Chinese tech giant Tencent's move to purchase Iflix, a video streaming platform operating in 13 countries including Thailand, shows the subscription video-on-demand (SVOD) market is crucially competitive and mergers and acquisitions in this segment should continue, according to industry analysts.
In April, HooQ, a Singapore-based SVOD player, stopped its service after struggling to compete in the market.
"SVOD is a very competitive and challenging market," said Jackkit Sangkittiwan, managing partner of Time Consulting Co, a media and telecom management strategy service provider.
"It is hard for regional or local players to compete with the global powerhouses that have strong financial backing and negotiating power to purchase content."
The purchase of Malaysian startup Iflix was reported by US trade publication Variety on Wednesday, indicating the deal is worth several tens of millions of dollars, citing people with knowledge about the agreement.
Iflix has more than 25 million active users on its platform with over 2.5 billion minutes viewed per month.
Tencent's streaming platform WeTV, which operates in Thailand, can compete in this segment as it has a strong customer base with the power to acquire content licensing using economy of scale, Mr Jackkit said.
However, SVOD market size is very limited with 2-3 million users in Thailand that have ability to pay and are likely to switch services, he said.
"Post-Covid-19 in a recession, this will affect the number of paying users," said Mr Jackkit.
He said Thailand could partner with global content players to export content and for co-production, pooling local content as a "content marketplace", which could increase bargaining power.
Policymakers should support local over-the-top platforms that have multiple business models, such as business-to-business, business-to-consumers and paid content, said Mr Jackkit.
Aravind Venugopal, vice-president of Media Partners Asia (MPA), an Asia-Pacific-focused media, entertainment and telecom research and advisory firm, said the sale of Iflix was not a surprise, particularly after its plan for an IPO was postponed. The acquisition should cause the biggest splash in Indonesia and Malaysia where Tencent does not have operations, he said.
After the purchase, Iflix's content catalogue might shift from Hollywood/Western towards Tencent's content from China, said Mr Venugopal. Iflix was increasing its catalogue of originals/local content in the region.
"It remains to be seen if and how Tencent works with local studios and content partners", he said.
According to Mr Venugopal, Iflix’s performance in Thailand has been waning and MPA found that YouTube, Line TV, Viu, TrueID, WeTV and Netflix were the leading platforms in the country.
Meanwhile Tencent told Bangkok Post on Friday it had purchased Iflix’s content, technology and resources.
“This is in line with our strategy to expand our international streaming platform, WeTV, across Southeast Asia and provide users with international, local and original high-quality content in a wide range of genres and languages,” the company said in a statement emailed to Bangkok Post.
The purchase encompasses a strong local network across emerging market with video content, such as TV shows, movies and local originals, it said.