Come see my good buddy Dwi and New Relic in Singapore :: https://newrelic.com/rsvp/singapore-exec-drinks-16-11-17
Good to see some Netflix truth telling
Was sent this about Netflix on Bloomberg today.
According to a statement issued last week, international subscribers grew at the slowest rate since 2014, when Netflix was available to far fewer people.
Not surprising – I wonder if Netflix tries to use Netflix from Singapore – the catalog is shit. I wouldn’t even bother using it in Singapore if it wasn’t for my ISP’s feature of routing my Netflix and HBO traffic to the states. It’s amazing the difference between the local catalog and the USA one – it’s still comical to me I can’t watch the latest season of the House of Cards on Netflix Singapore. Would be one thing if Netflix Singapore cost 4 bucks but it doesn’t.
Ultimately Netflix may prevail but I think they have underestimated a few things –
- Cost. They want to pull the SBUX global pricing game but that’s silly since the size of my cappuccino in Singapore is the same as the one in San Francisco. Netflix catalog differences are huge.
- Local competition – they act like none exist.
- Not being able to download. Not a huge issue but an issue.
- VPN blocking. A bunch of people used Netlfix for the USA catalog – now that has stopped which means they have lost subscribers who were paying USA prices to get access and who dumped them when they saw the local catalog.
Big kudos to iFlix for getting a big mention. What’s glaring is the complete miss on HOOQ but guessing that is either cause most folks are already writing it off or that HOOQ continues to be appallingly bad at PR.
Here you go HOOQ – got you some PR today.
IFLix and Netflix are spot on about piracy but Netflix seems to just be burying their head in the sand when it comes to dealing with the issue:
And that won’t be easy. In September, a senior Netflix manager acknowledged piracy as the company’s biggest competitor in Asia-Pacific, the fastest-growing internet market. But instead of lowering prices or seeking different models, Netflix is charging $7.99 per month to subscribe in Cambodia — a country where the average income is about $1,000 per year, and where only 2.3 percent of the population has a credit card. In fact, fewer than half of the 600 million people in Southeast Asia carry plastic. And even if they can pay for Netflix, the experience of watching it probably won’t be pleasant. Almost every country in the region has internet speeds below the global average — oftentimes way below.
They can’t price like this, have a shitty catalog and not offer downloads. It just won’t work.
I have always said – the real competitor in Asia is piracy. Note :: http://www.nokpis.com/2016/04/18/the-actual-state-of-ott-in-emerging-markets/
Netflix, HBO and Amazon will be global video players – also it is too early to tell if FB, Apple and Google will sit this party out since it is such a minefield of losses. We know Apple keeps trying to alter the cable game but that is a USA only thing and their buy on demand model will someday not work out well but for now one gets the best content on PPV. I still buy/rent far too many movies but maybe that is cause I have kids and I want new releases so I can skip the theatre.
My take is that this problem will never be globally solved and that in each GEO it may take on different patterns – just look at India with HotStar having HBO content :: http://www.hotstar.com/tv/game-of-thrones/8184. Word is that HotStar has essentially clubbed to death any of the other major players in India and I expect you will see some casualties soon. I honestly have never understood why HOOQ tried to be India – it is a race they will never win. Seems iFlix is sidestepping the India train wreck and focusing on other winnable territories.
I portend that Netflix is gonna keep bleeding and the investors might start to tire of it. Amazon has yet to show their global video hand but I suspect it will challenge Netflix in certain parts of the world. I wonder if HBO will do more HotStar like plays – I think they should. iFlix seems to be the local or strong emerging markets player to watch and it pains me to say it but I think HOOQ is toast but most folks probably labeled anything built by Singtel as toast anyway. I guess it just depends on what shade of burnt you acknowledge.
As a consumer of stuff – well, I still use my Mom’s Netlfix account, pay for HBO (VPN goodness from viewquest) and continue to wait for Apple to do something cool with the TV.
Picked up on this article by Steve Blank over the weekend – such a good read.
