The Shifts in Video Consumption Patterns across Asia Pacific

BLOG by Oscar Gutierrez, VP Business Development, Switch Media

As we noted in our last blog, the OTT video market is the one that seems to get the most attention from analysts across the video industry, with many reports on changing market conditions and priorities appearing on a regular basis.

Two have recently caught our eye. One looking at traditional pay TV revenues across the region and the other concentrating on the specifics of the OTT market. According to Digital TV Research, pay TV revenues will decline across the Asia Pacific market, citing an overall annual revenue figure of $26bn by 2028, which is $1.6bn less than in 2022. It says, “Pay TV revenues will fall in 10 countries, including Japan (down by $889 million) and China (down by $309 million), between 2022 and 2028. Conversely, India will add $153 million.”

Simon Murray, Principal Analyst at Digital TV Research, said: “IPTV revenues will overtake digital cable in 2023. IPTV revenues will climb by $481 million between 2022 to 2028 to $11.26 billion.” Digital cable will lose $1.15 billion between 2022 and 2028, with analogue cable down by $382 million. Satellite TV will also fall – by a whopping $494 million.

This is a significant contrast to the same company’s analysis of the OTT market across the same region, with TV and film revenues delivered this way predicted to grow by 56 per cent to $52bn in 2028, up from $33bn in 2022. China is set to add $19bn on that, India $2bn, South Korea $3bn and Japan $4bn. China’s percentage of the market will actually decrease from 48% to 38% of the total revenues for the region.

Furthermore, Digital TV Research has observed an intriguing trend in the Chinese market where due to a decline in advertising revenue in 2019, SVOD revenue surpassed Advertising AVOD revenue. However, projections suggest that the AVOD market is expected to recover, with a projected revenue of $20.64 billion by 2028. Despite the anticipated growth, AVOD is predicted to remain lower than SVOD revenue, which is forecasted to reach $25.62 billion.

Based on our extensive experience working in the South-East Asian region, it is evident that the streaming market is highly fragmented, much like other parts of the world. For instance, in countries like Australia and New Zealand, viewers are willing and financially capable of paying for streaming services. Nevertheless, in certain markets (such as Australia), SVOD services can still include advertising – which can create some level of complexity.

But across much of the region, irrespective of how much money people have, there’s very significant percentages of populations who are not willing to pay for video services. Even in Singapore, which is a relatively wealthy country, many people would rather sit and watch ads than pay for content. What we are seeing is a lot of models based on advertising rather than subscription. There are, of course, always exceptions to this but this is the general situation. We agree with the report that AVOD revenues are most certainly set to grow.

We do see parallel SVOD and AVOD services running, for example in the Philippines and Singapore. Indeed, we have been working on a project that does exactly this, a project about which we’ll be able to share the details soon. It really does depend on how familiar a company is with advertising as a model for their overall business. This can lead to SVOD being rolled out, sometimes when it may not really be appropriate for the market because people just can’t afford it. This applies to the major players like Netflix as well. People can’t afford to subscribe to one service let alone three or four.

Switch Media takes a modular technological approach that allows us to cater to the varying needs of our customers, regardless of whether they require a subscription-based service, advertising-supported service, or a combination of both. Our focus is on delivering both live and Video on Demand (VOD) content seamlessly, as ultimately, it is the video content itself that takes precedence. Our primary objective is to provide the right content to viewers, in the most suitable format and timing, and at a reasonable price point.

This approach has not changed over the years. For sporting events and major happenings, live TV remains the most sought-after format. For other types of content, viewers prefer the convenience of being able to access them on-demand, whether it be through Subscription Video on Demand (SVOD), Advertising Video on Demand (AVOD), or other formats. At Switch Media, we are committed to ensuring that our customers achieve whatever their goals in this regard.