Growth of premium video services in Southeast Asia accelerated in the second half of 2022, to reach 48.4 million paid subscriptions, according to a new report. But the same analysis sees growth slowing and costs accelerating.

The latest report from Media Partners Asia, “SEA Online Video Consumer Insights & Analytics” shows 48.4 million paid online video subscriptions at the end of 2022 in Indonesia, Malaysia, the Philippines, Singapore and Thailand. The full year saw 11.8 million net new customers, with 7.3 million of that total coming in the second half, including 4.6 million in the fourth quarter. Indonesia accounted for half of the increase.

The current year is likely to be tougher. “2023 is likely to be heavily focused on customer retention, churn management and implementing price increases,” said Vivek Couto, executive director at MPA. “Key players will continue to invest in localization and the strategic marketing of premium Korean, U.S. and sports content, but against the background and investor mantra of capital efficiency.”

Both [multi-territory operator] Viu and [Indonesia’s] Vidio “have built robust subscriber acquisition funnels through a freemium model, with growing focus on paid content and subscribers,” and attracted 51% of net news subscriptions, says the report. Indonesian and Thailand remain Southeast Asia’s two largest SVOD markets, accounting for 75% of SVOD subscriptions in Southeast Asia. Disney, Viu and Netflix have 52% of total SVOD subscriptions in Southeast Asia.

Viu’s three to five exclusive Korean dramas per quarter drove subscriber growth, while subtitled, day-and-date variety and reality content continue to provide meaningful competitive differentiation against peers. Local original content efforts have been impactful in retaining subscribers.

Disney’s fourth quarter growth was driven by its mid-November 2022 launch in the Philippines, adding close to half a million new subscribers by the end of 2022. Disney+ Philippines has leveraged strong local affinity for Disney’s core franchises, driving robust adoption.

Netflix’s continued subscriber growth and monetization leadership remains anchored to a cadence of premium U.S. series, movies and Korean dramas, along with local originals (in Thailand, Indonesia) and anime.

Indonesia is the strongest market in the region for Prime Video, where its momentum is driven by marketing around Korean and local titles.

U.S. content accounted for 32% of paid viewing time, ahead of Korean content at 25%. Southeast Asian content accounted for 13%, Japanese 11% and Chinese 10%.

MPA sees an upcoming crunch in Korean content, as demand from platforms remains significant but as content costs rise.

“Korean demand remains strong but expensive. Between Netflix, Viu, Disney and Amazon, 70 new and exclusive Korean dramas were released last year with strong SVOD impact. It remains to be seen if platforms will continue to invest in three to seven new Korean dramas per quarter as return on investment comes under the microscope,” said MPA senior analyst Dhivya T.

On the other hand platforms are learning how to make content go further. ! “Greater localization is allowing U.S. and Korean tentpoles to achieve new levels of reach in Southeast Asia, with local subtitles commonplace and dubbing on the rise, especially on Netflix’s new U.S. and Korean releases. High-profile and creative local marketing campaigns, such as that for “Alice in Borderland” in the Philippines, “Reborn Rich” in Indonesia are also proving impactful in driving growth in engagement and customers.

AVOD also remains a significant competitor to SVOD models. “2022 arguably belonged to TikTok more than any platform; its share of total Southeast Asia online video viewership grew from 24% in 2021 to 35% in 2022, eating into YouTube and premium video. “Daily time spent on TikTok exceeded all video platforms in SEA, except Thailand where YouTube leads,” said Dhivya T.

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