6 Thai Market Analysis



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6.2.1 OTT TV Service Trend in Thailand
OTT TV service trend in Thailand depends on many opportunities and challenges that will likely happen and can be concluded as follows:

Opportunities

According to National Broadcasting and Telecommunication’s data centre, there has been a notable increase in number of high-speed Internet subscribers from 2003–2016. It is estimated that there are 6.5 million high-speed Internet subscribers in 2016 as shown in Figure 6-3. Main Internet access devices are 3G mobile phones and portable devices, resulting in increase in Internet and data usage via mobile phones and content consumption in video format to 50% of total usage in 2016 in comparison with only 10% in 2008.

Figure 6-3: Increase in High-Speed Internet Users and Data Usage



Analysys Masons estimated data in 2015 indicates that within 2019,305 mobile broadband penetration rate and fixed broadband penetration rate will be 120% and 35%, respectively, and smartphone usage will increase to as high as 70–90%.

  • Competition Among SVoD Providers

Competition among OTT TV Providers generating revenue from SvoD is led by Hollywood HD. If we look at their revenue in 2015, Hollywood HD recorded 299 million THB of revenue; Primetime, MonoMaxxx, Doonee, iflix and HOOQ recorded 143 million THB, 98 million THB, 73 million THB, 18 million THB and 17 million THB, respectively. Service fee is in the range of 99–200 THB as shown in Figure 6-4. This is similar to the service fee in Malaysia and considerably not high when compared to other case studies.

Figure 6-4: Competition Among SVoD Providers

Nevertheless, total revenue of six new OTT TV Providers, namely Hollywood HD, Primetime, MonoMaxxx, Doonee, iflix and HOOQ in SVoD is only 10% of the total revenue of established OTT TV from Pay TV (calculated against TrueVisions at the end of the second quarter of 2016). In this regard, it can be said that the entry of new OTT TV Providers did not affect the revenue of established OTT TV Providers much in the current market. This is because new OTT TV Providers have been in the market for only 1–2 years, but the contents they provide are not all identical. For example, Hollywood HD is known for Thai movies, Primetime emphasises new and international movies, and iflix allocates up to 20% of their content for children, and these differences might contribute to their competitive advantage and future growth.


  • Competition and Services in AVoD Market

Notable OTT TV Providers in AVoD market in Thailand are YouTube, Line TV and OTT TV applications from Free TV Providers. The big player in this market has been YouTube, and in 2015, Line TV started their OTT TV service in this market as well. As can be seen in Figure 6-5, Line TV’s entry into this market did not affect YouTube’s advertising revenue much in the initial stage. YouTube’s advertising revenue makes up 75% , while the total revenue from all other providers combined is only at 25%. However, Line TV makes contents more varied and reaches specific groups of viewers more. Additionally, video advertising trend is likely to grow twice within only 1–5 years, and therefore it can be concluded that OTT TV service in AVoD is still promising for existing providers and newcomers alike.

Figure 6-5: Revenue Structure of Video Advertising of OTT TV Providers in AVoD Market



  • Opportunity of Support for OTT TV Providers from draft of Digital Economy Law

There are six main structures in Digital Economy, namely Hard Infrastructure, Soft Infrastructure, Service Infrastructure, Digital Economy Promotion, Digital Society and Digital Knowledge and Information. Draft of Digital Economy Law, therefore, supports the growth of OTT TV service, especially new OTT TV Providers who are small, in the form of Tech Start-Up, or various other players in the OTT TV industry. There can be many formats of support such as supporting basic infrastructure to be ready for new digital services, allocating investment or fund to concretely develop content-related projects, as well as supporting and encouraging human resource development to related knowledge to ensure readiness and improve the level of competition among service providers or content providers and make OTT TV service one of the tools of economic and social development in Thailand.

