The coronavirus-led lockdowns and shelter-in-place guidelines have compelled people to spend time indoors, which lead to significant spike in media consumption.
Amid these difficult times when most businesses are struggling to maintain operations, streaming services like Netflix NFLX, Amazon’s AMZN prime video and Disney’s DIS Disney+ are witnessing growth in subscriber base and traffic.
To put it differently, the pandemic has given a major boost to the already growing streaming industry. Per Grand View Research data, the video streaming market is expected to reach $184.2 billion at a CAGR of 20.4% between 2020 and 2027.
Asia-Pacific Takes Centre Stage
Amid the growing popularity of video streaming, the Asia-Pacific (“APAC”) region has emerged as the market with the strongest growth potential. Notably, the subscription video-on-demand (SVOD) services subscriber base is expected to reach 417 million by 2025 in APAC region, per a Research and Markets report.
Rising adoption of smartphones and the easy availability of high-speed 4G and LTE services in the region have led to a massive rise in the consumption of streaming content. India and China with their huge Internet user base deserves especial mention in this regard.
Moreover, the availability of 5G is expected to further boost the demand for streaming, especially in South Korea, China and Singapore. .
This has led to a race among the key streaming players to increase their footprint in the APAC region. Moreover, competition in the space has further intensified with Tencent’s TCEHY recent acquisition of Malaysian streaming platform –– iflix.
The China-based technology giant aims to expand the presence of its own platform WeTV with this buyout. Markedly, iflix has an active user base of 25 million across 13 countries that include Malaysia, Indonesia, Bangladesh and Thailand. Moreover, iflix has a vast library of curated and original content, which will be a valuable addition to WeTV’s portfolio.
These factors are expected to aid Tencent, which currently sports a Zacks Rank #1 (Strong Buy), to strengthen presence in the highly prospective APAC video streaming space. You can see the complete list of today’s Zacks #1 Rank stocks here.
Competition Intensifying in Asia-Pacific
In fact, all major streaming platforms are making huge investments to capture the potential of APAC region.
Netflix, which carries a Zack Rank #3 (Hold), has significantly expanded its portfolio to include more regional content from Korea, Japan and India. Netflix’s regional content includes hit Korean shows like Kingdom and Itaewon Class as well as shows like Sacred Games and Delhi Crime, which witnessed immense popularity in India.
Moreover, the company’s strategy of offering low-priced mobile plans in India Indonesia, Malaysia, Philippines and Thailand is expected to expand the subscriber base in APAC.. Nevertheless, the company’s absence in China may hurt overall growth prospects in the region.
Meanwhile, Disney is hot on Netflix’s heels with successful roll out of Disney+ in the APAC region. In April, the platform launched the service in India, with most of the content available in regional languages like English, Hindi, Tamil, and Telugu. It is also expected to be launched in Singapore in the near future.
However, Disney+ is also unlikely to be allowed entry into the China mainland anytime soon. Notably, Disney currently has a Zacks Rank #5 (Strong Sell).
Asian streaming platforms aren’t far behind in the streaming race either. Notably, China-based company iQIYI (IQ), another Zacks Rank #3 stock, recently hired ex Netflix executive, Kuek Yu-Chuang, as VP of international business to oversee its expansion in the APAC region. In January, iQiyi formed a strategic partnership with Malaysian satellite television operator Astro to launch its business in the country.
iQIYI has an edge over its competitors due to huge subscriber base in China, which is one of the biggest consumer markets in the world. The company had 118.9 million total subscribers (99.2% of these were paying subscribers) as of the end of first-quarter 2020, up 23% year over year. Thus, its expanding presence into the APAC market could seriously disrupt the streaming space for leaders like Netflix and Disney+.
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