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Vale fertilizer asset sale plan on track despite hiccups

Power Forecast Briefing: As retirements accelerate, can renewable energy fill the gap?

2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Fundamentals View

2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Market Driven View

AVIA OTT Summit 2019 Offers Insight Into Changing OTT Roadmap


Vale fertilizer asset sale plan on track despite hiccups

TOP NEWS

Vale fertilizer asset sale plan on track despite hiccups

Sources said the sale of Vale SA's fertilizer assets remains on track despite a request from the Brazilian state development bank, or BNDES, to study the deal more carefully, Reuters wrote. The transaction covers the sale of certain assets to Mosaic Co., and the terms are unlikely to change significantly. BNDES pushed back the vote on the fertilizer deal at the company's recent board meeting.

Vale's shift to northern Brazil deposits appeasing investors

Vale's shift toward new deposits in north Brazil, away from CEO Murilo Ferreira's home state of Minas Gerais, has been commended by investors amid prospects of higher earnings and lower costs. The move, however, was opposed by a group of local politicians conspiring to oust Ferreira when his term expires in the second quarter of 2017, Bloomberg News reported.

Codelco postpones US$2.25B investment amid copper price downturn

Driven by weak copper prices worldwide, Chilean copper miner Codelco said it would delay about US$2.25 billion worth of investment, reducing its planned spending for the five years to 2020 to US$18 billion, Reuters reported. Codelco also postponed phase two of its Radomiro Tomic project to 2024, and expects to complete the construction of a new level at its El Teniente mine in 2023 from an earlier target of 2020.

DIVERSIFIED

* An African-American employee at BHP Billiton Group's previously owned Pinto Mining Group alleged that he was harassed on the basis of his race and was greeted with Ku Klux Klan symbols and nooses while working at the operations since 2012. He is claiming general damages and punitive damages for the treatment, The Sydney Morning Herald reported. BHP Billiton sold Pinto Mining to Capstone Mining Corp. in October 2013.

BASE METALS

* Central Asia Metals Plc's Kounrad copper operation in Kazakhstan produced 4,102 tonnes of copper cathode in the third quarter, 38% higher than its output of 2,966 tonnes in the third quarter of 2015. Production for the first nine months of the year totaled 11,010 tonnes, up 31% year over year, while sales for the nine-month period went up 38% year over year to 10,646 tonnes.

* Independence Group NL launched a A$20.5 million cash bid for the Mark Creasy-backed and fellow ASX-listed Windward Resources Ltd. Creasy has already given his nod to the 19-cent-per-share, off-market offer for the 27.44% stake in Windward that he controls.

* According to unnamed sources quoted by FastMarkets and Metal Bulletin, the director of nickel marketing at Vale International S.A., Nick Williams, left the company after it announced plans to restructure its base metals division to reduce costs. Williams also stepped down from the nickel committee of the London Metal Exchange, the report added.

* Kosovo's government intends to make a renewed offer to assume control of a huge mining complex, RMHK Trepca Mines, despite strong objections from Serbia, which claims it owns the business, Reuters reported. Kosovo's Parliament is expected to pass a law, giving the government 80% control of the complex on Oct. 7, with the remaining 20% going to the miners.

* South Australia's power supplier, Electranet, said the repairs to the transmission lines damaged in a storm last week could be completed by early next week, Reuters reported. The restoration of power will bring BHP Billiton Group's Olympic Dam copper mine back to normal operations. The mining giant is losing an average of 567 tonnes of copper production at a cost of A$2.7 million per day, Reuters estimated.

PRECIOUS METALS

* Normal operations resumed at Sibanye Gold Ltd.'s Cooke gold mine in Gauteng, South Africa, a day after being suspended following clashes between rival unions. The company is investigating assault on four of its employees, which left two of them critically injured, by unknown assailants during the early hours of Oct. 4.

* Sibanye Gold CEO Neal Froneman blamed the apartheid-era past for present government regulations and labor problems confronting South Africa's mining sector, Bloomberg News reported. "We need to critically and honestly acknowledge the role of our industry where it acted against the interests of the vast majority of South Africans if we wish to secure full reconciliation with our broader society," Froneman was quoted as saying.

* A Mexican government mediator said that police have cleared three entrances to Goldcorp Inc.'s suspended Penasquito gold mine, while discussions are underway to resolve a blockade. An agreement with landowners and truckers is expected to be reached today, Reuters wrote.

