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Tencent bought iflix to extend the reach of WeTV, iQiyi hired former Netflix executive as the VP of international business to aid its expansion overseas, Netflix gained a notable number of upper middle class customers, Viu has been localising through introducing Korean dramas, HBO has excellent contents despite its bad user experience, the competition in streaming services in Southeast Asia is definitely intensifying, even after Hooq filed for liquidation. And now, Disney+ is entering the heated up battlefield in SEA.

Overview of Indonesia content streaming market 

Although the India market is huge, it is not easy to sustain a streaming business here. Not only customers’ low willingness to pay, high content creation cost, huge royalty cost, difficulties in monetising services and the rapidly increasing competition make it hard for streaming providers to earn profits and consolidate their businesses, some of them actually have unsustainable cost structure. For instance, apart from spending huge sum of money in hiring overseas experts, iflix overhires employees in Indonesia. 

Netflix entered the Indonesia market in 2016, however, the relatively high subscription fee and insufficient localisation made it fail to grow its customer base. Not to mention its credit card-only payment which is definitely an unfavourable approach in Indonesia, a country with less than 3% credit card penetration rate.

It also had a complicated relationship with the Indonesia government due to tax matters and was once blocked by Telkom, a leading telecommunication firm in the region after being accused of not meeting the content standards of Indonesian government. Nevertheless, Netflix had been spending more efforts in producing and bringing in localised contents since 2019. And just last month, they managed to lift the ban from Telkom.

While Viu had grown its market share in SEA by introducing popular Korean dramas to Indonesia, iflix and Hooq did not manage to maintain its customer base despite charging a much lower subscription fee than Netflix.

In 2019, Go-Jek launched GoPlay. It focused on producing localised contents and at the same time collaborated with renowned foreign media companies such as CJ E&M and SM Entertainment in South Korea.

Despite the fact that there are quite a number of streaming providers in Indonesia, none of them had sustained a dominant market share. 

Is the timing right?

After acquiring Hotstar, a local streaming service provider in India last September, Disney+ made its entry to the country in April. Not long after that, we can see it ramping up hiring in SEA. The Southeast Asia market is obviously the next big target for Disney+.

Amid the pandemic, Disney’s theme parks are forced to close and film productions are delayed, which undoubtedly tumbled its earnings. Together with a streaming boom due to closing cinemas, Disney+ is speeding up its expansion and announced an entry to Indonesia market in September. 

Although the internet penetration rate in Indonesia is not as high as that many other SEA countries, it is one of the counties that have the highest number of internet users. At the same time, while Indonesia is one of the biggest film markets in the world, cinema penetration in the country is low in which there were only around 200 cinemas and less than 2000 screens before the pandemic outbreak.                                      

Disney movies such as Star Wars, Frozen and The Avengers have always been the box office hits in Indonesia. Its unique and original content can potentially help Disney+ to stand out and outperform its many competitors in the market. As Mulan, the $200 million film, will be made exclusive to Disney+ subscribers on 4 September, a day before the launch of Disney+ in Indonesia, we can see if it will help Disney+ to acquire customers in Indonesia. 

Potential challenges 

One of the potential challenges for Disney+ would be Indonesian customers’ low willingness to pay. Despite the accelerating growth in mobile payment and educated market, it is never easy to persuade customers to pay for the services given the numerous choices available to them.

Maintaining customer loyalty and gaining profits can also be difficult after gaining a considerable number of customers. Moreover, content censorship by the Indonesian government is always lenient, Disney+ definitely needs to pay more attention to that.

As we can see from other streaming services providers in the market, localisation seems to be an important attributor to success. Although the superior content and strong IP that Disney has can already enable Disney+ to grow its customer base, it remains unsure whether it would put great efforts in localising its content.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].