ASIA OTT TELEVISION RESEARCH REPORT 2018.

Transcription

1 ASIA OTT TELEVISION RESEARCH REPORT OTT TV SERVICE ADOPTION DRIVERS, BARRIERS, AND PAYMENT PREFERENCES. A market study in partnership with YouGov, covering Singapore, Hong Kong, Indonesia, Thailand, and India. EXECUTIVE SUMMARY: THE FUTURE OF TV IS HAPPENING NOW. Today, TV is evolving from a world of limited options to one of almost unlimited choices. It s disrupting the idea of traditional broadcasting and redefining itself in the process, and streaming is the catalyst for this evolution. The future of TV is OTT and fundamentally, it will be defined by what the viewer wants, exerting a strong influence on how media companies package, deliver, and monetise their content. As a leading provider of online video streaming solutions in Asia, Brightcove speaks to many content owners who are in various stages of their OTT journey. Most of their decisions are centred around finding the right business model and the ideal user experience. Launching an OTT TV service requires rethinking every aspect of running an online TV business. It also requires the orchestration of many moving parts in order for content owners to create, deliver, monetise, and manage an OTT TV business, including commercial and legal aspects. However, prior to any service launch, there is an another challenge: do content owners understand their audience well enough to design an attractive and relevant value proposition? With the goal of discovering how today s consumers respond to OTT TV services, Brightcove teamed up with YouGov, an international data and analytics group, and conducted a study that polled 5,000 participants across Hong Kong, India, Indonesia, Singapore, and Thailand about their TV viewing habits. The study investigated how these viewers typically consume TV media, which platforms and devices they prefer, what factors motivate them to either sign up or unsubscribe, their payment preferences, and their tolerance for ads. 1

2 INTERNET & MOBILE USERS BY COUNTRY Internet Mobile India Indonesia Thailand Hong Kong Singapore NUMBER OF USERS 463 million 844 million 132 million 177 million 57 million 55.6 million 6.5 million 6.2 million 4.8 million 4.7 million PERCENT PENETRATION 34% 63% 67% 82% 80% 87% 83% 84% 82% Note that these five countries have vastly different internet and mobile users base, as well as internet and penetration rates. Both Singapore and Hong Kong are considered mature markets, whereas India, Indonesia and Thailand are emerging and mobile centric markets. THE HIGHLIGHTS. The value proposition for OTT TV services is simply not strong enough for most consumers. Despite globally famous media brands launching OTT TV services and increased water cooler chatter over TV shows, the industry is failing to present a strong value proposition to prospective customers. Creating a strong value proposition equates to designing and implementing smart customer acquisition and retention strategies that strike a balance between a robust content library, the pricing sweet spots, multi-platform multiscreen accessibility and exceptional user experience. Trial and promotion drives acquisition, but content drives retention. It s no surprise then why Netflix, Amazon, and Hulu plan to spend more than $8bn, $5bn, and $20bn for content, respectively, in This puts them in the same spending league as other big budget television and film companies, like HBO parent company, Time Warner ($8bn), Fox ($8bn), and Disney ($7.8bn). Every streaming service is under intense pressure to have a robust content library, which is critical to their retention strategy. OTT COMPANIES BIG BUDGET TV & FILM $8bn $5bn $20bn $8bn $8bn $7.8bn Netflix Amazon Hulu Time Warner Fox Disney 2

3 Price matters. Free trials and promotions are a strong initial driver for consumers to sign up; however, price is actually the top barrier to adoption. The propensity to pay for OTT TV service is present, but consumers are unlikely to sign up for a service if they see no value, even if such services are priced significantly cheaper than pay TV services. It is clear that users do see value once they try services, and lapsed users are more likely to consider re-subscribing. Consumers are highly price-sensitive. With pay TV, it is a single purchasing decision for the service, where a single sign-up unlocks access to a buffet of channels at a fixed monthly subscription fee. Pay TV subscribers are somewhat accustomed to paying several hundred dollars a month in some countries, but with OTT TV, it is a single purchasing decision for every content series, and consumers tend to be more price sensitive. Noting the ubiquity of free streaming and torrent sites in Asia, consumers are already conditioned to gaining access to free content, despite the poor UI on torrent sites. This is definitely a competitive threat that any OTT TV service provider needs to acknowledge and address by creating a differentiated and superior offering. To work around the price sensitivity factor and ensure that pricing is as painless as possible, an ad-funded model or a package with limited ads could also be viable options. 1-3 COMMERCIALS PER BREAK = ACCEPTABLE OVER 3 COMMERCIALS PER BREAK = NOT ACCEPTABLE Tolerance to ads is low. Most consumers can tolerate one to three ads in total, but no more than three ads in a single commercial break. Consumers are long accustomed to the ad experiences of linear and pay TV, where they don t have a choice in the matter of how many ads are included within the programming. But with an OTT TV service, consumers expect more content and less ads, due to their past conditioning of linear and pay TV experiences. Access and experience on mobile is one of the key motivators for OTT adoption and retention. Being able to access and watch TV on a mobile device is a big driver in OTT adoption, and it s an even a bigger driver in OTT retention. Consumers tend to watch TV on mobile devices, at any time, to fill any idle stint. While the TV screen is still a major fixture in the living room, what s equally important is the ability to access content on a personal mobile device. 3