* K92 Mining Inc. said gold production is underway from the Irumafimpa deposit at its Kainantu gold mine in Papua New Guinea, with concentrate shipment deliveries expected to start in November.

* Rockcliff Copper Corp. acquired an option to earn a 100% interest in the Snow Lake gold property, located in the Snow Lake mining camp in Manitoba and beside a former million-ounce gold producer.

* Osisko Gold Royalties Ltd. finalized an earn-in agreement with Osisko Mining Inc., pursuant to which the latter can earn a 100% interest in Osisko Gold's portfolio of 28 exploration properties in Quebec's James Bay and Labrador Trough areas, in exchange for seven-year work commitments.

* Kiska Metals Corp. signed a definitive agreement to sell its early-stage Goodpaster gold project in Alaska to Millrock Resources Inc.

* Centaurus Metals Ltd. is expanding its gold portfolio with the acquisition of a gold-copper exploration project in northern Brazil through an existing strategic alliance with Terrativa Minerais SA .

* Double Crown Resources Inc. entered a binding participation agreement for controlling interest of a major gold, silver and minerals property in Mexico's Puebla region. The company will use the resources from Puebla mines for multiple high-value supply projects over the next several years.

* El Capitan Precious Metals Inc. executed an agreement with AuraSource Inc. to sell 600,000 tonnes of head ore over the next 12 months from the namesake El Capitan polymetallic project in New Mexico.

* Centamin Plc's preliminary total gold production for the third quarter from its Sukari gold mine in Egypt totaled 148,674 ounces, a 41% year-over-year jump from 105,413 ounces in the corresponding quarter last year and a 6% increase over the 140,306 ounces produced in the second quarter.

* On a 100% basis, Caledonia Mining Corp. Plc's third-quarter gold production increased 23% year over year to 13,430 ounces at its 49%-owned Blanket mine in Zimbabwe. The company remains on track to meet full-year 2016 production guidance of 50,000 ounces.

* Keras Resources Plc completed the acquisition of Arcadia Minerals Pty. Ltd. and its Klondyke gold project in Western Australia. The company has also completed an agreement with Haoma Mining NL that gives it the right to mine and option to purchase tenements contiguous to and near the Klondyke project.

* Havilah Resources Ltd.'s total gold production at its Portia gold mine recently exceeded 10,000 ounces, 5,000 ounces of which is attributable to the company. The company said it is on track to deliver about half of its 10,000-ounce hedge book at an average price of A$1,618 per ounce.

* The recent fall in the gold price, which seems to have been driven by speculation of a scaling back in the ECB's asset purchase program as well as an expected U.S. rate hike, is anticipated to increase demand for the metal from consumers, long-term investors and central banks, according to a report from the World Gold Council.

BULK COMMODITIES

* U.S. District Judge Katherine Forrest dismissed a private antitrust lawsuit by certain aluminum buyers against Glencore Plc, Goldman Sachs Group Inc. and JPMorgan Chase & Co., which accused the defendants of artificially driving up the price of the metal, Reuters reported. Forrest noted in the judgement that "[p]rofit by defendants or losses by plaintiffs subsequently experienced in physical aluminum is irrelevant to antitrust standing."

* Brazil's Companhia Siderúrgica Nacional is seeking a valuation of between US$30 billion and US$35 billion for its Congonhas Minerios SA unit, Reuters reported, citing a source. CSN is in talks to sell a minority stake in the unit, and China Brazil Xinnenghuan International Investment Co. is interested in buying a 20% to 25% stake.

* Ferrexpo Plc produced 2.60 million tonnes of iron pellets from its own ore in the third quarter, down 7.8% compared to 2.82 million tonnes in the second quarter. Production for the first nine months of the year totaled 8.30 million tonnes, in line with the same year-ago period.

* The Chamber of Minerals and Energy and the Minerals Council of Australia have launched a new website in its bid to fight against the new iron ore tax proposed by Brendon Grylls, according to The West Australian. The website claims to make people aware of the effects of the new tax.

* ThyssenKrupp AG has assured about 8,000 Germany-based workers that current collective wage contracts and job guarantees would be upheld during its restructuring, Reuters reported, citing the head of the works council, Guenter Back. The company's works council and representatives from the IG Metall trade union will continue negotiations about potential restructuring measures at the division.

* Vedanta Ltd. intends to raise up to 12.50 billion Indian rupees by issuing non-convertible debentures, Press Trust of India reported.

