In Asia Pacific where there is a mix of local, regional and international social networking site, a clear marketing, content and audience strategy is required to stand out in this crowded space.
Failing which, experts say, they might end up in the same situation as Multiply, a Indonesia-based E-commerce and social networking site which recently filed for liquidation and will shut down for good on September 30.
The 12-year-old platform, which operated on a E-commerce model, had big dreams. It previously told The Drum it hoped to bring 100 original pieces of content from Indonesia, Philippines, Singapore and Thailand to its platform by mid-2020 through the Hooq Filmmakers Guild, an annual initiative to find new film talent in Asia.
However, Hooq announced at the end of March it was pulling down the shutters for good. It had not been able to grow sufficiently to offset escalating content costs and the continuous operating costs of an independent OTT distribution platform, according to its statement.
In addition, Hooq said it has not secured additional funding from existing or new investors. The platform had previously raised an initial $70 million in 2015 and the next funding round lifted it to $95 million in 2018, but it has had no publicly announced financing since 2018.
Lee Walsh, the vice president of media activation for APAC at Essence says the success or downfall of OTT platforms typically comes down to two things: marketing strategy and funding.
He points out that up until its liquidation announcement, Hooq subscription was offered as a complimentary service as part of select Singtel mobile phone bundles. When a platform's content can be accessed for free, he says it can be hard attracting paid subscribers in the future.
“Especially on international content, consumers can choose from leading global video streaming services like Netflix. Creating and licencing content is also incredibly expensive. To put this in perspective, ‘The Crown’ series reportedly cost Netflix US$130 million to produce,” he explains to The Drum.
“Furthermore, Hooq had the challenge of creating local content across five very different Asian markets. For instance, different programming would be required to resonate with subscribers in Indonesia compared to India. At the same time, without a large subscriber base to fund original programming, the quality and volume of offerings can suffer.”
Prerna Mehrotra, the managing director for media group in APAC at Dentsu Aegis Network notes Hooq tried to boost their user uptake by testing different models in the last few years. For example, lowering prices and introducing cheap daily plans in South East Asia, adding free content, ad-funded access, partnerships with Grab and a new brand campaign in late 2019.
Despite all these, she says Hooq failed to entice users and only reached around 80 million user mark in its life span, which could be put down to limited spend in brand building.
“Hooq did have a first-mover advantage when it launched five years ago but with growing clutter, expanded consumer choices and poor subscriber uptake it seems Hooq was not able to grow sufficiently to deliver satisfactory returns to cover escalating content and operating costs,” she says.
“The news of its abrupt closure was surprising and likely to have been induced by Singtel’s cost-cutting in response to Covid-19.”
Like many other brands, OTT platforms must regularly advertise to create awareness about their programming and get new users to signup, says Laura Quigley, the managing director for South East Asia at IAS.
She adds, with the support of Singtel, Warner and Sony, she would assume they had access to funds. However, success cannot be guaranteed through the running of campaigns alone because OTT platforms remain largely at the mercy of subscriber loyalty, as there are no long-term contracts binding the users and they can opt-out anytime.
“In the beginning, Multiply focused on social networking content and expected that people would pay for it and found out the hard way that youthful, local content was what appealed to their audiences in the region,” she explains.
“They also discovered that while Singapore has the highest per capita GDP in the world, audiences in Hooq’s territories of the Philippines, Indonesia, and Thailand are much less willing to pay for something they expect to be free. And unfortunately simply making content legally available did not stop content piracy, so there were a few factors involved.”
