The next key battlefield of domestic streaming media: Southeast Asia


Sina science and technology news on the afternoon of July 27, Beijing time news, according to the report of Peng Bo, with streaming media constantly changing the global media pattern, most of the competition takes place among Western streaming media giants, competing for large video markets in the United States, Europe, Latin America and India. But now Tencent and iqiyi, China’s two largest online video companies, are aggressively expanding into Southeast Asia, confronting their Western counterparts Netflix and Disney for the first time.
In early June, iqiyi, which owns a controlling stake in Baidu, poached Netflix’s kuek Yu Chuan. Guo Youquan used to be Netflix’s main liaison with the government in Southeast Asia. A few weeks later, Tencent acquired iflix, a video service company in Southeast Asia. Both companies have recently stepped up efforts to produce and purchase local content licenses, while increasing the number of employees in Southeast Asian markets such as Thailand, Indonesia and the Philippines.
Top streaming media platform broadcast minutes in the first quarter of 2020
For Tencent video and iqiyi, increasing investment in the Southeast Asian market also marks the most significant expansion of these companies outside China. Neither Netflix nor Disneyland + operates in Southeast Asia, where countries have strict regulations governing foreign media ownership. Therefore, the Southeast Asian market will become the first real battlefield for Chinese and American video companies to control global media.
Tencent declined to comment on the report, but said the iflix acquisition was part of its plan to expand its overseas video service wetv in Southeast Asia. In the statement, iqiyi pointed out that the company is committed to “serve users in different markets”.
China’s streaming media service has moved quickly before any company has a firm foothold in Southeast Asia. Netflix, the world’s leading streaming service, has yet to get a million subscribers in any Southeast Asian country, according to media partners Asia, a consultancy. Disney, Netflix’s biggest U.S. competitor, plans to launch Disney + in Southeast Asia by the end of the year. “Chinese companies see gaps in the market,” said Vivek Couto, head of media partners Asia. “It’s a neutral land.”
Even so, Southeast Asia is a tough bone for any global entertainment company. With the exception of countries like Singapore, which are slightly richer, most countries in the region have an annual per capita income of less than $10000. Indonesia has the largest population in the region, and then it has hundreds of different languages, and the censorship system adopted by the Indonesian government is arguably the most stringent. Before Guo Youquan left Netflix, his main job was to help Netflix deal with diplomatic problems. After joining iqiyi, his work is still similar to the previous one. Iqiyi started its overseas expansion for the first time in June 2019.
The experience of iflix is the best proof of this difficulty. In 2015, entrepreneurs mark Britt and Patrick grove founded the company to provide second round screening services and local program services for Hollywood films at a monthly cost of about $3, which is much cheaper than Netflix. They believe that, with its low-cost strategy and knowledge of the region, iflix can win users first when Netflix is struggling.
In the years that followed, as Netflix tried to expand in Southeast Asia, Netflix encountered difficulties, as the iflix co-founder expected. Netflix is really expensive for many potential users in the region, and it doesn’t offer many local subtitles or produce original plays for the region. Netflix also failed to reach a partnership agreement with telkomsel, Indonesia’s largest telecommunications company. As a result, over the past four years, millions of users have had to use virtual private networks (VPNs) to bypass local restrictions to access Netflix. (this year, Netflix and telkomsel just reached an agreement.) In contrast, iflix has reached an agreement with telkomsel to allow local users legal access to iflix.
Even so, iflix has not received much attention. Persuading people to pay for streaming video services is a challenge, even if the price is low, in a region where traditional pay TV costs little and YouTube is already popular. Tencent’s acquisition of iflix “is not really a real deal,” kuto said. “It’s more like a bad asset deal.”
However, there are also signs that the environment for streaming media services in the Southeast Asian market is improving. Hong Kong Telecom giant PCCW’s VIU has achieved little in terms of hybrid mode. The model provides free programs with advertising, but users can also choose to pay to watch all programs without ads.
VIU first obtained a number of loyal users by licensing programs in South Korea. South Korean programs are especially popular in Asia. Janice Lee, CEO of VIU, says that in most of the markets where VIU operates, VIU’s subscription numbers are growing at a rate of 50-60 per cent a year, with subscription fees accounting for half of the company’s total sales. In Indonesia, people spend more time watching videos on VIU than on Netflix or iflix. Janice Lee believes that original series such as Thai drama “bubble tea love” and Indonesia’s version of “the lie of a beautiful girl” have contributed a lot, “very good performance,” she said.

Recently, Netflix has also tried to launch a mobile only subscription scheme, but it is cheaper and produces more local content to attract more users. Currently, the company has about 800000 subscribers in the Philippines (leading the market) and nearly 600000 subscribers in Thailand (second only to the local service line TV). “Netflix has entered the game, especially in the past six months,” kuto said. “In many markets, Netflix usage has grown dramatically.”
In many Southeast Asian countries, Chinese technology has already penetrated into people’s daily life. Chinese manufacturers have dominated the smartphone market, and the byte skipping short video app tiktok is also very common. But video services in China have not yet reached a similar level of popularity. Unlike tiktok, which relies solely on user generated content, iqiyi and Tencent mainly provide TV programs and movies. Netflix and Disney have huge amounts of content from Europe and America. In order to compete with the two companies, Chinese companies are likely to need to invest heavily in local programs and buy head shows in South Korea and China.
At present, most of iqiyi’s programs are based on Mandarin. The company is building an original production team in Thailand and is working with leading media and telecommunications companies in Malaysia and Myanmar. Viewers can now choose subtitles in English, Thai, Malay, Indonesian and Vietnamese.
According to past history, Chinese streaming media companies have yet to expand overseas. Tencent, iqiyi and Alibaba’s Youku still focus on the Chinese market and compete with each other for the launch of the next hit drama. According to Reuters, Tencent had intended to consolidate its position in the market by acquiring iqiyi, which lost $1.5 billion in 2019.
Analysts said that in recent years, the use of entertainment for soft export to expand China’s global influence has gradually become mainstream recognition. “China believes that their country can not only provide an example of economic development, but also be a cultural and political leader,” said gavekal fathom China, a research firm focusing on Chinese industry (tour)