Challenges

  • Cost of Licenced Contents and the Problem of Piracy

One of the challenges for OTT TV providers is their reliance on content producers or agencies to purchase content licences, especially from international content. The increase in the number of providers forces the providers to develop strategies for securing important and interesting content, such as the way that TrueVisions or MonoMaxxx provide football and basketball programmes, as well as more foreign and Thai movies. According to TrueVisions' financial report in 2015, 26% of the company’s budget—a 7% increase from the portion of the previous year’s budget—had been allocated to international content. This indicates that OTT TV providers carry high costs when securing interesting content and programmes. Providers with limited financial resources may find it difficult to maintain or increase their market share. In addition, according to the Motion Picture Association of America (MPAA), 79% of the consumption of US content is through illegal videos, DVDs, or online downloads.306,307,308 Local and international content producers, distributors, theatre operators, DVD stores and OTT TV providers have all been negatively affected. It is estimated that the amount of damages is more than $400 million. In 2015, Thailand was still ranked high on the piracy watch list.307,308

Apart from this, OTT TV providers who used to be Pay TV providers are facing the problems of piracy and the hijacking of their broadcast signals. These providers must change their broadcasting, especially for premium users who watch special content, to be more secure via a new kind of signal decoding and the use of the MPEG-4 format. It is obvious that the costs of licencing and piracy strongly affect the competitiveness of OTT TV providers, as well as of local and international content producers.





  • Service Fees and Technology

The increase in content variety and the number of OTT TV providers forces the existing providers to reduce their service fees in order to maintain and increase their user bases. This can be seen from the Average Revenue per User (ARPU) of TrueVisions, which decreased by 30% in the second quarter of 2016 Y-o-Y, as well as Hollywood HD and PrimeTime, whose revenues also decreased to 33% and 50%, respectively, as shown in Figure 6-6.

At the same time, to create user satisfaction, OTT TV providers must invest in technologies, such as better audio and visual quality, better viewing experience (multiple screen view, recommendations, and resumption of viewing from the last time), Digital Rights Management (DRM), which controls access to digital information, such as music and movies, and hardware, such as 360-degree viewing and virtual reality for live sports broadcasting.309 Such investments may be too high for small and new OTT TV providers, who usually start with limited funds and develop their own service platforms.




Source: http://media2.telecoms.com/e-books/DTVEymagazire/msottl6pt5_lo.pdf

Figure 6-6: Service fees of OTT TV providers and their technologies.




  • Relevance of OTT TV Services and Telecommunications Business Act

Since OTT TV is a new service that combines media and broadcasting on the internet, it is highly possible that the emergence of OTT TV is relevant to internet and telecommunication services as considered in the current Telecommunications Business Act. It is our opinion that the said Act would not impede OTT TV services, because so far, there has been no hindrance or obstruction of OTT TV on either an individual or a collective basis. On the contrary, telecommunication business providers offer products and services that complement OTT TV. However, if online video viewing time continues to increase, telecommunication business providers fail to manage their bandwidth well enough, and the net neutrality rule is enacted by a government office in charge, telecommunication business providers may be obliged to invest in expanding their networks, as shown in Figure 6-7.

Figure 6-7: Relevance of OTT TV Service and Telecommunications Business Act




  • Competition and Control between OTT TV and other TV providers

Since OTT TV is a new service in Thailand, where most service providers started offering their services to consumers in 2012, the ambiguous rules and regulations may affect competitive advantage in business, as well as affect the consumer’s right to access the content. This is because the operations of OTT TV providers are different in many aspects, such as business ownership, business type and registration address, to name a few. Service boundaries, content control between OTT TV providers and other TV providers are still not in place, and therefore, the issuing of rules and regulations to manage and control the networks, applications and content in order to ensure fair competition and the ability of consumers to access quality and variety content will be very challenging.

  1. Analysis of Notable OTT TV providers

In this section, we conduct a SWOT analysis on 10 notable OTT TV providers in each category. We used information gathered from two sources, which are direct interviews with the providers and research from various media, to conduct the analysis.
Providers with Revenues from Subscription Fees

