Major SVODs are looking outside the US in order to grow as the domestic market slows, but accessing emerging markets is not straightforward. A minefield of technical and business traps lie en route but the potential reward is billions of new viewers.
If VOD penetration rates in just the two largest emerging markets — China and India — rose even to Hong Kong levels, it would mean an additional 1.2 billion viewers, calculates Zenlayer. That’s nearly double the combined populations of the United States and European Union.
CHARTING THE GLOBAL MARKETPLACE:
Big content spends, tapping emerging markets, and automated versioning: these are just a few of the strategies OTT companies are turning to in the fight for dominance in the global marketplace. Stay on top of the business trends and learn about the challenges streamers face with these hand-curated articles from the NAB Amplify archives:
- Building a Better SVOD Platform
- Think Globally: SVOD Success Means More Content, Foreign Content and Automated Versioning
- How Does OTT Gain Global Reach? Here’s Where to Start.
- Governments Draw Battlelines To Curb the US Domination of SVOD
- Streaming Content: I Do Not Think You Know What That Word Means
The cloud service provider suggests that media and entertainment companies will need new strategies in order to succeed.
One reason is that consumers in emerging markets have different habits and preferences. For example, the use of mobile devices to view content is much more prevalent in emerging markets. That has implications on both the business side (e.g., subscription types and price points) and the technical side (e.g., IP transport and networking for direct connectivity with mobile ISPs).
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Different regions pose unique challenges. Some are business-related, such as local entity requirements (e.g., Internet Content Provider licenses required in China) and complex compliance schemes (for instance, content regulations). Others are technical challenges, such as under-developed interconnectivity (limited peering, for example) and under-developed utility infrastructure (e.g., relatively low power reliability).
Even streaming giant Netflix, with its global reach, has had a lack of success in regions like India, where the streaming market is fueled by roughly 100 million subscriptions, the BBC reports.
“The great news is in every single other major market, we’ve got the flywheel spinning,” Netflix chief Reed Hastings said during an earnings call with investors. “The thing that frustrates us is why we haven’t been as successful in India. But we’re definitely leaning in there.”
READ MORE: Netflix: Why the world’s biggest streaming service is frustrated with India (BBC)
Connectivity itself is a whole other issue, especially if streamers are going to provide users with real-time personalized digital experiences.
Zenlayer argues for its edge computing infrastructure. Strategically locating Points of Presence (PoPs) solves for interconnectivity issues within emerging markets and enables regional availability. Making decisions as close to the user as possible — at least in-country — is essential given the fact that no matter what you do to accelerate your application, you will always be bound by the speed of light and physical distance.
A globally interconnected private backbone — another Zenlayer specialty — solves for interconnectivity issues getting into and out of emerging markets, it says.
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“Direct interconnects between global and regional internet service providers make the average number of hops between source and destination just 1.5. And it enables a hybrid cloud deployment approach irrespective of emerging market public cloud infrastructure gaps.”
Other common issues include poor application performance, slow synchronization across regional cloud servers, and interruptions during cross-border downloads.
Carlos Morell, VP of M&E Services at Zenlayer, says, “While the challenges for media and entertainment companies looking to tap into the tremendous opportunity in emerging markets are significant, they’re not insurmountable.”