4 CONSUMPTION TRENDS: HOURS, PLATFORMS, & DEVICES. HOURS SPENT WATCHING CONTENT Hong Kong 25% 40% 10% 5% India 13% 30% 24% 14% 10% 9% Indonesia 7% 40% 27% 12% 7% 7% Singapore 15% 37% 17% 7% 6% Thailand 8% 28% 27% 14% 8% 15% < 1 Hour 1-5 Hours 6-10 Hours Hours Hours 20 Hours There are only so many hours in a day or week devoted to TV watching. Up to 40 percent of consumers said they spend one to five hours a week watching content, while up to 27 percent said they spend six to 10 hours. This indicates consumers generally allot a limited number of hours per week to watch movies and TV shows. However, in emerging markets like India, Indonesia, and Thailand, which are mobile-centric, consumers watch more TV than in mature markets like Singapore and Hong Kong. TV SHOWS & MOVIES ACROSS PLATFORMS 80% 70% TV SHOWS MOVIES 40% 30% 20% 10% 0% Hong Kong India Indonesia Singapore Thailand Hong Kong India Indonesia Singapore Thailand Free-to-Air Pay TV Free Online Streaming Paid Online Streaming Others Consumers are accessing TV and movie content across multiple platforms. Among television viewers, up to 73% said they preferred to watch content on free-to-air (FTA) broadcast channels, while some preferred pay TV channels and free online streaming services. Generally in these countries, FTA broadcast channels tend to be the go-to channels for local content, since local content is not readily available on free or paid online streaming channels. Movies are the anchor content on free streaming sites. Up to 44% of consumers said that free online streaming sites were their preferred platform for movie watching. Illegal free online streaming services are the main barriers to OTT adoption. Today, given that pirated content is readily available, consumers are impatient and unlikely to wait for the latest blockbusters to be released via OTT in their respective markets. Because consumers now demand TV content on their own terms, they have the capacity to search and stream content at any time. 4

5 For content owners, increasing consumer engagement and view duration means their content library should drive a strong stickiness factor and offer a mix of live broadcast and catch-up programming. What is interesting here is that even though FTA broadcast channels are the easiest way to consume TV, a growing number of consumers are watching TV through streaming platforms. DEVICES USED TO WATCH TV & MOVIES Regular TV Smart TV Desktop Laptop Smartphone Tablet Other Hong Kong India Indonesia Singapore Thailand TV content is being accessed across many devices. Across all five countries, the big screen TV isn t losing its stature in the living room just yet, but it is definitely being complemented by non-traditional TV screens, such as desktops, laptops, smartphones, and tablets. In Singapore and Hong Kong, laptops, smartphones, and tablets are the most commonly used platforms to watch TV, whereas in Indonesia, India, and Thailand, Smart TVs and smartphones are the strong favourites. Wider wifi coverage in Thailand and Indonesia, coupled with the Jio effect in India with low data prices, are also fuelling consumer behaviour to access OTT. As consumers increasingly watch videos across many devices and screens, it is critical for content owners to implement a multi-screen OTT strategy. 5

6 OTT SERVICE ADOPTION FACTORS & BARRIERS. OTT SUBSCRIPTION DATA Are you currently subscribing to an OTT TV service? Would you consider a paid subscription? 40% 45% 40% 51% 30% 32% 30% 20% 20% 29% 10% 17% 10% 20% 0% Yes, current subscriber No, but have in the past No, and have never in the past 6% Not sure 0% Yes No Not Sure Factors that drive OTT adoption. Thirty-two percent of consumers polled said they were current OTT subscribers, whereas 17 percent said they were past subscribers without an active subscription currently. When looking at the possible factors driving these subscription rates, research shows that free trials and promotions were the top drivers, mainly because the try-before-buy strategy is quite effective in lowering sign-up barriers. However, the exception to this was in India, where content libraries and mobile app user experiences were the main drivers for consumers to sign up for OTT TV services. 40% 45% 24% would consider signing up for an OTT service. 30% 32% 20% 10% 0% Yes, current subscriber 17% No, but have in the past No, and have never in the past 6% Not sure would consider re-subscribing to an OTT service. When we asked the 17 percent of lapsers if they would consider re-subscribing to an OTT service, 50 percent said yes. Of the 45 percent who said they have never subscribed, only 24 percent said they would consider signing up. For content owners, this means that once a user tries a service, they are highly likely to return and resubscribe. With 45% of consumers not subscribing yet, this is a sizable opportunity to address. Very few categories have this level of interest or engagement. 6