* Brazilian copper processor Termomecanica has invested 27 million Brazilian reais to adapt part of its existing facilities to produce an initial 200 to 250 tonnes of aluminum products per month, which will target the domestic market and Mercosul area, Metal Bulletin reported.

* Turkey informed the World Trade Organization that it has launched dispute proceedings against Morocco over anti-dumping duties imposed by the North African country on imports of Turkish hot rolled coil, Metal Bulletin reported.

* Vietnam's Ministry of Industry & Trade launched an anti-dumping probe into Chinese imports of steel H-beam, Metal Bulletin wrote.

SPECIALTY

* Stellar Diamonds Plc said that an independent preliminary economic assessment for the combined Tongo and Tonguma diamond properties in Sierra Leone defined a pretax net present value of US$172 million, using a 10% discount rate, with a 49% internal rate of return. The project is estimated to generate US$1.52 billion in revenue over its 21-year mine life, with operating costs of US$847 million.

* Dakota Minerals Ltd. has estimated a maiden resource at the Lynas Find lithium project in Western Australia of 7.3 million tonnes at 1.25% lithium oxide, 85 parts per million tantalum pentoxide, and 0.99% iron(III) oxide in the indicated and inferred category.

* A review by Premier African Minerals Ltd. of immediately available tungsten-rich material at its RHA tungsten operations in Zimbabwe estimated sufficient tonnage in the open pit and underground operations to support an initial three-year operation at 39,000 tonnes per month, upon the installation of the proposed X-ray transmission system for ore sorting at the plant that is expected by the end of November.

* Syrah Resources Ltd. shares lost more than 20% of their value on Oct. 5 after it emerged that Tolga Kumova resigned as managing director of the graphite miner, The Australian Financial Review wrote. According to the report, Kumova will take on another role after deciding that he does not have the "skill base" to oversee the company's transition from junior explorer to an operating miner.

INDUSTRY NEWS

* In a bid to avoid court hearings following a deadlock, South Africa's President Jacob Zuma asked the Mines Ministry to negotiate an out-of-court settlement with mining companies over the 26% black equity ownership quotas proposed under a new law, Mineweb.com reported, citing Deputy Mines Minister Godfrey Oliphant. Separately, Oliphant was quoted by Bloomberg News as saying that the government wants to finalize the country's mining charter by the end of this month.

* The International Monetary Fund expects metal prices to decline by 2% in 2017, and by 8% in 2016, according to its latest World Economic Outlook. In April, the fund projected a 1% drop in 2017 and a 14% fall in 2016.

The Daily Dose is updated as of 7 a.m. Hong Kong time, and scans news sources published in Chinese, English, Indonesian, Malay, Portuguese, Russian, Spanish, Thai and Ukrainian. Some external links may require a subscription.


Watch: Power Forecast Briefing: As retirements accelerate, can renewable energy fill the gap?

Mar. 19 2019 — Steve Piper shares the outlook for U.S. power markets, discussing capacity retirements and whether continued development of wind and solar power plants may mitigate the generation shortfall.

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Credit Analysis
2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Fundamentals View

Mar. 15 2019 — On November 20, 2018, a joint event hosted by S&P Global Market Intelligence and S&P Global Ratings took place in London, focusing on credit risk and 2019 perspectives.

Pascal Hartwig, Credit Product Specialist, and I provided a review of the latest trends observed across non-financial corporate firms through the lens of S&P Global Market Intelligence’s statistical models.1 In particular, Pascal focused on the outputs produced by a statistical model that uses market information to estimate credit risk of public companies; if you want to know more, you can visit here.

I focused on an analysis of how different Brexit scenarios may impact the credit risk of European Union (EU) private companies that are included on S&P Capital IQ platform.

Before, this, I looked at the evolution of their credit risk profile from 2013 to 2017, as shown in Figure 1. Scores were generated via Credit Analytics’ PD Model Fundamentals Private, a statistical model that uses company financials and other socio-economic factors to estimate the PD of private companies globally. Credit scores are mapped to PD values, which are based on/derived from S&P Global Ratings Observed Default Rates.

Figure 1: EU private company scores generated by PD Model Fundamentals Private, between 2013 and 2017.

Source: S&P Global Market Intelligence.2 As of October 2018.