  • MonoMaxxx

MonoMaxx is an OTT TV provider under Mono Group Plc. Co., Ltd., whose major shareholder is Mr. Pete Bodharamilk (71.35%).310 In 2015, MonoMaxxx earned 298 million THB from OTT TV subscribers,311 of whom 50% are in the Greater Bangkok area. MonoMaxx's subscription fee starts from 129 THB/month. The company estimated that there would be more than 2 million subscribers in 2016. To create sources of long-term revenue, the company is employing a long tail marketing strategy that focuses on contents such as Asian TV series and dramas that are not in trend, but are well known to most of the subscribers. In 2016, the company put emphasis on providing more interesting content to increase subscriptions, as well as on developing their own software and hardware viewing systems. MonoMaxx uses data analytics to analyse viewer behaviour in order to provide content that meets demand. The company also has the advantage of having a content-sharing policy with other companies in the same group, a move that results in lower costs. MonoMaxx has also expanded their service channels to other telecommunication providers, such as 3BB, TOT, and AIS, as well as Smart TV manufacturers, such as LG312 and Panasonic,313 who install MonoMaxxx to allow subscribers to watch OTT TV. However, the investments in OTT TV services are still financially limited, since the company must wait for budget allocations from Mono Group Plc. Co., Ltd. The company is still undergoing rebranding from their previous OTT TV name, Doonung. Figure 6-8 shows a business model and SWOT analysis of MonoMaxxx.

Figure 6-8: Business model and SWOT analysis of MonoMaxx



  • Primetime

Primetime is an OTT TV provider that generates revenue from subscriptions. It is a start-up company under Mr. Kasidit Kolasastraseni, who had spun off from Hollywood HD.314 The company was funded by DNA 2002 Plc., Co., Ltd., which is a company selling home entertainment media products. DNA 2002 holds 75% of shares in Primetime Entertainment Co., Ltd. and 25% in Primetime Solution Co., Ltd.315

Primetime focuses on new movies just released into theatres, as well as on popular movies, Thai and international series, and concerts. The subscription fee starts from 99 THB/month and is higher for unlimited viewing or annual subscriptions. There were about 0.5–1 million subscribers in 2015, and in the third quarter of the same year, there were 1.5 million. Most of the new subscribers had simply joined to watch Pongsit Kampee’s concert video.316 Apart from this, Primetime also provides TV on Demand (TVoD). 316 Viewers can watch a video within 21 days after purchase, and once a viewer starts watching a purchased video, they must finish watching it within 48 hours. In OTT TV, Primetime also features technologies such as DTS Surround and Headphone X. The company is also the first and only provider in Thailand to offer Full HD visual quality.317 Primetime has also entered a joint venture with DTAC to distribute products. The company's long-term business goal is to expand and become an OTT TV provider on both regional and international levels. However, due to the competition amongst television services in Thailand, Primetime is facing many limitations, such as financial limitations, service stability for the increasing number of subscribers, content management and competition with other free TV providers. Free TV is still the most preferred means of viewing television.



Figure 6-9: Business model and SWOT analysis of Primetime



  • iflix

iflix was created by regional-level investors, Catcha Group and Evolution Media Capital, who want to offer online movie and series services in Southeast Asian countries. iflix aims to grow in this region by providing OTT TV at affordable prices, together with a reliable system and a variety of content.318 iflix was managed by Ms. Artima Suraphongchai, Managing Director, when the service was launched in September 2015. Later in October 2016, Mr. Thinakorn Thianprathum, former General Manager of Me Television Co., Ltd., became appointed as iflix Thailand’s Managing Director whilst Ms. Artima Suraphongchai focused more on marketing strategy319 to achieve the company’s goal of having more than 1 million subscribers in 2016, an increase from less than 500,000 subscribers in 2015.320

iflix offers movies, variety shows and series by contracting with 35 world-class content producers, such as Fox, Disney, Warner Bros., BBC and KBS, to name a few. The company also allocates as much as 20% of their content to children, as well as parental control parameters for parents to control the content access of their children.321 iflix charges 100 THB/month, which is roughly the same price they charge in Malaysia, for unlimited viewing without any conditions or additional fees. Videos can be downloaded for offline viewing 322 and there are various payment methods, such as credit card, money transfer and counter service. Initially, iflix did not provide Thai soundtracks, since it emphasised Thai and English subtitles. However, the company understands that content viewing differs from country to country, so iflix is planning to offer funds to freelance content producers to create local content in order to compete with other OTT TV and with free TV providers.



