Competition in the over the top (OTT) video streaming market continues to heat up, with Disney+ growing faster than Netflix and local players like Viu giving the market leader a run for its money in Southeast Asia.
Disney+ signed up 12.4m new subscribers in its third fiscal quarter ending July 3rd 2021, taking the total to 116m worldwide[i], despite the re-opening of its theme parks giving families an alternative form of entertainment. Disney reported US$4.3bn in total streaming revenue during the period, up 57% year on year and 7.5% over Q221. Those figures were partially boosted by the US$1 price rise introduced in March. Still, the company also made tens of millions of dollars by releasing the movie Cruella in May in tandem with its cinema release and charging subscribers US$30 to watch it under a Premier Access deal.
The growth of its streaming business contributed significantly to Disney’s profitability, too, with income totalling US$923m in Q321, a 9% improvement on the previous quarter (US$912m). But Disney’s results also show that building a portfolio of streaming services remains very expensive.
Combined costs of content production, marketing and technology infrastructure meant the company’s streaming business still posted a loss of around US$300m, albeit one roughly half the loss it reported a year ago. Not all of those costs are attributable to Disney+ – Disney also includes Hulu and ESPN+ in its streaming division – but the majority spent on funding the creation of unique content.
Competition stacks up
Disney+ is comfortably the second-largest video streaming platform in the world behind Netflix, according to statistics compiled by Adweek[ii] (Amazon Prime Video is excluded because it is just one component of a broader subscription package that includes online deliveries, audio streaming and other features).
However, the company doesn’t break out its subscriber base on a regional basis, whereas we know that the majority (around 65%) of Netflix’s customers come from outside North America. Disney+ is adding new subscribers at a faster rate, though. It boosted its numbers by 12% quarter on quarter, adding 12.4m customers compared to net additions of just 1.54m for Netflix.
According to Adweek, HBO Max is now in third place, primarily because of its international expansion after debuting in the US in May 2020. In June, the company launched in 39 countries in Latin America and the Caribbean after promising to produce 100 local original TV shows over the next two years[iii]. Unlike the US, HBO Max doesn’t offer an ad-supported version of its streaming platform. Tiers are limited to a low-cost mobile one plan offering standard definition streaming and up to five title downloads, or a standard plan offering 30 downloads and the ability to stream HD/4K content on up to three devices simultaneously. Pricing will vary on a country by country basis.
Viu trumps Netflix in South East Asia
That gives Netflix some healthy competition in other regions of the world, just as it ramps up its own efforts to grab a larger share of the international audience. Separate research conducted by Media Partners Asia also suggests that Viu, rather Netflix, is now the second-largest streaming service ranked by paying subscribers in South East Asia behind Disney+.[iv]
The platform’s success is even credited to have helped push owner PCCW’s OTT business revenue up 29% year on year to US$83m in the first half of 2021, shrinking its losses by 75% from US$10m to US$3m. PCCW’s 2021 Interim Results Presentation reports that Viu’s revenue increased 47% YoY from US$42m in H120 to US$62m in H121. It also saw a 37% increase in paying subscribers (7m), with monthly active users up 62% to 49.4m.
Statistics provided by the App Annie suggest the streaming platform does have a robust paying customer base in the region. It was ranked 7th by consumer spend across Apple iOS and Google Play stores in Singapore during January 2021, for example, though Netflix was second. It was a similar story in Malaysia where Viu was ranked 8th behind Netflix in 4th and the Philippines where Viu came in 10th behind Netflix in 2nd. In Indonesia, however, Viu was the 3rd app rated by consumer spending, and in Thailand, it made 9th place while Netflix didn’t even make the top ten.
Local language content is key
Hong Kong-based Viu is remarkable because of the high volume of customised video content to subscribers in the region, often in local languages. The company hasn’t disclosed how much it has spent on producing that content but say it has delivered an average of over 40 original shows every year since 2016.
Viu is now available in Hong Kong, Singapore, Malaysia, Indonesia, the Philippines, Thailand and Myanmar in Asia, Bahrain, Egypt, Jordan, Kuwait, Oman, Qatar, Saudi Arabia and the UAE in the Middle East and South Africa. It gained much traction by appealing to those countries’ fast-growing middle-class populations and spotting trends like the appetite for Korean dramas dubbed into several different languages. Offering a free subscription tier has also helped, but Viu appears to be doing an excellent job of converting a chunk of that customer base into paying subscribers.
Viu will have to fight hard to maintain that momentum as the likes of Netflix, Disney+, and Amazon Prime Video step up their efforts to produce original, local language content. It could be that the global subscription video on demand market is sufficiently large and fast-growing to keep them all happy, however.
[i] Disney Plus Tops Expectations, Reaches 116 Million Subscribers, Variety, 12th August 2021
[ii] Here’s How the Biggest Streaming Services Stack Up in Mid-2021, Adweek, 16th August 2021
[iii] HBO Max starts global expansion with Lat Am & Caribbean launch, Television Business International, 30th June 2021
[iv] After Beating Netflix, Billionaire Richard Li’s Viu Looks to Next Battle, NDTV, 17th August 2021