Faster internet speeds to spur Asia Pacific OTT video market

The Asia Pacific OTT (over-the-top content) video market is set to grow due to a number of market trends.

Faster bandwidth, growing 4G coverage, ever-increasing smartphone and pay-TV penetration, improved payment options, falling data tariffs and rising per capita income are collectively spurring the market.

This is according to GlobalData's new report entitled OTT Video in Asia-Pacific: Localized content and business models are key while mobile will offer opportunity for future video growth.

Overall, mobile is an important platform for the growth of OTT video service market.

Specifically, the OTT video market in Asia Pacific is expected to witness further traction due to higher investment in 4G networks across the region, says GlobalData.

Expansion of LTE and the introduction of 5G will also give a further boost to the market, as the OTT players will be able to provide enhanced user experience in terms of HD/UHD, linear and AR/VR content going forward.

Unlike developed economies, GlobalData states that lower income Asian countries don't have fast internet speeds, primarily due to underdeveloped broadband infrastructure.

And this situation poses a major hurdle for such countries in adopting OTT.

But, this challenge can be addressed as the number of 4G users in the region grows.

The share of 4G mobile connections was pegged at 26.2% of the region's total at the end of 2016, which is expected to surge to 53.9% by 2022, offering ample opportunities for OTT players in the years to come.

GlobalData analyst Macolm Rogers says, "OTT players can expect rosy days ahead in APAC region. Apart from expansion of 4G, the availability of low priced smartphones and sizable population of internet users in the region will also support the growth of OTT video market.

International players like Netflix and Amazon have already entered the APAC region to tap the market, challenging local players such as Viu, Hotstar and Iflix.

These local companies are looking for other ways to expand their user base by combining international content with their local and vernacular content for low priced monthly subscription plans.

Moveover, in order to beat the competition, some OTT providers have started focusing on providing enhanced user experience in terms of HD/UHD, linear and AR/VR content, which is also further supported by expanding 4G coverage.

In emerging Asian countries, OTT players are trying to come up with innovative solutions, including the option to download content to address the poor broadband connectivity.

They are also using suitable video streaming technology to optimise streaming based on the bandwidth availability and reduce buffering in lower internet speed. Additionally, the abundance of free content on the Internet combined with low income levels are the major challenges for the monetisation of OTT video in all the markets.

Most OTT players have adopted a hybrid model of AVoD and SVoD/TVoD, where AVoD is aimed at attracting users while SVoD drives monetisation.

Some OTT players are even partnering with telcos to offer both benefits, which are believed to help OTT players in addressing billing challenges.

Rogers adds, "Consumers can expect premium content at competitive prices from OTT players as the competition intensifies. The premium content will be on offer along with the vernacular content.