The growing penetration of over-the-top channels on Web is turning out to be big craze worldwide, especially in Asia Pacific. A report released by Hong Kong-based consulting firm Media Partners Asia, says online video streaming industry is set to grow rapidly in Asia in the next five years.

Online video revenue, comprising net ad spend and subscription fees, will grow at an 18 per cent CAGR across Asia Pacific between 2018 and 2023, climbing from the current $21 billion to $48 billion by 2023.

The analysis has covered 12 markets in Asia Pacific, including Australia, India, Japan, Korea, Hong Kong, Taiwan, and six key markets in Southeast Asia, with a focus on consumer and advertiser spend, content costs and market share across key clusters.

China will source over 60 per cent of revenue by 2023, comprising net ad spend and subscription fees. The country records an impressive growth in the number of video subscriptions per year. According to the report, the subscription fee on online video platforms has risen from less than $850 million in 2015 to a projected $5 billion in 2018.

The other major markets that will drive industry’s growth are Japan, Australia, India, Korea and Taiwan.

Commenting on the analysis of the report, Vivek Couto, the executive director of Media Partners Asia, says, “Online video monetization is starting to scale, supported by rising investment in premium entertainment and sports as well as the growth of broadband and digital payments. Strong digital ecosystems are emerging, especially in China while telecommunication companies are also becoming important aggregators of video services in markets such as Australia, India and Southeast Asia.”

Hike in Subscription Fees

The report highlights that online video subscription fees are growing rapidly from a very low base, up 41 per cent year-on-year in 2017 to reach $1.7 billion. It estimates that it will grow at a 12 per cent CAGR from 2018 to more than $4 billion by 2023. Last year, Netflix hiked its subscription prices for the first time in two years. The company’s most popular plan in the US, which allows customers to stream titles on two devices with a single account, increased by $1 to $10.99 a month.The company is planning to create a new plan in the US, the details of which are yet to be announced. In India, the base plan starts from Rs 500 ($8.00) for a single operator.

The report says that after China, Australia and Japan, India is to be the Asia Pacific’s fourth-largest online video subscription opportunity, by 2023. The report adds that the growth of payment infrastructure as well as investment in sports rights, local movies, and series, are driving the growth online video industry in India.

Online video subscription fees in Southeast Asia (including Hong Kong) are relatively low, at a projected $267 million in 2018. This could grow to $724 million by 2023, driven by greater momentum in Hong Kong, Indonesia and the Philippines.

According to the study, Japan and Australia will remain the leading markets for online video, contributing over 55 per cent to Asia Pacific revenue excluding China in 2023. The third-largest market will be India, which will also be the fastest growing with a 26 per cent CAGR over 2018-23. Southeast Asia will be the second-fastest, with a 21 per cent CAGR over the same period.