Market Insight

Operators innovate with content and services in Southeast Asia

June 18, 2015

Jun Wen Woo Jun Wen Woo Senior Research Analyst, Online Video

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Southeast Asia is one of the fastest growing mobile content and services markets in the world. The growth of smartphones, 3G and 4G has resulted in the increase of subscribers’ demand for content, services and mobile data. For mobile operators, this provides more opportunities to partner with over the top (OTT) content and service providers and in some cases the chance to create their own content to drive adoption of data services.

In emerging markets, mobile operators earn less money from mobile data and still depend heavily on voice call and SMS for revenue. Mobile operator initiatives are therefore mostly aimed at driving data revenues and customer acquisition, rather than making money directly from content and services. Operators must be innovative if they are to create their own content or they will struggle when facing competition from OTT content and services. In most cases, operators prefer to partner rather than compete with leading OTT players. However, unlike in most Western and mature Asia-Pacific markets, emerging markets offer greater opportunity for mobile operators to provide content and services to their subscribers. As the mobile ecosystem is less established in these markets, mobile operators will play a more significant role in offering content and services. Nonetheless, they must be able to react quickly as the market is growing quickly and they need to be willing to leverage the expertise of partnerships to succeed.

The dominance of prepaid customers means operators must carefully target bundled content offers. Bundling or discounting access to premium content and services is a popular option for operators looking to drive subscriptions on to higher value data plans. However in markets that are predominantly prepaid, operators must also offer bundled or discounted services that can be used by prepaid subscribers. In the Southeast Asian market, prepaid takes up the majority of mobile subscriptions. 98.5% of the mobile subscribers in Indonesia were prepaid users in 2014. This has created challenges for mobile operators as most of the prepaid subscribers are price conscious and many have opted out of value added services.

Singapore is the most mature and the most advanced mobile content and services market amongst the five countries (Indonesia, Malaysia, Thailand and Vietnam) analysed in this report. It has the highest smartphone and 4G penetration and Singapore’s incumbent telecom operator SingTel has been very active pursuing investments and acquisitions to boost its role in providing content and services. SingTel’s investments in gaming and online video services, its acquisition of HungryGoWhere and the development of a list of own branded content services shows its innovation to enhance its portfolio in the content and services market. It also offers a range of digital services that aim to go beyond its telco operations including acquisitions to support its Amobee mobile advertising company and the recently launched Hooq online video services.

Indonesia, the country with the highest population which makes up the largest smartphone installed base in the region, is an attractive market for mobile operators and international OTT players. Indonesian mobile operators have already launched a number of innovative offers that will help them to provide attractive content and services. They have launched localized content and services, such as XL Tonton by XL Axiata, LangitMusik and Dunia Games by Telkomsel as well as providing ease of use by offering carrier billing for app stores like Google Play. Many operators choose to partner with content service providers to drive data revenue, instead of investing on developing own content and services to compete with existing OTT players.

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