I have worked at a few places in my life – startups, corporates, corporates in decline (Yahoo) and joint ventures masked as vehicles for corporates to try and stem declines (HOOQ). All of them share critical components but the corporates trying to deal with disruption can be very interesting. They don’t have it easy but they also continue to display the classic behaviors that got them to where they are in the first place.
I notice in the local space that there is not a lot of investigative journalism into the big corporates around Singapore. I am guessing it is too touchy of a subject or maybe doesn’t drive page views. Hard to say.
Having just left HOOQ I would like to say a few things about it since I am asked many times why I went from startup land, Spuul, to pseudo startup land – HOOQ.
Let me list a few reasons:
– I wanted the chance to get to know Singapore Inc. more closely.
– I wanted exposure to Sony and Warner.
– I was generally intrigued by the concept – 2 big studios work with local telco to try and do something cool in OTT.
– The plan had a solid model – the plan that is. The execution – not so much.
I went into the gig with my eyes wide open. I would learn, I would network and I would gain much needed experience on how to deal with a big corporate giant, actually three of them, trying to innovate. I would have a seat at the board meetings – huge learning opportunity. Boards can help a lot if done right.
Lastly, most importantly for me – I would try and see if I could buck the trend of a large corporate trying a new way to innovate but normally failing. The model had the right ingredients – a joint venture versus a subsidiary, good partners, a worthy business to go after and funds. Most startups don’t have these ingredients but then again most startups also don’t come with any baggage. Usually startups have a green field advantage and the right to make plans as they go whereas a joint venture is immediately plagued with too much funds, large parents to make happy and long range planning processes.
Frankly – it is too early to tell what will happen. Right now the market for OTT in emerging markets is early days. It is all about funding, posturing and moon shots. Obviously Netflix and Amazon will be the largest global players. As I keep saying to folks who constantly ask – who is the Amazon of India – Amazon. Just wait and see.
However folks tend to only thing big and forget that there are some healthy niche businesses out there – take Spuul for example. Doing well, but most folks only want to hear about big fund raising or other PR noteworthy milestones as examples of success.
For video we tend to think of Netflix or maybe YouTube. Right now the YouTube of emerging markets is YouTube. The Netflix for emerging markets – is also probably YouTube cause free and piracy are still the leader around the emerging markets. The idea of building out a robust, and profitable, paid OTT service for the emerging markets is still a work in progress.
HOOQ has a shot but iFlix appears to have the early lead. Will guys like Rakuten, Alibaba and HotStar emerge to try and go big? Don’t know yet. Will Netflix and Amazon slowly take over? Possibly. Will Google eventually get it right around the globe when it comes to premium content? I think not likely. Apple – well, they just seem to suck at emerging markets when it comes to payment models so I am not hopeful.
The race is on. I will continue to armchair quarterback it and share more insights as I go.
Here we go …
It’s holiday time.
Short break between gigs.
To all the folks at HOOQ – kick some ass. I will be watching and cheering.
To the NWA crew – u know who you are, I love you guys/girls. Make me proud.
To everyone else. I will be doing something new. Starting over. Back to learning.
Formal announcements soon.
Let the bloodbath begin!
Banged this out yesterday – http://www.nokpis.com/2016/04/18/the-actual-state-of-ott-in-emerging-markets/
The idea being that the expansion of OTT across the planet will be a full scale war and that it won’t simply be handed over to Netflix on a silver platter.
Now we have Netflix with the okay quarter but with a shady forecast: http://techcrunch.com/2016/04/18/netflix-posts-a-mixed-q1-but-adds-6-74m-new-subscribers/
Don’t get me wrong here. Netflix is huge and growing but the cost of building out tech and a library for the globe won’t be cheap. They are also losing paid subscribers who can no longer VPN to get the good content. I am in Singapore and the size of the library sucks here. I can’t even get the latest season of many of the Netflix shows. Thankfully I still use my mom’s account so not like I am sweating the subscription.
However on top of dealing with all the regional players, Netflix has to now contend with Amazon.
