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Multichannel networks (MCNs), specialist companies that aggregate brand-friendly video content, are following their own growth trajectory in Asia, after emerging as a major component of the online video ecosystem in North America and Western Europe.
The largest – such as Maker Studios (now owned by Disney) and Fullscreen (now owned by Otter Media, a JV between AT&T and The Chernin Group) – have amassed sizable followings on the back of YouTube, a giant in online video watched by more than a billion people around the world each month.
This reach has delivered sizable audiences in Asia-Pacific too, driven largely by English-language channels made elsewhere, but also increasingly by content made in this part of the world, in English as well as in local languages.
At the same time, domestic MCNs are building scale, notably in large YouTube markets such as Australia, India and Japan. Concurrently, some Western digital entrepreneurs are opting to focus their MCN efforts in digital economies at an earlier stage of development, rather than more mature markets elsewhere.
Shallow Talent pools
YouTube has only recently offered local language versions of its monetization tools in many Southeast Asian markets, while broadband speeds and online ad spend are still low in many growth markets.
Consequently, the pool for user-generated content (UGC) is relatively shallow, with ready-made content playing a larger role in helping YouTube gain inventory and scale. This has prompted many Asian MCNs to orient their businesses around professional content and talent first.
Additionally, a sizable slice of revenue for MCNs in growth economies comes from countries with higher digital ad spend, where CPMs tend to be higher. “It’s just recently that creators are able to monetize here in Vietnam,” says Esther Nguyen, CEO of Pops Worldwide, a six-year-old company that started life as a music specialist.
“Prior to this, Pops had to really focus on marketing to the diaspora Vietnamese community in the US, Australia, Taiwan and South Korea to monetize. Now that YouTube has launched in Vietnam, it has been very exciting to see monetization opportunities in Vietnam, where most of the views come from.”
Pops has diversified beyond music, focusing on cultivating the women’s and kids segments where local content is in short supply, while eyeing expansion into neighboring markets.
“It would be great to see more creators and inventory, which is why we are making investments to grow, create and foster new talent,” Nguyen says. “If there are good creators, then they may or may not be brand friendly, which is challenging to sell them to brands.”
In India meanwhile, MCNs are likely to make more money by working with existing celebrities and production houses than user-generated content for the next two to three years, says Shabir Momin, MD of two-year-old home-grown MCN, OneDigital Entertainment.
“We are not close to that market as yet,” Momin says. “It will happen eventually. Right now, it’s about professionally created content. It also has to be polished content. We have about 300 celebrities from movies, food, fashion and so forth. We use these celebrities and create our own content within our own studios.”
In the future, OneDigital’s studio might be spun off as a separate business. Established production companies are finding it tough readjusting to digital economics and production, based on lower costs and faster turnaround, Momin muses.
“There is a lot of legacy structure and thinking very tuned to TV,” he says. “The problem they are getting into is high costs of production because they are used to TV and movie related content creation.”
Momin adds: “There is a new age of content creators and professional companies which will think digital, create digital, produce digital. They will have a better ROI because the production costs will be much lower.”