7 FACTORS THAT DRIVE SUBSCRIPTIONS Hong Kong India Indonesia Singapore Thailand MOBILE FACTORS Ability to access on mobile device. Quality of the mobile app experience. 0% 10% 20% 30% 40% Free trial. PROMOTION Promotion. 0% 10% 20% 30% 40% Specific TV shows available on the service. Specific TV titles available on the service. CONTENT Selection of local TV and/or movies. Selection of international TV and/or movies. 0% 10% 20% 30% 40% Cheaper than services. PRICE 0% 10% 20% 30% 40% Peer recommendation. OTHER Other. 0% 10% 20% 30% 40% NOT SURE Not sure. 0% 10% 20% 30% 40% 7

8 Among those that answered not sure, this group represents a high potential for conversion. But given that the majority of respondents stated that they would not pay for an online streaming service, this segment poses a much bigger challenge for OTT providers. It shows that launching an OTT service is simply not enough. Weak value propositions do not convert free trial users to premium subscribers, and this rings true for non-subscribers or those who have lapsed their subscriptions. However, another reason cited for not considering a paid subscription was that they were satisfied with their existing pay TV subscription, and that the size of the content catalog was not compelling enough to justify the spend. The propensity to pay for such services is present, even though some consumers stated that OTT TV services are cheaper than pay TV. But consumers are also quite pricesensitive and resistant to paying for OTT TV services. Why? It s because content is readily available freely on online streaming sites with relatively painless access. For content owners, these illegal sites ARE the main competition. Therefore, it is critical for content owners to create an offering that satisfies consumers content needs, meets price expectations, delights with a simple user interface, and provides an exceptional user experience all factors that form the value proposition needed to acquire and retain subscribers. Content is also a strong acquisition and retention driver. Specific shows, titles, and content library volumes have weight in driving stickiness. Anchor content is often a big draw for OTT TV services. Consumers also stated peer or social recommendations were also strong factors. Social media is an important channel for awareness and acquisition. Platforms that encourage consumers to share their experiences on social media can drive down acquisition costs and are key to retention. 8

9 REASONS FOR NOT SUBSCRIBING Hong Kong India Indonesia Singapore Thailand PRICE/VALUE Don t see the value. Too expensive. 0% 10% 20% 30% 40% CURRENT SERVICE Satisfied with free streaming service. Satisfied with existing paytv offering. 0% 10% 20% 30% 40% Insufficient international titles. CONTENT Insufficient local titles. 0% 10% 20% 30% 40% CURRENT NEEDS Don t want to watch that much video content. Lack of availability of video content on mobile. 0% 10% 20% 30% 40% Bad peer review. OTHER Other. 0% 10% 20% 30% 40% Factors that hinder sign-ups. Forty-five percent of respondents stated that they do not currently subscribe, nor have they ever subscribed, to an online streaming service. When asked if these people would consider a paid subscription, 51 percent said no. When asked the reasons for not considering a paid subscription, most of the consumers said they either were satisfied with free streaming services or saw no value, or they considered the service too expensive. 9

10 REASONS FOR CONTINUING TO SUBSCRIBE Hong Kong India Indonesia Singapore Thailand MOBILE FACTORS Ability to access on mobile device. Quality of the mobile app experience. 0% 10% 20% 30% 40% 70% Specific TV shows available on the service. Specific TV titles available on the service. CONTENT Selection of local TV and/or movies. Selection of international TV and/or movies. 0% 10% 20% 30% 40% 70% Cheaper than services. PRICE 0% 10% 20% 30% 40% 70% OTHER Other. 0% 10% 20% 30% 40% 70% Factors that drive retention. Once trial users convert to subscribers, four main factors play a role in their retention: Accessibility on mobile, Quality of experience on mobile, Price, and Content library. ACCESSIBILITY & USER EXPERIENCE ON MOBILE Being able to access content on mobile devices and the mobile app user experience were key reasons consumers chose to continue on with their subscriptions. PRICE Price, when it is cheaper than pay TV services, proved to be another strong factor for consumer conversion. Interestingly enough, price was also cited as one of the top barriers to adoption, since one-month free trials will not convert consumers who are unwilling to pay full price. 10

11 CONTENT LIBRARY Having access to a library of local and international content was also essential to retention. Consumers said they liked having options for what to watch or binge-watch next. However, when viewers face the prospect of depleting their content watchlists, that s when they are more likely to churn. Therefore, this puts pressure on OTT providers to release fresh content as regularly as possible to keep the subscriber hooked. MARKETING AN OTT When it comes to marketing OTT TV services, many content owners tend to focus primarily on their content library offerings, assuming that this is the type of messaging that will drive the most sign-ups. But what s often overlooked is OTT s own secondary benefit: accessibility on mobile devices. Access on mobile devices is one of the prime drivers for consumers to subscribe, and retain their subscription to OTT TV services, mainly because mobile devices are so personal to consumers and offer the ability to curate viewing options to fit consumers schedules. In addition, content owners can also offer features like offline downloads on mobile and the ability to travel between screens (i.e., switching to another device while travelling and then resuming content at a more convenient time). 11

12 PAYMENT PREFERENCES - TV SHOWS, MOVIES, & SPORTS. Across all five countries, there is a sense of comfort in free, ad-funded and pay TV models because they have existed in these markets for decades. The beauty lies in that these models are familiar and have zero friction when it comes to payments. OTT and payper-view are considered newer services and therefore come with a level of friction, since payment ecosystems differ from country to country. Content owners rolling out OTT TV services need to consider the added complexity of online payments and design offerings that ease the sign-up and subscription process. Hong Kong India Indonesia TV Shows Ad-funded OTT SVOD Ad-funded Movies OTT SVOD OTT SVOD OTT SVOD Sports Family Decision Family Decision Family Decision Singapore Thailand TV Shows Movies OTT SVOD OTT SVOD OTT SVOD OTT SVOD PREFERRED PAYMENT MODEL BY CONTENT TYPE If you were to subscribe to an OTT service, how would you prefer to pay for it?* Sports Family Decision PPV Family Decision *Top three choices shown. Rows with only two blocks lacked a clear third choice. HONG KONG Free, ad-funded platforms and paytv was highly preferred for TV shows, movies, and sports. This could be due to the strong local FTA broadcast channels and paytv operators that are typically the incumbent providers of content. However, for movies Hong Kong consumers stated an additional preference for OTT SVOD service. INDIA In India, ad-funded, pay TV and OTT subscription options are highly preferred payment option for TV shows, movies and sports. Pay per view was also another payment option for movies. In comparison to the other countries, India also had a much higher amount of consumers who said paying for content is also a family decision. INDONESIA Consumers prefer to watch content over free or adfunded platforms and also via pay TV subscriptions. This could be attributed to the strong local FTA and pay TV operators being the incumbent providers. However, for movies Indonesian consumers stated an additional preference for OTT SVOD service. SINGAPORE Consumers prefer free, ad-funded platforms, as well as pay TV and OTT subscriptions. However for sports content, consumers stated that it was a family decision when it comes to paying for content. THAILAND Thai consumers strongly prefer free or ad-funded platforms. For movies and sports content, Thais prefer multiple payment options like pay TV, OTT, and pay-per-view. 12

13 TOLERANCE TO ADS. Hong Kong India Indonesia Singapore Thailand 40% 30% 20% 10% 0% 1 ad 2 ads 3 ads 4 ads 5 or more ads No Limit The rise of video consumption through OTT provides a new source of ad revenue for advertisers. OTT has the power to reach audiences that many advertisers would pay a premium for. But advertisers cannot just replicate the linear TV ad experience to OTT, because across all countries, most consumers stated that they can tolerate one to three ads on OTT TV services, but no more than three ads in a single commercial break. Consumers are long accustomed to the ad experiences of linear and pay TV, where they are inundated with ads within the programming. But with OTT, consumers' expectation is more content and less ads. This is where addressable TV advertising can thrive in the OTT landscape where ads can be targeted, agile, and effective. Hong Kong India Indonesia Singapore Thailand Prefer to pay subscription to avoid seeing ads 9% 18% 20% 8% 22% Prefer to pay lower fee and see some ads 24% 27% 26% 15% 25% Prefer to pay nothing and see ads 23% 9% 10% 17% 11% Prefer to pay nothing and see no ads 23% 14% 14% 30% 14% Prefer the flexibility to customise what I want to pay and how much ads should be served 9% 15% 14% 16% 13% Does not matter 8% 8% 9% 9% 10% Even though consumers are accustomed to ad experience in the linear world, when given the opportunity to see no ads and pay nothing, only 14 to 30 percent chose this option. Only 9 to 22 percent said they would pay a subscription fee to avoid seeing ads. Overall, most consumers generally had no strong objections about seeing ads as part of the programming. Content owners can ease the friction of paying by offering lower priced AVOD models or giving consumers the flexibility to customise how much they wish to pay and how many ads they see. 13

