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FEATURE
June 19, 2023
Rising subscription $ in APAC
Although movie streaming was a clear winner of the pandemic, it's now struggling to sustain its growth. Competition for new subscribers is fierce and new media formats are taking time away from the small screen. K Dass investigates.
Rising inflation is making the road to recovery from the pandemic a rough one for countries in APAC. While price rises in the region are relatively moderate compared with those in other parts of the world, persistent inflation will hinder growth and add to issues such as insecurity and diminishing real wage growth, says analysts.
In the backdrop of global inflation, several streaming services are planning to increase their subscripting rates by treading local content. Disney+ hopes to serve up 50 new APAC originals by end 2023, while producing amply of local language content. The hidden agenda unveils that this is an attractive region for streaming services looking to scale up their subscriber base.
Netflix surprised investors when its total audience fell for the first time in over a decade. But it had one trick up its sleeve: APAC, where it added 1 million subscribers between April and June 2022. Inspired by the giant's success, various streaming services are spending big as they attempt to win over the region's viewers.
Online TV peaked
It's useful to understand how online TV has evolved in this part of the world as well as the opportunities that have sprung up in the last few years. Consumer time watching online TV peaked during lockdowns, the main questions on our minds then were: is this a one-off for the industry? And will we see these highs in a post-pandemic world?
We believe the worst of the virus has passed and some sort of normality has returned. This is evident as boarders began to reopened and travel and tourism improved once again. However, as Covid situation improved, the cost of living replaced the pandemic as an immediate crisis, driving many consumers to rethink purchases like home entertainment. The price of home entertainment is of less concern. With many consumers choosing to stay in to save money, these brands are set to benefit. But it's worth noting not everyone can afford subscription services to begin with.
Around a quarter of streamers in five APAC markets are thinking about cancelling a TV subscription, with the main reasons being 'paying for too many services already' or 'wanting to use another cheaper one instead'.
It seems consumers have a limit to the number of platforms they're willing to pay for, and that limit may get smaller as inflation continues to bite, especially in parts of the region where price sensitivity is higher.
Breaking up the service
But this just means they're open to breaking up with services, not the industry - which is thriving right now. In fact, the time people spend watching online streaming has overtaken traditional TV. With the arrival of ad-based subscription scheme, the margin may shift again. Will streaming platforms drop their SVOD prices to accommodate advertisers within? It may be by a slide dip, but it's a huge win for the sector.
Also, the number of people who say they use a TV streaming service on a typical day has stayed fairly consistent since Q1 2020, right in the beginning of the pandemic.
The years between 2016-19 represent the biggest jumps in online TV usage, and progress is unlikely to ever happen that quickly again because the untapped market in many countries is smaller than it once was.
Still, research suggest that recent subscribers are sticking around, and the time spent watching online TV will continue to creep up. This is good news for companies introducing cheaper ad-based subscription models and those hoping to advertise on streaming sites, as more time spent on them means more ads watched.
Also, APAC's consumers are the most likely to approve of ad-supported tiers and to say they'd exchange their personal data for free services. So, if this model's going to land anywhere, there's a good chance it'll be here.
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