Indonesia in View
6 October 2022

We have already established our market dominance in Indonesia due to the strength of our TV content which remains highly popular in OTT consumption, our complete offering of local and international sports, and the most aggressive slate of local original content in the market. While global OTT players clearly have the benefit of a larger scale of economy and the ability to license content across multiple territories, they are also cheering up their investment in local content. However, we believe our local content ecosystem within our larger media group will give us the superior advantage to remain dominant in that area.  

In Indonesia, Free-To-Air (FTA) remains dominant. The culture of the Indonesian people whose TV consumption hours are still above 3 hours, is healthy for this industry. It is not a habit that can be changed instantly. FTA is also the cheapest broadcast technology that can reach the entire population of Indonesia and is suitable for brands that need awareness. However, digital media such as OTT, is an extension of the media ecosystem, which is good for the advertising media business. The digital multi-platforms enable higher reach, higher engagement, even increasing the content watch consumption, which is beneficial for us to deliver better value to the advertisers to promote their product across the multi-platform.

Indonesia, like any other market in the world, is rapidly adapting to digital adoption. But what we have seen so far is that digital adoption on video consumption is complementing instead of substituting other linear channels consumption.  Clearly digital adoption is much more dominant in the upper socioeconomic class, which makes this group our target for the subscription business, a new business focus. However, in Indonesia subscription habits still need to be built, by all OTT providers and all other types of applications. Eventually the adoption of subscriptions will be more common in the future.

Nevertheless, while consumption of TV is still large, OTT is growing fast and in OTT we are investing for the future.

There are 2 sides of an OTT platform, the advertising based, and the subscription based:

•  Advertising based (AVOD): the material for AVOD can be utilized from previously aired content, such as catch-up from the currently popular TV programs and sports extension rights. Compared to a very dominant FTA market, the AVOD content investment is actually less. 
• Subscription based (SVOD): Premium content is how we justify people to pay to consume our content. The competition from OTT global platforms also makes it necessary for us to deliver a relatively high volume of premium content which clearly requires higher content costs as compared to other typical content available in the broadcast industry. 

Piracy. It is a concern not just for us, but it should also be a concern for all platform owners as well as the major studios, and we should work hand in hand to address the problem.  AVIA’s role is to step up to protect the investments we are making in premium content, in order for us to exploit those investments through our platforms rather than losing them to pirates through illegal sites or links.

This is also something for which we should call upon support from the social media platform owners so we can have better and more concrete actions toward reducing piracy.

Our strategy for Pay TV is to empower the Indonesian family value of ‘togetherness’, to grow and develop by having unlimited windows to the world (to get inspired, get new knowledge, get entertained, etc.) through a variety of content, both local and international, as well as the unlimited reach of the Internet, to be able to do more good in every aspect of their lives. Indonesia has a geographic archipelago and a very diverse society with many different needs, therefore MNC Vision Networks provides 3 Pay TV Platforms, from Satellite prepaid (K-Vision) and postpaid (MNC Vision) to IPTV Broadband Internet (MNC Play).

Our strategy for streaming is to holistically extend content in the MNC universe, which may include content from our affiliates and partners, to user’s mobile devices, enriching their experience of watching content anytime and anywhere, with personalized content offerings in the mobile streaming app and providing the ease of hassle-free single sign-on by integrating the backend user data set. The goal is also to enrich the living room experience by providing integrated experiences through optimized set top boxes and smart TV apps. Also, the user data set would provide recommendations and personalized content presentation on connected platforms through 360° data analytics based on demographics, behaviour, psychographics and numerous other parameters.

Yes, there is a shift between linear content consumption to on demand content consumption,  and this trend is undeniabledue to consumer demand on personalization and flexibility on what, when, where, and how to watch. To meet this change in consumer behaviour, we enrich our Satellite Pay TV based platform with the Vision+ Connect feature, to enable them to watch anytime, anywhere, and experience Catch-up content (“Pay TV dalam Genggaman”). As for our Broadband IPTV Platform, we also enrich their experience by upgrading to an Android TV Box to enable our customers to optimize both their linear and streaming content experience.

In Indonesia the topmost watched channel is still RCTI, which is our main Free to Air. To meet the on demand behaviour, the group also provides VOD for killer programs in the Vision+ Application as well as   feature the top programs in primetime on our Vision Prime channel. However, there are notable differences (and overlap) in consumers/audiences between Linear TV and VOD – therefore, content created for the respective platforms have been adjusted accordingly. Accessibility, user behaviour, and buying patterns are also factors in catering for certain content between Linear and VOD.

Yes, with the changing times, and the increasing number of mobile phones and their usage, there is a skew towards consuming linear content alongside streaming on the mobile platform. Mobility gives personalization, flexibility, and ease to watch at your convenience. There has been a considerable amount of linear channel consumption on the mobile platform. Catch up features on linear channels on the mobile app makes it a near streaming experience o linear content with the ease of watching at your own convenience. On the other hand, people consume streaming more on Smart TVs and other Android set-top boxes/sticks for the big screen experience.

Advertising revenue provides a balance to cover the costs incurred in procuring the content and maintaining the platform, as users still want to watch content but the affordability to subscribe is a concern. Hence the ability to still watch a large amount of content for free makes the model very popular, even though the users have to see advertising. The key is to provide relevant advertising, that would not annoy the users, but may be a source of information as well. However, it is important that the consumption of content in an advertising model and the engagement time must be much higher to make the model profitable.

The Indonesian OTT market is estimated to grow at a CAGR of 31% and reach around US$16.4 Bn by 2030. The market is getting crowded with more than 20 OTT providers. However, OTT platforms do have their unique propositions that keep them sustainable, and the pie is still big. To stay relevant in this market, it is important to balance among 3 key levers – content, platform and experience – and maintain strategic marketing to differentiate between building brand awareness while targeting relevant customers. At this moment, the competition in the Pay TV/IPTV market is more stable. At the end of the day, Pay TV/IPTV with relevant content and quality premium local content, sports and family driven content, is the ultimate winner.