24% CAGR expected as APAC online video revs top $12.4B by 2020

Online video revenues in the Asia Pacific region – driven by an estimated 977 million OTT users — are expected to increase more than 254% by 2020, topping $12.4 billion, according to a new report. In 2014, revenues from online video services came in at an estimated $3.5 billion.

Media Partners Asia said advertising will dominate online video revenues, in the 13 APAC markets it looked at for its Asia Pacific Online Video Distribution 2015 report. About 80 percent of the revenue – roughly $9.9 billion – is expected to come from advertising.

Subscriptions to SVOD services, meanwhile, are expected to account for some $2.3 billion by 2020, more than 3X the current $700 million. That growth will in large part be linked to the nearly 200% increase in the number of subscribers to SVOD services. MPA said it expects APAC subscriber numbers to exceed 225 million by 2020, up from 75.3 million in 2014. China will be the dominant player in the market, but Japan, Korea, India and Australia also will see growth.

“The market for the legal consumption of OTT services in Asia Pacific is at an early stage with monetization models nascent in most countries,” says Vivek Couto, MPA’s executive director. “As barriers to entry reduce and broadband penetration increases, more disruptors are emerging and host of new platforms are proliferating, though business models are not always scalable and issues such as piracy; content; and platform operation remain problematic.”

Much of the OTT growth is being driven by the expansion expected from companies like Netflix – which already has announced plans to launch in Australia. But, major local and regional television companies also are in the early stages of launching large scale advertising and subscription-based OTT platforms, as are several telecom operators that are moving upstream into content and OTT services or providing a crucial link for the ecosystem.

Overall, MPA said, it expects the number of OTT users to grow more than 65% to 977 million users from 594 million today.

China will remain the largest market, in terms of subscribers, with about 80% of the total. It currently has about 85% of OTT users. Korea, India, Japan and Hong Kong, which currently are significant OTT markets, will remain so in 2020, with India likely to bypass Korea in subscriber numbers.

MPA said Malaysia and the Philippines will be the leading OTT markets in Southeast Asia.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn