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5G auctions prepare Thailand for growth in mobile OTT streaming

March 3, 2020

Filippo Giachi

VP – Asia Pacific, Middle East & Africa

Last month’s auction of wireless spectrum in Thailand will pave the way for resident telecommunications operators to build fifth-generation (5G) mobile networks across the country. That infrastructure will eventually deliver faster, more reliable data connections to the 93% of 16-64yr olds in the country that currently own smartphones, most of which already use those devices to download or stream video content.

Advanced Information Service (AIS) has already launched limited 5G services, with Total Access Communication (DTAC) set to follow before July this year. True Move H Universal Communication, Thailand’s largest mobile carrier, and state-owned telcos TOT and CAT Telecom – also purchased licences in February’s 5G spectrum auctions, with True Move H and AIS having 49 and 40 licenses respectively.

How long it will take for True Move H, AISand others to deliver faster 5G connectivity to Thailand’s population of almost 70m, 50% of whom live in rural areas, isn’t yet clear. But the country already has some of the fastest average mobile data speeds in South East Asia, estimated at 26Mbit/s in 2018 having increased 48% year on year (YoY) since 2017 as MNOs upgraded and extended their 3G/4G networks.

For the moment those speeds are eclipsed by some of the highest average fixed internet speeds in the world – around 125Mbit/s according to estimates, one reason why Thailand saw a 30% reduction in internet traffic accessed by mobile phones between 2018 and 2019 and a parallel 56% increase in traffic accessed from laptops and desktop PCs (more capacity, more data).

5G is likely to alter that dynamic, however, offering download speeds of up to 2Gbit/s, while mobile phone penetration far exceeds that of other devices used for web browsing and over the top (OTT) video streaming. Almost every 16-64yr old in Thailand owns a mobile phone, and almost all of them are smartphones, while only 50% own PCs, 33% tablets, 12% games consoles, and 8% streaming TV devices.

There are around 50m mobile Internet users in Thailand which spend an average of almost 5 hours a day accessing web content and services using their mobile devices. Approximately 89% of 16-64yr olds (estimated at 48m) use mobile entertainment or video apps on those devices, with 54% of estimated to have watched TV content via some form of monthly streaming subscription service in the same year. Netflix was ranked the second mobile app by consumer spending in 2019, with PCCW-owned Viu tabling eighth, for example.

Those trends are helping to drive significant revenue growth for Thailand’s OTT video providers, which currently offer a mixture of subscription video on demand (SVOD) and advertising video on demand (AVOD) services to the country’s consumers. Statista estimates that collective turnover derived from SVOD services in Thailand grew 10% year on year to reach US$83m in 2019, predicted to develop at a compound annual growth rate (CAGR) of almost 8% to be worth US$117m by 2024. Digital TV Research is more bullish, calculating the SVOD market in Thailand was worth a total of US$132m in 2019 whilst forecasting it to more than double to US$293m by 2023 (US$148m of which will be generated by Netflix alone).

The fact that SVOD penetration is currently low – no more than 6% according to Statista – illustrates the potential for expansion, though progress is expected to be slow. Statista forecasts just over 7% of people in Thailand will use SVOD services by 2024, by which time average revenue per user (ARPU) from SVOD subscriptions will have expanded from US$20.80 to US$23.49.

Whatever the final total, the share of that revenue is likely to be more piecemeal due to the differences in how each OTT video provider distributes, packages and bills for its streamed video content.

One of the first to launch SVOD services in Thailand as far back as 2015 was iFlix, which offers paid SVOD subscriptions for around US$3 per month or US$30 per year. Subscriber numbers are relatively low according to Digital TV Research, however, estimated at around 520,000 in 2019 and yielding revenue of around US$16m.

Hooq (a joint venture between SingTel, Sony Pictures and Warner Bros) also launched in Thailand in 2015 and has amassed just over half a million subscribers to date, driving revenue of approximately US$19m in 2019. The company has partners Thai studios GTH, Five Star and TIGA to produce local content announced plans to create 100 titles across Singapore, Indonesia, the Philippines, India and Thailand last year [2019].

PCCW introduced Viu to the Thai market with US$3 subscription packages in 2017 and signed a local content deal with GMM Grammy in 2019. The service is estimated to have attracted 208k subscribers to date, though its revenue base is still small at US$6m.

Hong Kong broadcaster TVB launched a Thai version of its TVB Anywhere OTT platform in partnership with MVTV in 2018, offering Chinese content dubbed into Thai and a 24 hours Drama Thai Channel for around US$6 a month.