I always assumed Amazon would do this at some point but didn’t expect it this soon. To be frank I had Prime for a bit so I could play with the video service but didn’t keep it due to not having enough content. With the service now being split out I may try it again but I have always found their tech and apps to suck in comparison to HBO and Netflix. Amazon always does just enough to get by versus build the best app ever. It shows with their video apps but maybe this breakout will force them to compete more. Time will tell.
One thing we do know is video is growing like mad – even in Asia. http://variety.com/2016/digital/asia/online-video-further-growth-in-asia-report-1201755475/
I think the market will split off into a few groups and that there will never be one dominant player for the globe or for the Asian regions.
But who the hell knows.
The actual state of OTT in emerging markets
Wrote this recently about the Quartz article, http://www.nokpis.com/2016/04/15/finally-met-up-with-josh/ .
One of the discussions that always comes up is how the players like us or iFlix compete with Netflix or how these services in general will survive.
I always remind people that the fight is not about HOOQ versus the competition but actually it is the notion of getting people to pay in the first place versus steal.
This tweet sums that up perfectly:
Finally met up with Josh
I didn’t get to attend the TIA conference but was able to catch up with lots of folks who were in town and went to a nice event by Sequoia.
Say what you will about our current times but Singapore is absolutely hopping right now and is the center of the startup universe for SEA region and India. Love it. So fortunate to be here at this time.
I have many Twitter friends that I sometimes get to meet and Josh would be one of those. We finally got to hang out and chat a bit.
As a writer, he of course decided to spring this on the Internet after we chatted.
Good stuff. As I always tell people – OTT in emerging markets is really just kicking off and has a long ways to go. I wouldn’t profess to know where it all might land, but it’s a crazy hot space regardless.
One comment – that last little quote by iFlix – we all know 1 million is just registered users. Paying subs will be some marginal single digit percentage point of that total number. As I always say – release real stats or none at all.
Good chatting with you Josh – I guess we will keep up the Twitter DM dialogue going till we meet again.
Of course Apple’s so called streaming service is a no-show
Not a very thorough article but jogged my memory some :: http://www.techinsider.io/apple-streaming-tv-service-delayed-2016-2
I think people don’t realize that the launch of Netflix global is going to set everything back a bit before things can move forward. I love watching all the haters coming out and bashing the OTT companies over content or VPN issues. Folks – you are bashing the wrong crew. It’s the content owners to bitch at – not the streamers.
The world of content rights is such a mess it’s not even funny. Just look at all the audio guys – even Pandora can’t make money. The only guys making money in streaming audio are the owners of the rights and the infrastructure guys. Not the artists or the streaming companies. Spotify is huge but I am sure they don’t make money.
Apple wanted to upend the market and offer some sort of global subscription with content from all over at a fair price. Great. Bring it. But the content guys don’t want that cause they sold the rights a zillion different ways and until all the rights are reset and the system capitulates nothing will happen. Apple will probably keep trying but I bet it takes years.
What I don’t get is why Apple is trying to do this stuff when there is a ton of things they are not doing to make it easier to build a better OTT system on their platform. Apple is trying to be everything these days while at the same time they are not building or shipping the best tools for those who focus on OTT to build the best product. At this point Google has pulled ahead in this platform game in my opinion.
– Cheapest device to get content on the big screen – Chromecast
– Allows the app developer to implement multiple payment options – not just Google Pay
– Is shipping a basically free DRM platform that works well across chrome, android and chromecast. Plus it includes download as a core feature
– Apple TV is pricey and still buggy as hell
– Apple only allows Apple payments and only credit cards. Emerging markets totally missed
– Shipping a DRM system that works well enough across Apple ecosystem but reserves the use of download only for Apple. Pathetic!
I have faults with both these guys in general:
Tons of pirate apps in the stores
Still taking 30% for content subscriptions when they know the margins don’t support it
Unfairly using DRM to control the ecosystems
OTT biz is hard but these guys could do a lot more to help create the best platform versus trying to be the end user product.
Have fun dodging the VPN blocks!
Thoughts on OTT
Update to the post::
I said as much in my list below – get ready for the VPN to stop working when it comes to gaming Netflix content libraries.
