This summer, Baidu’s streaming service iQiyi announced its plan to expand towards new markets in Asia-Pacific. Meanwhile, in June, Tencent acquired the Malaysian service iFlix. The latter has been struggling to generate profit and accumulated losses over the past few years, opening an opportunity for the Chinese media group to acquire its significant content library. Tencent is also operating its own service WeTV in the region.
The Southeast Asian streaming industry has seen considerable changes this last year as Chinese streaming services have been taking over a large part of viewers and investing in local content significantly. Chinese media groups are capitalizing on the potential of a huge and still untapped market. Only 3.6% of Southeast Asian households were paying a subscription for legal streaming services as of end 2019. At Q1 2020, US based platforms had the largest share of paying subscribers.
But AVOD is by far the leading access for video streaming in the region. The advertising based free model is difficult to sustain: some actors that have been on the market for several years are still struggling to generate profit, as Hooq’s shut down and iFlix’ acquisition showed us last quarter. Chinese OTT in the region might be the only actors who can afford to keep AVOD as their main model to reach a large number of viewers while still investing in valuable content without making sufficient operating margins in the next few years.