Video markets in Asia, as in other parts of the world, are being swept by a wave of commercial and technological adjustment to the rise of internet-delivered video, frequently referred to as “OTT” television. Unfortunately, in most countries adjustment of regulatory policies by governments is way behind.
Asia’s cities, in particular, are rapidly being wired for broadband connectivity. In developing countries like Thailand, the Philippines, Indonesia and India a broad digital divide has opened, with major urban areas enjoying improving connectivity and the countryside still reliant on more traditional modes of video delivery to consumers.
That divide is a problem needing attention, but in the meantime urban populations, at least, are enjoying a “sweet spot” of improving broadband and adequate disposable income to pay for services consumers want. As a result, they have become the object of a “race to serve” on the part of video providers on every scale:
• Traditional pay-TV operators are upgrading their VOD offerings and broadening device access to include smartphones and tablets.
• At the same time, new entrants are seeking to construct the right content offerings at the right price to win over consumers. Major global providers (Netflix and Amazon Prime) entered Asia during 2016, and immediately were confronted with the need to adapt a global approach to Asian realities (including lower price points).
• A raft of regional Asian OTT platforms have expanded their offerings (including Viu TV, Hooq, IFlix, and Catchplay), alongside a plethora of locally-oriented offerings (like Hotstar, Dittotv and Voot in India, plus Toggle, Monomaxx, Doonee, USeeTV, MyK+, etc., in Southeast Asia.)
These market developments have significantly ratcheted up the pressure on governments, who are seeing more and more consumers migrate to lightly-regulated (or totally unregulated) online content supply, and away from the heavily-regulated traditional TV sectors. Governments are in a quandary – most do not wish to impede their citizens’ access to global information sources, but at the same time they see evident challenges to long-established policies for content acceptability, broadcaster licensing, taxation, advertising etc. At the extreme, “pirate” OTT services happily locate offshore, respect no rules and meet no obligations of any kind (not limited to copyright authorization), all the while reaping millions in subscription and/or advertising revenues. Local content industries are crying foul.
This very unbalanced competitive landscape causes deep damage to network operators, content creators at home and abroad, and investors in local economies. In general, it isn’t possible to subject online content supply to outdated “legacy” broadcasting rules, so alternative solutions have to be considered, including self-regulatory approaches (which can gain acceptance from legitimate OTT suppliers, if not the pirate scofflaws) and lightening the burdens on existing players.
So far, despite various governments in our region trumpeting a desire to update regulations to suit the digital age, only piecemeal measures have been adopted. Several “major policy reviews” in places like Australia, New Zealand and Singapore have produced thin gruel in the way of concrete adjustments. That said, to policymakers’ credit, there are now a few examples showing how existing rules can be lightened to allow licensed video providers to give consumers more of what they expect, in the internet age. South Korea relaxed rate regulation on cable TV operators so they could compete more fairly; Singapore eased its content censorship on VOD over pay-TV networks, to more closely match the approach used for online content suppliers; Vietnam allowed pay-TV providers to construct their own content offerings with different foreign channels instead of hewing to a single national content list.
So a start has been made, but there remains a huge work to be done; a vast thicket of taxes, licensing rules and interventionist regulation constrains licensed pay-TV providers throughout Asia and these burdens will have to be reduced to attract investments for modernizing network infrastructure and developing local content offerings. Even governments for whom this is not much of a current issue can see the future coming: more and better broadband is on the way for Asian consumers, and like viewers everywhere they will be looking to view their content online.
Unfortunately, ingrained habits die hard. Hong Kong’s regulators are wasting energy in a fight with major broadcasters over whether product placement in programming is too prominent; the TRAI in India is going the wrong way – actually seeking to extend and tighten rate regulation on digital content when supplied by traditional cable operators; Thailand – eager to justify the high bids for digital terrestrial licenses – levies burdensome “must carry” rules on cable and satellite operators; Indonesia’s content regulators are pushing protectionist “made in Indonesia” rules for ads on traditional TV platforms. (Who looks at prices charged, products touted, or ad origins for online content?)
A better approach is reliance on self-regulatory systems wherever possible. Many issues (e.g. product placement, ad origination, content guidelines) should be the object of clear rules negotiated by industry bodies which can be applied by the respective players to online and offline networks. The ad industry is very accomplished at doing this; in the UK, for example, advertising self-regulation is being extended to online platforms as well as traditional ones.
Rarely is the scope of future challenges so clear, as it is for Asian governments looking at the video industry. It is time to move to meet those challenges in a pragmatic and realistic way.