Viu's success has cemented Richard Lis image as a media and technology entrepreneur (File)
Billionaire Richard Li's streaming business is on a roll, mulling a potential initial public offering after its platform Viu beat Netflix Inc. in subscribers in one of Asia's most competitive markets.
Viu is now Southeast Asia's second largest streaming service by paid subscribers, trailing only Disney Plus, according to research firm Media Partners Asia. Its success has driven the over-the-top media business of Li's conglomerate PCCW Ltd. to post a revenue jump of 29% in the first half of this year, narrowing losses by 75%.
The Hong Kong-based business, which also includes a smaller music streaming platform, is expected to break even as early as the second half, said PCCW Managing Director BG Srinivas last week. The group will consider introducing strategic partners or even a listing for the division, he said in an August 6 earnings call.
The rise of Viu in Southeast Asia has stood out as the streaming space worldwide becomes mostly carved up by giants from Walt Disney Co and Netflix to China's Baidu Inc and Tencent Holdings Ltd. The Hong Kong-based platform got to the fast growing middle-class population before bigger competitors in part by recognizing trends more quickly -- like the appetite for Korean dramas across the several languages used in the region and demand for a free subscription tier -- but it remains to be seen if it can hang onto the early lead.
"Our aim is to continue to be frontrunners in the digital entertainment space in Asia," Viu CEO Janice Lee told Bloomberg. "We want to create a service in Asia for Asia, but we also understand Asia is not one region."
Its rivals have deeper pockets, an established track record of creating original content and are ramping up their focus on Southeast Asia as growth slows in home markets like the US Netflix spent almost $2 billion between 2018 and 2020 on creating and licensing shows in Asia, with Southeast Asia a key market.
In November, Disney appointed Ahmad Izham Omar, former chief executive officer of Malaysia's largest production company Primeworks Studios, to lead its efforts in Southeast Asia.
"The key question is how Viu can scale up even more," said Vivek Couto, executive director of Media Partners Asia, adding that the firm lacks its own franchises, especially in Korean content, compared with how Netflix is setting up studios and inking production partners in the East Asian country. Viu is at a critical point in its journey as it moves to expand its user base and compete in content, he said.
China's streaming services are entering the fray too: Baidu's iQiyi Inc scouted Kuek Yu-Chuang, Netflix's main liaison to governments in Southeast Asia in June last year, and a couple of weeks later, Tencent acquired Malaysia-based streaming platform iFlix Ltd, ramping up efforts to expand in the market.
Looking ahead, Viu is trying to consolidate its early gains by pivoting to creating more original content, announcing its first four Korean drama originals earlier this year. It has produced an average of over 40 original shows every year since 2016, according to the company. Lee declined to disclose its budget for original content.
Betting on growth opportunities in Southeast Asia and technology-driven sectors has been a key focus for Richard Li -- the younger son of Hong Kong tycoon Li Ka-Shing. The scion, 54, is expanding his insurance businesses in the region, as well as investing in e-payment and digital financing. He's also teamed up with billionaire Peter Thiel to establish blank-check firms with a focus to acquire new economy startups in the market.
Viu's success, though it contributes only a small proportion of PCCW's overall revenue, has cemented Li's image as a media and technology entrepreneur, which is rare among Hong Kong's tycoons whose businesses mainly operate in traditional sectors like real estate, ports, utilities and retail.
Tiered Model
One of Viu's early coups was to introduce a hybrid model offering some content for free and some only available to its paying subscribers, at a time when other platforms were just courting the latter.
Given the lower spending power and rampant piracy in the region, free content lured in hordes of users and created an advertising revenue stream for Viu, one that surged 54% in the first half. Subscription revenue jumped 40%. Overall, Viu's revenue grew 47% to $62 million in the first half of the year.
Recent entrants iQiyi and Tencent's WeTV have both adopted this tiered model.
Viu was also among the first major platforms to partner with local wireless operators and offer its service over mobile phones, with plans costing as little as $2 a month. Netflix in 2019 adopted a similar system, introducing under-$5-a-month mobile-only plans in several Asian countries.
Still, the platform, which operates in 16 markets including the Middle East and South Africa, will find it an uphill challenge to replicate its success in Southeast Asia elsewhere.
Other major Asian markets like China and India are dominated by local incumbents; Viu decided to exit India in 2019 after more than three years of operations because it lacked the cash to challenge bigger rivals, Economic Times reported.
Few regional streaming platforms have been able to keep up with American and Chinese heavyweights. Hooq, backed by Singapore Telecommunications Ltd, filed for liquidation and discontinued service last year. IFlix was acquired by Tencent after advertising revenue took a hit during the pandemic.
Viu is hoping to continue defying expectations.
"We have been in the market with multiple players for a period of time now," said Lee. "We've seen that we have continued to deliver very robust growth."
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)