The Pay-TV Innovation Forum is a global research programme for senior pay-TV and content executives, developed by NAGRA and MTM, and designed to catalyse growth and innovation across the global TV industry, at a time of tremendous change and disruption.
As part of the programme, we are publishing a series of interviews with leading TV industry executives from around the world to explore their views, perspectives and experiences of innovation. In this interview, Michael Fleshman, CTO of HOOQ shares his views on the evolution of the Asian TV markets, the need for business model innovation, the shape of next-generation pay-TV service provider, and key technological priorities for pay-TV / OTT service providers.
How would you describe the markets that HOOQ operates in at the moment?
HOOQ currently operates in five countries – Singapore, India, Indonesia, Philippines, and Thailand. Apart from Singapore, our territories have lower purchasing power and percentage of the population with access to credit cards or other recurring payment methods compared to North America or Western Europe. For example, the Netflix-style demographic – high-income households with high-speed connectivity – in Indonesia or the Philippines only represents 2-3% of households. At HOOQ, we primarily focus on addressing the other 97%.
The five markets seem to be quite different from each other. Is that reflected in your strategy and business model for each market?
We have adapted our business model and positioning to account for individual market dynamics. Due to similarities in market structure, we have deployed a fairly consistent business model across Indonesia, Thailand, and the Philippines, focusing on the entire content funnel which spans free and paid content. Singapore, on the other hand, is unique – it is a small, high-income market, with a fragmented population. There, we position HOOQ as a more conventional video subscription business. In India, where the scale is vastly different – some of our partners have hundreds of millions of subscribers – our positioning, again, differs. We bring the best of Hollywood to India and are the go-to content partner for a number of platforms. There, we are more of a premium provider, which fits with other premium services.
You mentioned limited access to recurring payment methods and low purchasing power across most of your territories. How do you overcome these limitations?
We operate in highly pre-paid markets, so we have to be well-integrated with established payment methods. For example, we work with existing mobile and broadband providers as they have established billing relationships. To address low purchasing power, we give users a reason to come back every day and offer payment flexibility. Our service combines free and paid content with flexible payment options, such as weekly, 3-day or 1-day sachets. We do not follow a standard subscription funnel. It is more of a whirlpool than a funnel – we give people a reason to come back every day, and it allows us to either sell to them or upsell them on a daily basis.
How do you ensure that your service is widely distributed and accessible to consumers?
If we want to make money, we need to go where our customers are. We go through multiple distribution channels to allow users to experience our content, by establishing mutually-beneficial partnerships with various fixed and mobile telcos, pay-TV platforms and local ecommerce partners who offer something similar to an Amazon Prime-style membership. We work closely with multiple partners by co-investing in content, co-marketing, sharing platform technology, finding ways to integrate better with their services, and helping them to understand and optimise their customer journeys. For example, in the last 12 months, we have completed around 85 new tech integrations. To do that, we need flexibility – and our product is built for that, it has a strong B2B2C component.
What is the role of traditional pay-TV providers in the markets you are in? Is HOOQ a risk to them or a potential partner?
Some of them are probably at risk, but they may also be good partnership candidates. In some markets, such as Indonesia, the pay-TV market is not large – pay-TV penetration is between 10% and 20%. So, the opportunity is more about providing a brand new pay-TV service rather than replacing an existing one. Given the recent growth in mobile, Indonesia might follow a similar path to some of the African countries that have skipped fixed-line infrastructure to go mobile. As a result, services like HOOQ could be the future of pay-TV in Indonesia, regardless of whether you call it pay-TV or not. In Indonesia, we have already started offering live TV channels on HOOQ alongside on-demand content, and have plans to launch them in Thailand and the Philippines. In 3-4 months, we believe we will be able to offer a more compelling service than pay-TV providers in most of these markets, at a materially discounted price.
How is the competition for content evolving across the markets you are in?
We are seeing a major trend of almost everyone in the video ecosystem trying to get into the content business. This is not only limited to telcos but also includes various ecommerce companies that follow Amazon’s Prime membership model or even fast food consumer brands in some markets. I do not know how this trend will end up, but I see similarities with the car industry in the 1920s and 1930s when new car brands popped up almost every week, and consumers were trying to figure out how these new brands fit into the picture. It will be interesting to see how a lot of companies that do not have content in their DNA continue investing over the next few years.
What are the key technological priorities for OTT service providers like HOOQ?
It is worth saying that the term OTT is increasingly redundant. The emerging, future version of pay-TV services – which is cloud-based and reliant on IP delivery – looks like an OTT service. In terms of priorities, owning your own technology platform is crucial. Typically, technology platforms are designed for North American and Western European devices, price points, and products. In most cases, South East Asia is an afterthought. We differentiate HOOQ by being able to customise our product for our markets, using developers on the ground. Also, as partnerships are key to our distribution strategy, B2B2C capabilities have to be built into our technology product in order to be flexible and react quickly. To do that, we have engineers and product teams on the ground in our markets, and we work closely with our partners to develop joint product roadmaps.