In Asia’s increasingly crowded streaming space, Hong Kong telco and IPTV operator PCCW has carved out three OTT brands that are gaining traction across the region with more than 10 million subscribers. In each case, the success has been due to a strong focus on Asian-language rather than Hollywood content.
Among the three brands, premium service Viu TV has more than 12 million monthly active users across 16 territories in Asia and the Middle East, each watching an average of one and a half hours a day. Launched just 18 months ago, the service quickly became known as a leading destination for hugely popular Korean dramas, along with Chinese and Japanese shows, which are also starting to travel across the region.
As it has pushed into India, Southeast Asia and the Middle East, Viu is also building a library of content from these territories and has also stepped into producing original shows. Recent productions include Korean lifestyle show Beauty Views, hosted by popular actress Song Ji-hyo, and two drama series, Gehraiyaaan and Spotlight, with Bollywood filmmaker Vikram Bhatt.
The mobile-centric service is complemented by short-form content platform Vuclip, which PCCW acquired in 2015, and music streaming service MOOV, which so far has been rolled out in Hong Kong and Vietnam. In August 2017, PCCW tapped $110m in financing for the three brands from blue chip investors Hony Capital, Foxconn Ventures and Temasek.
Speaking to Screen in Hong Kong, Janice Lee, PCCW Media Group managing director, talked about the company’s OTT content strategy and how it deals with the challenges of expanding in emerging markets.
Why the focus on Asian content?
While Hollywood content will always be popular, when we launched Viu 18 months ago, we recognised there was a market gap in being much more Asia-centric. We looked at what consumers wanted and saw the need to get localised, subtitled content out there much faster, whether Korean or Japanese. There were no legal means for people to get this content, so it was almost like they had to look at other means if they wanted it quickly. Our first proposition was to localise and get that aggregated content out there as fast as possible.
How would you describe your original content strategy?
We started originals in markets like India, Indonesia and Hong Kong because this is content that can travel to other markets. We’re not just producing for single markets as this content has multiple market appeal.
Our Hong Kong content, which is mostly Cantonese but we’re also venturing into Mandarin, has appeal in markets like Singapore and Malaysia. We’ve also done four series in India already, not just in Hindi, but also Tamil and Telugu, and that content travels to Southeast Asia and the Middle East. We’ve found that 60% of our Indian viewers have watched our original series. We also held a women’s writers festival in Indonesia where we tested out scripts we can produce – and that content can also be shown in Malaysia. The idea stemmed from Korea where a lot of the highest-rating shows are written by women.
In fact the Koreans have demonstrated that language is not a barrier, because nobody speaks Korean outside of Korea, but that content travels everywhere. So as content producers it’s all about finding those great stories that can resonate and travel across different regions. For the aggregated content, it’s about speed. For the originals, it’s about differentiation.
Your footprint includes both affluent and emerging markets. How do you deal with issues like pricing and data costs across the region?
We price ourselves according to the market so we have both ad-supported free tiers and subscription tiers. In every market we operate in, digital advertising is growing 15-20% and video advertising is growing 30%.
For our subscription services, monthly packages range from $1.99 to $4.99, because we recognise that one price point does not work for everyone. The global streaming players are here in Asia, and they are formidable competitors, but while you can make yourself available in the market, to actually achieve penetration into that market takes a bit more thought.
Data cost is an issue so we deal with that in two ways. Mobile operators are also trying to push higher data plans, so they’re doing a lot to complement what we’re doing to lower the entry barriers. And secondly we have a download to view feature.
Are your viewers also watching movies on their mobile phones?
We only introduced movies in mid-August so it’s too early to say if they’re driving viewership. We decided we needed movies because we saw usage is long form and that there’s a demand for Korean films, as well as the TV shows, as the talent is crossing over. We’ve announced a deal with Korea’s CJ E&M and its [cable channel] tvN and in Hong Kong we have a joint venture movie channel, Now Baogu, with Huayi Brothers and Edko. We’ve been taking that as VOD content into some of the markets where that content has appeal.
How are you engaging with the mainland China market as you can’t operate as a platform there?
We look at mainland China as an opportunity from two angles – it already has such a robust OTT scene so we’re not trying to play in that role. But recently Tencent Video picked up two seasons of our [Chinese drama series] Margaret & David: Green Bean and we’ll do more like this as these platforms are looking for more content and mainland audiences have an appetite for content from outside. Through NowTV [PCCW’s pay-TV platform] we also co-produced a TV drama with Huace and will do more of that on a project-by-project basis.
How do you differentiate Viu in India, which now has dozens of OTT platforms?
We’d already been in India as Vuclip for more than eight years before we launched Viu. Actually the acquisition of Vuclip gave us a fast market rollout because it was already integrated with 30 telcos across the region. Given Asia is such a pre-paid market, we needed those micro payment collection points.
So we look at India this way – we monetise through both ad-supported and subscription services, but recently we’ve been seeing advertising pick up a lot. The way we differentiate our service is that, similar to our views on Hollywood content, everyone is chasing the Hindi content, so that’s driven up prices and its already quite over-exposed. We still do Hindi content, but we looked at where the opportunities lie and it was with the Tamil and Telugu content, which still has a huge market, and we supplement that with Viu originals.
What kind of content do you carry in the Middle East?
We have Arabic, Indian, some Korean and we’re finding content from the Philippines has appeal in the Middle East. We’re acquiring films and TV shows, but we’ve not started production yet. We aren’t going after the mainstream content that the TV stations are after. In the past two years, our Middle East business has grown two to three fold, so it’s a high growth market for us.
Do you think traditional pay-TV will eventually be replaced by streaming services?
Pay-TV will play a different role in different markets. In Hong Kong, where we have free TV, pay-TV and OTT offerings, we had to be vigilant about reinventing ourselves. We launched our OTT services even within our Now [pay-TV] brand where we have to keep serving our subscribers different kinds of content because viewership is becoming much more fragmented. We’ve also integrated Netflix into our set-top box. If we hadn’t innovated, then that is when pay-TV could become diminished, if we’d stayed as a traditional cable operator.
Outside Hong Kong we don’t have any baggage as we’re not a pay-TV operator. The question is whether people will still consume content on TV screens, because people are watching the same amount of content, but on different kinds of screens. These days we categorise our business less as pay-TV or OTT, and more as ad-supported or subscription services, because it will all converge eventually. At the end of the day, the screen is just a display mechanism.