Global OTT streaming giants Netflix and Amazon are also making a concerted play for Thai subscribers. Netflix launched in Thailand in 2016 with tiered subscriptions starting at around US$9 a month for one screen, going up to roughly US$13 a month for four screens and high definition (HD) options. More significantly it launched a fully localised Thai user interface in 2017 and has added Thai subtitles to thousands of hours of programming, before partnering SK Global Entertainment to produce a film on the 2018 Tham Lung cave rescue.

Despite its relatively high subscription priced, the attention to local content has driven strong growth for Netflix – Digital TV Research estimated the company had 709k subscribers in Thailand in 2019 contributing to the overall revenue of US$61m. The same cannot be said of Amazon Prime which despite the introduction of US$6 a month packages in 2016 still has only around 100,000 subscribers, largely because it has so far offered little or no localised or original content tailored specifically for the Thai market.

Thailand’s MNOs have also got in on the act. AIS launched its first VOD service in 2017, available on both its mobile (AIS Play) and fixed broadband networks (Playbox). For US$9.50 a month, AIS estimated 41m mobile phone subscribers can sign up to watch 14 channels on their smartphones (including HBO, HBO Go, Warner TV, Fox Sports, Fox Fight Sports and HLN News). The operator is estimated to have around 1.7m active users at the end of 2017 with another 500k in its sights for 2018 (though only a fraction pay for the service and the rest access it through mobile phone promotions).

And more recently True Move H owner True Corp, Thailand’s biggest pay-TV cable and satellite operator, outlined plans to launch its own OTT service – True ID TV – aimed at True’s fixed andmobile broadband customers in the near future.

As elsewhere in South East Asia (and despite government crackdowns), a bigger problem for Thailand’s OTT streaming providers is illegal content, with piracy undermining their revenue streams and forcing new thinking around free or low-cost content.

After struggling to compete with widely available pirated content, iFlix introduced a free AVOD version of its service in 2018 that offers more limited short-form videos. The provider also plans to greater collaboration with YouTube users to expand its library and bring a younger demographic onto its platform. Doonee too, owned by STG Mediaplex International, offers SVOD subscriptions for around US$4.49 per month. But despite gaining 1m registered users by mid-2016 only around 60,000 were paying customers, with the majority opting for its free AVOD service.

Thailand’s biggest AVOD provider is Line TV which counted 20m app downloads in 2018 alone and is aiming to expand the number of active users from 33m in 2019 to 55m by 2021. To reach those goals it will add more original content under its co-production model alongside exclusive content such as Indian series from Channel 8. Overall advertising spend on the platform is reported to have doubled in 2018 and quadrupled in the fourth quarter of the same year. Indeed, Statista estimates the value of total digital advertising in Thailand in 2019 was US$894m, up 16% YoY.

Navigating the diverse payments landscape in Thailand is another challenge for the country’s SVOD providers. Although a high proportion (81%) of those over the age of 15 have an account with a financial institution Thailand remains largely a cash economy – only around 10% of the population have credit cards and 8% a mobile money account. Yet 19% of 16-64yr olds do make online purchases or pay bills online, and 69% of those online purchases were made via a mobile device in 2019.

Maximising consumer reach is likely to be dependent on allowing subscribers to pay for digital content using multiple methods. Those include local convenience stores to facilitate Thailand’s cash economy alongside credit/debit card payments, online stores and mobile wallets, while the provider also introduced direct carrier billing (DCB) in partnership with True Move H in 2017.

Thailand’s high rate of smartphone penetration makes mobile a natural distribution channel for OTT video providers. And DCB provides a way of paying for digital content through existing pre- and post-paid mobile phone accounts that represents a secure and simple way for both content providers and consumers to set up either one-off transactional or recurring subscription payments.

Thai providers have already seen some success through DCB. Another billing partnership established in 2018 offers iFlix’ VIP plans at less than US$1 a week and around US$3.13 month through their AIS smartphone accounts (as well as flexible daily access for around 22 cents). Hooq too has a distribution agreement with AIS as does Viu and Doonee, while AIS also offers new and existing customers switching from its 4G prepaid to postpaid plans unlimited access to Netflix through DCB.

If Thailand’s OTT video providers are going to get ahead of the competition, they need to find a way of quickly setting up flexible billing arrangements with multiple MNOs simultaneously, which is where third-party payment platforms can help.

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