First, let me start off with a shameless plug for a podcast I was a guest of:
Now that we got that out of the way we can continue on. Also – my shameless plus is so we make this AA’s #1 podcast to ensure I get invited back. 😉
Let me disclose that I work at hooq.tv and used to work at spuul.com . I do have some sense of this world I am talking about. I don’t have a crystal ball and I also think that in the emerging markets it will take years to declare a winner. Years I say!
That being said I think it is important to note some things for the pedestrians:
– In many markets, say Taxis or car booking services, I can agree with the winner take all or winner take most, especially in the USA or China. FYI Om covered this topic well here :: http://www.newyorker.com/tech/elements/in-silicon-valley-now-its-almost-always-winner-takes-all. However in large regional area or emerging markets I am not sure if it is true and it also has to be that pricing almost equalizes. In the case of this specific subject if we are talking about Netflix dominating in India I struggle to see how a company that charges 3x its emerging markets brethren can own the market. Maybe it will own the high end but how would it own the market that does not pay that much for entertainment?
– Let no one kid you. None of these players are currently fighting over a paid customer base – we are all fighting to convert a pirate over to a paying subscriber. That will take years and there are plenty of pirates to share at this moment.
– Local content is a big deal and no one player owns it all nor can sell it all to one OTT player. Also many of the local content players are building or have built their own OTT services.
– There can never be just one service for all. Take me for example. I share my mom’s Netflix account but I buy my own HBO account. I value HBO way more than Netflix and nothing they did last week changed that equation for me.
– Payment models in the emerging markets are hard. For Netflix it very well could be that the only customer they care about has a credit card. That still lives 100’s of millions of customers for companies like HOOQ who think there are others way to take money from users.
– Not only are payment models hard but so are subscription types. Is a monthly recurring subscription going to work in the emerging markets? For some folks it might. For others maybe weekly subscriptions is better? Maybe a subscription tied to a data balance makes more sense. No one knows yet.
– Content rights are super hard. I love seeing all the people baffled as to why they log into Netflix Singapore and it doesn’t look like the USA catalog. Netflix didn’t buy all the rights for Singapore because they know it is a small market. It may not be worth it and chances are some of it is not available. Also, Netflix being a capitalist, sold some of their shows to services in Singapore already so they can’t just take it back. Over time as they grow they will fix this but again Netflix could never own everything you want to see.
– As OTT takes off some of the big players will try to work around Netflix and other services to go direct. One good read on this :: http://bgr.com/2015/11/05/netflix-streaming-time-warner/
– The all powerful VPN. Currently lots of folks are signing up for Netflix Singapore and then using a VPN or anonymous IP to get the USA catalog. All good but keep in mind they way content rights work. They are bought and sold for a region – they are not tied to what credit card you use. Lots of folks talk about Apple TV or iTunes as the model where I can use my use a credit card to buy a show. And I can watch it in Singapore but note I am paying US prices so the content guys don’t care. Apple is not a subscription service and notice it they planned on doing this with TV and backed down. Netflix is getting away with murder right now. Pay Singapore prices but watch a USA catalog. At some point the content owners may ask Netflix to enforce geo specific rule or to simply not support VPN usage. Most content owners ask companies like HOOQ to try to block VPN’s or similar tools. As global content streaming takes off, I expect this to be an ongoing discussion.
– To summarize I would like to say this is going to take time to all play out. As I like to remind my team regularly – it’s a marathon – not a sprint.
I’ll add to this is if I think I missed something.
VOD – here come Asia!
We all know VOD is big. Just check Netflix for reference. I pretty much never watch actual TV or cable – except for the news.
Normally I am watching HOOQ, HBO Now, or Netflix. Plus a lot of iTunes video.
Given all that it is no wonder that global VOD growth is gonna keep growing.
What is exciting is the Asia numbers:
The VOD market in Asia Pacific Excluding Japan (APEJ) is expanding at a robust pace and by 2020, the market is expected to reach $80.5 billion.
How do you like them apples?