Asia Online Video Growing as Free TV Revenues Move Into Secular Decline

Online video is taking up the role of growth engine for the Asia Pacific video industry as free-TV in the region moves into long-term decline, says a new report. The video sector is forecast to remain robust this year, but recession could deal a blow to sector performance in 2023.

Video sector revenues – defined as subscription fees and advertising generated by free TV, pay-TV and online video platforms – in 14 Asia-Pacific markets are forecast to will grow by 6.4% in the current year to reach $143 billion, according to Media Partners Asia.

With macro-economic woes likely to hit 2023, compound average growth will slow to at 3.5% in the following period to 2027 and total revenues reach $169 billion.

The research was published on the eve of the APOS Summit, hosted by Media Partners Asia, in Singapore, running September 27-29, 2022. The summit is scheduled to feature speakers including Prime Video’s Kelly Day, Candle Media’s Kevin Mayer, Netflix’s Kim Minyoung, Warner Bros. Discovery’s Gerhart Zeiler and Studio Dragon’s Park Hyun.

Behind the headline number, Media Partners Asia forecasts sharply differing performances. Excluding China, where free-TV has longer legs, Asia-Pacific video revenues grow at a forecast 4% compound average to $98.2 billion, with online video leading at 10.2%, pay-TV at 1.8% growth and free TV contracting by 2.2%.

China, Japan and India are predicted to remain the three largest video markets by revenue by 2027, followed by South Korea and Australia. Indonesia will overtake Taiwan to occupy sixth place by 2027, Media Partners Asia forecasts. It also calculates that these six markets will account for more than 90% of APAC video revenues by 2027. China alone will contribute 42% of the total.

The fastest growth rates over the next five years are expected to be Indonesia (9.0% compound average), India (8.6%), Philippines (7.7%), Thailand (5.4%) and South Korea (4.6%).

Premium streaming companies’ revenues grew by over 20% on average during the pandemic years of 2020 and 2021, but growth has decelerated to 10% this year and is expected at 11% in 2023. The premium online sector will remain loss making at an earnings before interest, taxation and depreciation, but some are expected to either reach breakeven or start generating profits this year, including Hulu Japan, Netflix APAC, Stan and Viu. “Netflix’s margins should start to materially grow from next year onwards,” said the report.

“Free-TV is by and large in secular decline. Profit will continue to contract, but demand for local TV content online will continue to grow, and local players will benefit from premium AVOD, an incrementally high margin business. Last mile bundled home broadband and video remains a high margin business in scale markets though the full video aggregation opportunity has yet to be unlocked,” said Vivek Couto, Media Partners Asia executive director.

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