Sixty percent of broadband users are in emerging markets, where analysts predict VoD usage will grow fivefold in the next three years, delivering $18.8 billion in revenue, according to Janice Lee, managing director, PCCW Media. This, coupled with PCCW's success with its IPTV service, nowTV, and a recognition that consumers increasingly wanted their content on multiple devices, led PCCW Ltd. (NYSE: PCW; Hong Kong: 0008) to launch its OTT streaming service, Viu.
Lee discussed her thoughts on launching Viu, the right business model and partnership strategy for it, and leveraging synergies with nowTV in the first part of this exclusive interview with Telco Transformation. (See PCCW's Lee Discusses OTT Service Viu.)
In part II, she talks about some of the challenges associated with launching an OTT service in emerging markets, important features and the impact of Netflix's entry into Asia.
Telco Transformation: What do you see as the major success factors for such a service?
Janice Lee: Emerging markets certainly possess several unique challenges, and we have had to address them.
The pervasiveness of piracy is obviously a big one, partially driven by the relative absence of strict piracy laws and insufficient IP rights education. Torrenting is particularly rampant in emerging Asian markets, with torrent websites often emerging among the top in traffic rankings.
But Viu was launched using a Freemium model which is free to users, and the local language subtitles are provided very quickly, so it just becomes natural for viewers to view that content on the Viu OTT platform. Also, from a QoE point of view, it is a smooth and free viewing experience rather than what they might have with torrents.
We think the Freemium model is best suited to help convert pirate site users to a legal model, and the key to making it work is to ensure quick delivery of premium content and some select content is offered with local language subtitles, good video streaming quality and the right set of features and functions integrated into the app.
We do work with content partners to report pirated content on video streaming sites but it's not easy to tackle the immense upload of illegal content around the world.
Another challenge is content aggregation. Access to truly differentiated content is the key to success in this market. It is not easy to strike quality content partnerships, as incumbent cable and satellite players often already own premium local content, or have exclusive distribution rights to such content.
As an OTT service with users in multiple countries, we have to get the balance right with content: we need both content diversity and localization. Viu has done research into what online viewers want for drama, and Korean content is still the killer across the region. So we have signed up the top four Korean broadcasters. But conversely, every market has its own content needs -- for example, Bollywood content in India, HK drama in Malaysia (where Cantonese drama is very popular with Chinese viewers) and Indonesian content in Indonesia.
Self-produced content is another opportunity, for example What The Duck, a hockey program in India, is very popular, and K1 News, a Korean entertainment news program in Hong Kong, is rated among the top-five programs.
We will also be partnering with the Korean entertainment news giant Dispatch, to add to the Korean entertainment news on Viu across the region.
We have those relationships with broadcasters and the production capabilities for curated content, which gives us an advantage over other OTT video entrants who could be left with aggregating second-tier content which is not compelling to many viewers.
TT: Are there specific features that you have integrated and added to the user experience?
JL: We have developed local language meta tag search, so users can look for programming in their own language. And we have developed and patented some unique adaptive bit rate technology from Vuclip, to facilitate streaming for markets that have infrastructural challenges, with low bandwidth. This allows us to offer a smoother video experience to our customers even in emerging markets.
TT: How has the launch of Netflix affected your strategy?
JL: We regard Netflix as one of our competitors. But the fact that they are in our market points to the vibrancy and potential of OTT services, and it does help convince telcos and analysts about the growing importance OTT plays in the daily lifestyle of consumers.
We continue to progressively roll out our service as we believe in the USP of Viu, with our unique content along with fast local language versions, curated content, our ability to leapfrog bandwidth challenge in emerging markets with our patented adaptive streaming technology, and creative marketing, pricing strategies and bundling with our telco partners.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation