoo, Smartfren Telecom, Telkomsel and XL Axiata.
Hooq has also penned deals with local studios, including 13 Entertainment, MNC Contents, Multivision Plus and Transmedia, adding domestic movies and TV shows to its catalog.
Iflix meanwhile will go live by next month, after announcing deals with Telkom, Indonesia’s biggest telco, and Indosat Ooredoo.
Households subscribing to Telkom’s triple-play offering IndiHome (~1.1 million customers at the end of 2015) will get Iflix free for an unspecified period, followed by special offers for continued access, depending on subscriber plans.
Select mobile and fiber broadband Indosat customers will also gain complementary access to Iflix for an unspecified time.
Earlier this year, one of Indonesia’s biggest broadcasters and content producers, Emtek, became an investor in Iflix, as part of a funding round led by European pay-TV major Sky.
CatchPlay has also signed a non-exclusive deal with Telkom. Details on packaging and integration will be revealed closer to launch.
Telkom also operates its own OTT video offering called USeeTV, a reboot of its IPTV service Groovia TV, which has been running since 2012. The platform today offers a mix of ad-supported, subscription-based and rental video services.
Telkom’s mobile subsidiary Telkomsel may also launch its own OTT video offering, including free and paid-for services.
Genflix, Indonesia’s second legal SVOD hopeful, entered the market last year with a heavy slant towards live football. Backed by local DTH operator Orange TV, Genflix has telco tie-ups with Indosat Ooredoo and XL Axiata.