Though Indonesia may be relatively less advanced in terms of its mobile phone infrastructure, a young and vibrant population, ongoing capacity improvements and accelerating smartphone penetration make it an attractive prospect for over the top (OTT) streaming video providers.
Amongst a population of around 270m there are over 326m mobile phone connections and 175m internet users. The drivers for that growth include overall economic expansion, greater availability of affordable 4G devices and upgrades to 4G infrastructure, rapid urbanisation and an expanding middle class.
Google’s Consumer Barometeri estimates that nearly 60% of the Indonesian population uses a smartphone, far more than those who use either a PC (22%), tablet (8%), or a device for streaming internet content to a TV (2%). However large swathes of the country were still without mobile Internet in 2017 – 163m people according to GSMA Intelligence which calculated mobile internet penetration at just 39%.
Indonesia also currently has some of the lowest average mobile Internet bandwidth capacity of any country in South East Asia (56% of the population live in urban areas). Though around 83% of connections are 3G/4G enabled, average download speeds are estimated at 10.5Mbit/s according to Ookla tests conducted in December 2018 (though up 7% year on year). Fixed internet bandwidth is a little better; however, with download tests averaging around 15.5Mbit/s.
Lack of relevant content too has historically been a barrier to Internet usage in Indonesia, which is estimated to have more than 700 different languages according to Ethnologue (and where at least 1m people speak around 21 different dialects). The GSMA Mobile Connectivity index estimates that in 2017 only 16% of the Indonesian population had access to apps in their first language, for example, highlighting the necessity for streaming providers to deliver localised content to reach new subscribers.
6% 5G Penetration by 2025
Things are set to improve over the next five years in terms of coverage and available mobile bandwidth at least. By 2025, 6% of subscribers will be on 5G networks according to GSMA Intelligence* and 79% on 4G (compared to just 44% in 2018). The country’s mobile network operators (MNOs) are still several years away from launching commercial 5G services, and a wireless spectrum is yet to be allocated by the government. As such, Telkom Indonesia (Telkomsel), Indosat Ooredoo and others are still experimenting with test networks and deliberating on which telecommunications infrastructure equipment suppliers will underpin their eventual rollouts.
Despite the relatively basic nature of its mobile telecommunications infrastructure compared to other countries in the SEA region, the scale of Indonesia’s population and its preference for watching video content on mobile devices makes it a fertile hunting ground for OTT streaming providers.
GlobalWebIndex estimates that half of all 16-64yr olds in Indonesia stream TV content via the Internet to some form of device and almost all (95%) watch videos on mobile devices specifically. That led mobile live streaming platform Bigo Live to be the second biggest earning app in the country by revenue in 2019, with PCCW-owned Viu’s video on demand (VOD) service coming in eighth according to statistics compiled by App Annie. Viu provides access to exclusively Asian video content costing US$2.10 a month for five screens after signing partnerships with fixed broadband provider IndiHome Fiber and Telkomsel. However, Indonesia is served by a much broader and diverse mix of local, regional and international subscription video on demand (SVOD) providers besides.
Netflix has been active in the country since 2016, though its adoption has been patchy on account of regulatory concerns early on. Netflix subscriptions range from roughly US$7.65 for a month for basic on-demand streaming in standard definition (SD) to a single screen, through to US$11.86 a month for Premium high definition (HD) content on four screens. The company introduced a full Bahasa Indonesia interface in 2018, simultaneously adding more Indonesian content and agreeing on video data plan packages with MNOs including XL Axiata, Bolt, Hutchison 3 Indonesia and Smartfren.
Taiwanese multimedia company Catchplay (Catchplay on Demand) too has been active in Indonesia since 2016, offering a range of local and international movies for US$3.15 a month. More than half of its content is considered original, and around 25% of it is available in local Indonesian languages, while a partnership with Telkom Indonesia that packages its services alongside the latter’s fixed and mobile broadband subscriptions has reputedly helped the company attract more subscribers than Netflix.
iFlix too has both paid SVOD HD subscriptions (iFlix VIP) costing US$2.74 a month and a free version that shows a select range of SD TV shows, movies and kids television designed to attract people onto its paid services. It originally started offering exclusive content in the form of old Indonesian movies before incorporating original local content and films and TV shows from other countries in Asia.
Having launched in 2016 Amazon Prime delivers its standard US$6 a month for three screens, while Emtek Group’s Vidio also offers original Indonesian content alongside premium sports channels in partnership with local TV stations SCTV and Indosiar.
A more recent entrant is Gojek which added a VOD service – GoPlay – to its app platform late last year  with the specific intent of making it easy for local filmmakers to make Indonesian films more accessible (though it also sources international content). Services cost around US$6.26 a month for streaming via the GoPlay Android or Apple iOS app, though like Amazon Prime, there are discounts for subscriptions to other Gojec services (such as GoFood deliveries).
Vidio and iFlix content partner and TV company MNC Group also launched its own video streaming service through its MNC Now app last September , with China’s iQIYI is reported to be in talks to expand its streaming service into Indonesia in partnership with MNC later this year . ErosNow partnered Indonesian MNO XL Axiata to offer Bollywood content over the XL Home broadband entertainment service and mobile app for US$1.80 a month (or US$18 a year) in 2018, with its content also available through a partnership with Chinese smartphone maker Xiaomi (Mi TV).
Other home-grown Indonesian video streaming platforms include Dens.TV, FirstMediaX, Genflix, MAXstream, M2V, Super Soccer TV and UseeTV Go, while specialist film buff platform Mubi charges US$11 for seven days of access to a select number of curated movies.
Direct Carrier Billing
While there is no shortage of OTT video streaming content or providers in the country, the importance of DCB in allowing providers to monetise their services cannot be overstated. Less than half of over 15s in the country have bank accounts according to World Bank global financial inclusion data, with only 2.4% a credit card and 3.1% a mobile money account. Indonesia also has some of the lowest levels of average revenue per user (ARPU) in the world (smartphones available for less than US$50) and a relative lack of disposable income which is reflected in the high percentage (97%) of pre-paid mobile connections.
While only a small proportion (11%) pay for good or services online according to GlobalWebIndex figures, 76% did so using a mobile deviceii. And GSMA Intelligence estimated that 35-40% of Indonesian smartphone owners already purchase physical and digital goods online using those devices, there is a danger that activity levels may drop this year  after the government passed legislation which applied local VAT to digital goods and services provided by foreign companies, including streaming companies like Netflix and others.
With the addition of new market entrants swelling the already crowded market, 2020 is therefore likely to be a make or break year for streaming video providers who now need to think very carefully about how they price their subscription packages. Telcos and DCB, have a pivotal role to play in those delivery mechanisms, and third party payment management and aggregation platforms can effectively outsource much of the administration involved in partnering multiple content providers and carriers simultaneously.