December 19, 2022
JAKARTA – In recent years, investors have been increasingly prying at profit from streaming service businesses in Indonesia. It is not surprising, given the industry has been gaining momentum throughout the pandemic and is projected to claim robust growth, at least for the next five years.
The Indonesian streaming business is indeed very promising. According to a report by We Are Social in 2021, video was the most accessed content via online (98.5 percent). The country also boasts around 202.6 million internet users or 73.7 percent of the total population.
A survey by Inventure and Alvara earlier this year revealed that 74.2 percent of respondents said they preferred subscription to on-demand streaming services such as Netflix, Disney+ and HBO Go over cable TV.
Business wise, subscription video-on-demand (SVOD) services in the country is estimated to accrue US$232 million in revenue by the end of 2022 and is expected to post a compound annual growth rate (CAGR) of 12.84 percent in 2022-2027, translating to a projected market volume of $425 million by 2027, according to Statista.
The average revenue-per-user (ARPU) in the SVOD business is projected to hit $13.49 this year, while the number of users will be 26.3 million by 2027, with an expected market penetration of 9 percent.
In the eyes of venture capitalists, content power remains the key to the success of the streaming service business. In Indonesia, main attractions that service providers continue to rely on are still revolving around sports, feature films, short films, series and Korean drama.
Through such a strategy, local players such as Vidio and Noice have secured their respective target markets. Vidio currently dominates the country’s streaming market, thanks mainly to their sports content, especially soccer, which are very popular with local consumers.
Seeing the lucrative Indonesian market, Association of Indonesian Venture Capital and Start-ups (Amvesindo) believe that strong competitors for local providers actually come from foreign players, who are backed by global tech giants.
Tencent, for example, develops the WeTV platform through MD Pictures and is starting to allocate funds for local content. In addition, e-commerce mammoths such as Amazon and Alibaba have their own streaming services and use them as an adoption strategy for their core services.
On the other hand, local platforms are also starting to be in demand even though several homegrown video on demand (VoD) and audio on demand (AoD) services failed to survive because they were unable to compete.
However, there are indeed local platforms that survive thanks to their stronger ecosystem, for example Vidio and GoPlay, which are still able to compete. Both have also been given funding by investors several times.
Investors know both of them have the potential to thrive because of their ecosystem.The Gojek ecosystem has grown bigger due to the presence of Tokopedia, while Vidio is managed by Emtek in collaboration with other companies, from Bukalapak to Grab.
Apart from investors’ backing, the key to win the competition in streaming business is to develop an engaging ecosystem with film industry players, such as production houses, talents, among many others. Although of course it will still be very difficult for local providers to compete with the likes of Netflix and Disney ecosystems in the film sector.
Nevertheless, one of the obstacles for the streaming industry is the large amount of piracy of local content and films. This is a structural problem and there must be strict policies and implementation of rules because it is one of the things that hinders the exponential growth of VoD and AoD, both locally and abroad.