Market Insight

HOOQ raised additional USD25 million from its shareholders

January 19, 2017

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

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Singtel, Sony Pictures and Warner Bros have invested additional USD25 million in HOOQ, a subscription based online video service. Share distribution between the companies will remain the same following the deal. Singtel owns 65 percent, while the remaining shares are split equally between Sony’s AXN and Warner Bros.

HOOQ first launched its service in Philippines, Thailand and India in the first half of 2015, followed by Indonesia and Singapore in 2016. These are the countries where Singtel has its regional associates in. HOOQ has had a competitive advantage since its launch as it is backed by two international entertainment giants. At launch, HOOQ offered a catalogue of over 10,000 movies and TV series including titles from its shareholders Sony Pictures Television and Warner Bros. Entertainment.

Our analysis:

To attract subscribers in the Southeast Asia, HOOQ has adopted partnership with mobile operators and localisation strategy, such as providing local subtitles, as well as enabling download feature for offline viewing. With the latest round of funding, HOOQ will be able to further expand its business in terms of scale and improve its platform for better user experience as well as increase its content catalogue.

Sony Pictures and Warner Bros continue to strengthen their footsteps in the Asia market. In March 2016, HOOQ’s rival, iflix also received USD45 million funding from Sky, a UK-based media company. These indicate that online video market in Asia continues to attract investor interest.

Original content is the key to success

In June 2016, HOOQ premiered its first original content in Philippines, mini-series On the Job, which was co-produced with Reality Entertainment and Globe Studios. The six episodes mini-series was shown exclusively via HOOQ service. HOOQ has also talked about its plan to invest USD2 million on producing Indian original content. It was a strategic move for HOOQ to launch its original content to attract first time users in the Southeast Asian market, where most of the viewer still watching free and pirated content. HOOQ is able to use this round of funding to increase its investment on original contents as this is an important move to differentiate itself from its competitors.

The success story of similar approach was by Netflix when it first introduced House of Cards in 2013. Netflix reported to have a significant increase of new subscribers after its first original series was release. In China, iQiyi also reported to have an explosive growth in its paid subscription when The Lost Tomb was released online in June 2015.

iflix is a strong competitor in the region

Founded by Catcha Group, iflix has been rolled out more aggressively in terms of geographical coverage. The service is currently available in Malaysia, the Philippines, Thailand, Indonesia, Sri Lanka, Brunei, the Maldives and, recently, Pakistan. The Malaysia-based company also aims to expand to the Middle East and Africa. Content wise, iflix disclosed its plan to launch original content in 2016. iflix announced in November 2016 that it has achieved over five million subscribers in all countries it operates at that time. HOOQ revealed it has reached one million subscribers in the Philippines in October 2016. However, IHS understands that these numbers represent the number of registered users instead of paying subscriptions.

Online video market in Southeast Asia will grow, but slowly

The online streaming service market in Southeast Asia is getting more competitive after HOOQ and iflix launch. International players like Netflix and Amazon also enter the market in their respective global launches in 2016. Other regional players are Taiwan-based Catchplay by Catchplay Media and Hong Kong-based Viu by PCCW Media. Generally, the paid online video market in the region is growing even though the total size of the market is still insignificant. The market growth is still limited by low acceptance of paying for content concept, piracy issue in the region, as well as relatively slow or unreliable internet connection in certain territories.

South East Asia
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