14 TOP REASONS WHY USERS UNSUBSCRIBE. No time to watch so unable to justify the spend 22% Too expensive 19% Depleted content library or no other content to watch Content was available on free or torrent site Preferred content was not available Requires storage on my phone Too many ads Sign-up experience was poor Video streaming experience was poor UI was poorly designed 3% 2% 2% 2% 1% 5% 8% 14% 0% 5% 10% 15% 20% 25% For most subscription-based businesses, churn rate is a crucial metric that determines overall performance, and preventing churn is key to improving revenues. Research shows that the main cause of churn for OTT TV services lies in whether the subscriber has the time to utilise the service, as a metric to justify the spend. Consumers are also highly price-sensitive to OTT TV services and are likely to churn if the price point is too expensive. This is because consumers are coming from an era where pay TV packages are often expensive, and need a significantly compelling value proposition to justify the spend on OTT services. For many in Asia, an OTT TV service is still considered as a premium item. To keep subscriber churn rates low, OTT service providers need to orchestrate a variety of factors: a robust content catalog and a multi-screen strategy for consumers to increase their utilisation time on the service, the right price point with frictionless sign-up and payment experiences, and deliver an exceptional video streaming experience at any and every time. 14

15 CONCLUSION. One standout finding was that getting consumers to pay for OTT TV services is a major challenge. The cost of a monthly OTT TV service is the price of a cup of coffee or breakfast in most countries in Asia; yet, consumers are not necessarily willing to pay for it. The trigger point lies in demonstrating value to the consumer. Gone are the days when consumers switched on their TVs and referred to a set programming guide for a buffet of content, and content price decisions weren t even a factor to consider. Consumers today are forcing an unprecedented digital disruption, and it s changing the way large parts of the population are watching TV content. For consumers, the switch between TV and mobile devices is straight forward. The implication for service providers is, however, much greater. OTT is an important platform for publishers, distributors, and advertisers to reach quality audiences at scale and generate positive brand outcomes. The biggest challenge for content owners is creating a strong value proposition, which equates to designing and implementing smart customer acquisition and retention strategies that strike a balance between a robust content library, achieving the sweet spots in pricing multiscreen accessibility and exceptional user experience. Content rights owners should invest more time and money in the areas that differentiate their service in the mind of the customer in an increasingly cluttered market. Underlying technology of video delivery should be left to organisations like Brightcove. Understanding and navigating the intricacies and challenges of streaming video across the world is what video technology companies like Brightcove do, so that content owners can focus on providing exceptional video content experiences that grow their audiences and generate revenues. 15

16 RESEARCH METHODOLOGY. YouGov, an international data and analytics group, conducted the survey by interviewing 5,000 participants in Hong Kong, India, Indonesia, Singapore, and Thailand. Fieldwork was conducted between October 2017 to May ABOUT YOUGOV. YouGov is an international data and analytics group. Our core offering of opinion data is derived from our highly participative panel of five million people worldwide. We combine this continuous stream of data with our deep research expertise and broad industry experience into a systematic research and marketing platform. Our suite of syndicated, proprietary data products includes YouGov BrandIndex, the daily brand perception tracker, and YouGov Profiles, our planning and segmentation tool. Our market-leading YouGov Omnibus provides a fast and cost-effective service for obtaining answers to research questions from both national and selected samples. With 30 offices in 20 countries and panel members in 38 countries, YouGov has one of the world s top ten international market research networks. For further information, visit ABOUT BRIGHTCOVE. Brightcove Inc. (NASDAQ:BCOV) is the leading global provider of powerful cloud solutions for managing, delivering, and monetizing video experiences on every screen. A pioneering force in the world of online video since the company s founding in 2004, Brightcove s awardwinning technology, unparalleled services, extensive partner ecosystem, and proven global scale have helped thousands of companies in over 70 countries achieve better business results with video. To learn more, visit Congress Street, 4th Floor, Boston, MA tel brightcove.com fax