According to the latest edition of Video Content Dynamics in Asia from analyst firm Media Partners Asia (MPA).
This report tracks video content consumption, content investment and production costs in seven key Asian markets: India, Indonesia, South Korea, Malaysia, Philippines, Thailand and Vietnam. . Verticals include Free-to-air (FTA), Pay-TV, Video and Online Film with analysis of key players and production value chain.
Video industry content investment jumped around 21% to $10.4 billion in 2021 as major operators rebuilt content pipelines after initial waves of depleted programming inventories Covid in 2020. All content verticals except movie theaters delivered strong gains. Film costs were down 2% as pandemic-related restrictions delayed releases in many markets. Korea and India were the largest content investment markets with a combined total of $7.4 billion; the other markets reached 400 to 900 million dollars each. Pay-TV was the largest vertical with 46% of the industry’s total content investment, reflecting the well-developed pay-TV markets in India and Korea. OTT content was the fastest growing vertical, growing 83% year-on-year to become the second largest vertical with 26% of industry investment. Korea and India generated particularly strong OTT investment growth, while Thailand and Indonesia were strong contributors. FTA ranked third with 25 percent of the total.
2022 is expected to generate further significant gains in content investment, up an expected 15% to $12.0 billion. India and Korea will drive most of the increase, but all markets and verticals are expected to grow. Online video will see the biggest growth – by almost $700 million – while cinema will see the fastest growth – by almost 140% as theaters show new films.
“Inflation, particularly with online originals, is clearly a factor driving up content costs,” notes MPA Vice President Stephen Laslocky. “Online video operators, broadcasters and producers need to see that higher budgets translate into more premium viewing experiences; otherwise, cost increases will not be sustainable. Internationally successful programs remain the Holy Grail content license which so far only Korean dramas and some anime as well as US and UK content have achieved sustainably. Some Thai content has been successful outside of Thailand. Quality production values, solid youth-focused storylines online will be the building blocks of future investment strategies.
“The expansion of the online video sector has been a boon for independent producers. Profit margins stabilized at 10% or more in much of the region. More can be done to support independent producers, including additional compensation for original concepts, commensurate rewards for breakout successes, and expanded use of pipeline deals (which allows producers to recover overhead costs from more reliably). In exchange, producers must be transparent with production costs. Commissioners must be willing and able to verify costs.
TV ratings continue to decline in measured markets. The declines reflect structural changes as viewers shift to online video. Going forward, online viewership will further erode television ratings. Online video growth has continued through 2022. Video consumption remains heavily skewed towards UGC platforms, with their share of video consumed ranging from 82% in Korea to 95% in Vietnam. While YouTube remains the leader, TikTok is driving growth in Southeast Asia. Premium video, both AVoD and SVoD, captures the majority of the balance.
The ways in which television and online video are consumed diverge. On television, drama is usually the most-watched genre while variety, including reality, often ranks second. Movies, kids, and news can be big ratings drivers, and sports can over-index with top-rated TV programming. The number of viewers of certain key television genres is shifting to YouTube, where they generate significant classifieds consumption.
Meanwhile, with premium online video, about 90% of consumption is series, the bulk of which is drama, while movies generate about 10% of viewership. Dramas represent almost all major titles. Outside of India, variety consumption is largely driven by acquired Korean programming.
Box office revenue, admissions and releases all performed poorly in 2021. The silver lining is that lagging tent poles performed well in 2022. Some markets, such as India and Indonesia, are expected to recover completely. In other markets, a return to pre-covid status could take until 2023. Elsewhere, the outlook could be marginally but permanently damaged.