In Indonesia, emerging trends, such as subscription-based media and over-the-top (OTT) video are becoming an integral part of the overall media scene. Over-the-top video is films, tv, and other media delivered to your screen through the internet, rather than through terrestrial TV delivery services, bypassing the cable and satellite companies that traditionally act as content controllers. 

With traditional cable and satellite services, a controller selects the programmes for each timeslot. However, most OTT services are synonymous with subscription-based video-on-demand (SVoD), which allows users to choose to watch a wide selection of film and TV content at any time, in exchange for a monthly or annual fee. 

It also differs from pay-per-view services, where the user pays for only what they want to watch, each time they watch it. OTT gives consumers more control, making its rise unsurprising in a world of personalised, digital consumption.

Smartphones and OTT

Recently, Allied Market Research published a report breaking down the OTT industry by examining the device types, content, revenue model, and other aspects. It revealed that, in 2018, the OTT market in Indonesia was valued at $213 million USD, and is likely to reach $1.5 billion USD in the next six years, with a compound annual growth rate (CAGR) of 27.7% from 2019 to 2026. 

Digital trends and movement is changing Southeast Asia. We look at some of these changes and what it means.

This rise in OTT follows the growing penetration of smartphones in Indonesia, which increasingly are compatible with OTT apps; some even come with such apps pre-installed. Indeed, the report indicated that smartphones dominated the OTT market share in 2018, and the authors do not expect this to change over the next few years. Mobile broadband coverage is growing, and the usage of traditional TV is waning in favour of subscription-based media and video-on-demand. 

A report by Dataxis estimates that the number of subscription video-on-demand accounts in Southeast Asia will grow from 4 million in 2019 to 6.2 million by 2022. They also estimate that, by that year, the SVOD market will be worth $390 million USD. This data supports the idea that smartphones are a key ingredient in the rise of OTT services, noting that only 29% of households have fixed broadband, whereas 45% of individuals have mobile subscriptions. 

Challenges and triumphs of OTT in Indonesia

Kagan, S&P Global Market Intelligence’s research group, reported that OTT video subscriptions penetrated around 36.4% of broadband-enabled households in Indonesia in 2018, and they estimate a CAGR of 16.4% over the next five years. 

It may seem surprising at first glance that subscription OTT video is thriving in Indonesia, as the country suffers from limited broadband infrastructure. Subscription services also face fierce competition with illegal online streaming services and old-fashioned pirated TV boxes. In 2018, an Asia Video Industry Association’s Coalition Against Piracy commissioned survey, conducted by YouGov, reported that 22% of Indonesian consumers use so-called Illicit Streaming Devices (ISDs) to download and access an endless supply of VOD content and pirated TV channels. This cut deeply into the demand for paid OTT services. 

However, Indonesia is a highly significant market for video streaming service providers and one that is starting to become more competitive. Netflix, iFlix, Hooq and HBO Go all offer video-on-demand services in the country. They are proving popular by providing local television series, Indonesian films, dubbed Western movies, stand-up comedy, and several other genres.

Evolving partnerships 

Further, the Kagan report suggests that iFlix considers Indonesia one of its most important markets, and will continue to strengthen its presence in the country by maintaining local partnerships. For example, iFlix, recently purchased by Chinese tech giants, Tencent has an ongoing collaboration with major local telco Indosat Ooredoo, and the Indonesian media company MNC has also invested in iFlix. It has focussed on adding local content, in collaboration with local production houses, a key factor for consumers when selecting an SVOD service (along with pricing). 

The report estimates that consumers spend over half of their viewing minutes watching local programming. In 2019 iFlix collaborated with production house Starvision, bringing the number of popular titles available on the service up to 93. Because of this, regional players such as iFlix maintain their dominance over global players. 

In Indonesia, emerging trends of subscription-based media and OTT video, bring a clear indicator of a changing industry, as traditional TV and film platforms lose out to instant, on-demand services offering a vast variety of shows sent straight to the consumer’s device. 

As the country strives to bridge the digital gap, the increased use of smartphones and internet-ready devices will continue to push the growth of digital media in Indonesia with consumers taking more control of their viewing. The new style of media and video providers are sure to capitalise on this trend and continue to thrive in the coming years.