Figure 6-10: Business model and SWOT analysis of iflix




    1. Source: http://www. news plus .co.th/76990

    2. Source: http://th.postupnews.com/2015/02/Primetime-Entertainment-TV-Online-On-Demand.html

    HOOQ

HOOQ is the largest OTT TV provider in Asia. The company was funded by three world-class companies, namely SingTel, Warner Bros., and Sony Pictures, who own 65%, 17.5% and 17.5% of shares, respectively. This funding makes HOOQ the OTT TV provider with the most movies and series to offer in Asia (10,000 items in total). HOOQ’s service strategy is to ally with big telecommunication service providers in each market. 323

HOOQ started their service by entering a joint venture with AIS, the mobile telephone service provider with the largest customer base. HOOQ offers promotional packages for AIS Fibre customers, who can receive AIS Play signals on their AIS Playboxes, as well as applications on their AIS mobile devices. For 119 THB/month, viewers can watch Hollywood movies in Ultra HD 4K quality within six months after theatrical release, as well as watch blockbuster, international and Thai movies with Thai soundtracks and subtitles.324 The HOOQ mobile application also supports offline viewing and subscribers can choose to pay via many payment methods. HOOQ still plans to generate revenue from subscriptions and has no plan to generate additional revenue from advertising. The company understands that piracy is a very difficult problem to solve, but chooses to provide Exclusive Content to their subscribers for viewing convenience, ease of use, and lower fees in order to sustain their competitive advantage in the OTT TV market. 325



Figure 6-11: Business model and SWOT analysis of HOOQ




1
Source: http://www.mediabusinessasia.com/artide.php?id=1697 124 ที่มา: https:///po.itioningmag.com/61628

It can be concluded that the features of OTT TV providers who generate revenue from subscription fees are content variety, investment funds and online video viewing technology. The low service fees and the external factors that boost the consumer’s access to the internet, the competition to provide more interesting content will likely increase in severity. There is also competition from OTT TV providers that do not charge viewing fees at all, as well as from free TV providers and piracy.
Providers with Revenue from Advertising

  • LINE TV

LINE TV is a Thai OTT TV provider managed by the LINE Corporation in Japan with Mr. Ariya Banomyong as the Managing Director in Thailand.326 LINE TV started out as a messenger application for both individual and group chats, as well as for free domestic and international audio and video calls. LINE TV was launched in 2014, and as of 2015, it had more than 33 million users. LINE TV aims to be a portable private TV that values the culture of its users in each country.327

LINE TV is free of charge, but viewers have to watch commercial videos before or after watching actual content. These commercials are LINE TV's main source of income, which has been increasing so far.328 LINE TV provides various exclusive content329 from collaborations with famous local content makers in the form of co-productions,330 and in accordance with the behaviour of the viewers, who are 18–22 years old on average. LINE TV’s advantages are its huge customer base, the familiarity of its customers with LINE's other products, and exclusive content that is only provided by the company, whose collaboration with other content producers and emphasis on quality have contributed to LINE TV’s popularity.331 However, LINE TV’s revenue is only a part of LINE Thailand’s revenue and is still not its main source of revenue.332 The biggest competitor in the same field is YouTube, who is a larger provider in term of advertising revenue.



Figure 6-12: Business model and SWOT analysis of LINE TV




  • YouTube

YouTube is the OTT TV provider with the largest income from advertising. At present, YouTube is managed by Mr. Ben King, the head of business at Google Thailand Co., Ltd.333,333 In 2015, YouTube’s viewing and uploading rates in Thailand increased by 70% from the rates of the previous year. 334,334 This dramatic increase was due to increases in the access to high-speed internet on mobile devices, ease of access, and content variety, as well as due to the fact that YouTube is an additional access channel for free TV providers to distribute their content to viewers.

YouTube provides User Generated Content (UGC),335,335 which is different from LINE TV in that all content comes from professional content producers. Looking at the number of viewers and subscribers of YouTube Thailand, the three most popular Thai channels are in entertainment and music, namely content produced by GMM GRAMMY, Ginierock, and RsiamMusic, respectively. Even though YouTube is a large OTT TV provider and has been in this market for a long time, the emergence of more providers in 2015 forced YouTube to come up with strategies, such as better viewing experience, production of local content, and an office viewing function that allows viewers to download video clips or their favourite shows for up to 48 hours, to maintain market share.336,336



Figure 6-13: Business model and SWOT analysis of YouTube



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