For any given year, the distribution of credit scores of EU private companies is concentrated below the ‘a’ level, due to the large number of small revenue and unrated firms on the S&P Capital IQ platform. An overall improvement of the risk profile is visible, with the score distribution moving leftwards between 2013 and 2017. A similar picture is visible when comparing companies by country or industry sector,3 confirming that there were no clear signs of a turning point in the credit cycle of private companies in any EU country or industry sector. However, this view is backward looking and does not take into account the potential effects of an imminent and major political and economic event in the (short) history of the EU: Brexit.

To this purpose, S&P Global Market Intelligence has developed a statistical model: the Credit Analytics Macro-scenario model enables users to study how potential future macroeconomic scenarios may affect the evolution of the credit risk profile of EU private companies. This model was developed by looking at the historical evolution of S&P Global Ratings’ rated companies under different macroeconomic conditions, and can be applied to smaller companies after the PD is mapped to a S&P Global Market Intelligence credit score.

“Soft Brexit” (Figure 2): This scenario is based on the baseline forecast made by economists at S&P Global Ratings and is characterized by a gentle slow-down of economic growth, a progressive monetary policy tightening, and low yet volatile stock-market growth.4

Figure 2: “Soft Brexit” macro scenario.5

Source: S&P Global Ratings Economists. As of October 2018.

Applying the Macro-scenario model, we analyze the evolution of the credit risk profile of EU companies over a three-year period from 2018 to 2020, by industry sector and by country:

  • Sector Analysis (Figure 3):
    • The median credit risk score within specific industry sectors (Aerospace & Defense, Pharmaceuticals, Telecoms, Utilities, and Real Estate) shows a good degree of resilience, rising by less than half a notch by 2020 and remaining comfortably below the ‘b+’ threshold.
    • The median credit score of the Retail and Consumer Products sectors, however, is severely impacted, breaching the high risk threshold (here defined at the ‘b-’ level).
    • The remaining industry sectors show various dynamics, but essentially remain within the intermediate risk band (here defined between the ‘b+’ and the ‘b-’ level).

Figure 3: “Soft Brexit” impact on the median credit risk level of EU private companies, by industry.

Source: S&P Global Market Intelligence. As of October 2018.

  • Country Analysis (Figure 4):
    • Although the median credit risk score may not change significantly in certain countries, the associated default rates need to be adjusted for the impact of the credit cycle.6 The “spider-web plot” shows the median PD values for private companies within EU countries, adjusted for the credit cycle. Here we include only countries with a minimum number of private companies within the Credit Analytics pre-scored database, to ensure a robust statistical analysis.
    • Countries are ordered by increasing level of median PD, moving clock-wise from Netherlands to Greece.
    • Under a soft Brexit scenario, the PD of UK private companies increases between 2018 and 2020, but still remains below the yellow threshold (corresponding to a ‘b+’ level).
    • Interestingly, Italian private companies suffer more than their Spanish peers, albeit starting from a slightly lower PD level in 2017.

Figure 4: “Soft Brexit” impact on the median credit risk level of EU private companies, by country.

Source: S&P Global Market Intelligence. As of October 2018.

“Hard Brexit” (Figure 5): This scenario is extracted from the 2018 Stress-Testing exercise of the European Banking Authority (EBA) and the Bank of England.7 Under this scenario, both the EU and UK may go into a recession similar to the 2008 global crisis. Arguably, this may seem a harsh scenario for the whole of the EU, but a recent report by the Bank of England warned that a disorderly Brexit may trigger a UK crisis worse than 2008.8

Figure 5: “Hard Brexit” macro scenario.9

Sources:”2018 EU-wide stress test – methodological note” (European Banking Authority, November 2017) and “Stress Testing the UK Banking system: 2018 guidance for participating banks and building societies“ (Bank of England, March 2018).

Also in this case, we apply the Macro-scenario model to analyze the evolution of the credit risk profile of EU companies over the same three-year period, by industry sector and by country:

  • Sector Analysis (Figure 6):
    • Despite all industry sectors being severely impacted, the Pharmaceuticals and Utilities sectors remain below the ‘b+’ level (yellow threshold).
    • Conversely, the Airlines and Energy sectors join Retail and Consumer Products in the “danger zone” above the ‘b-’ level (red threshold).
    • The remaining industry sectors will either move into or remain within the intermediate risk band (here defined between the ‘b+’ and the ‘b-’ level).

Figure 6: “Hard Brexit” impact on the median credit risk level of EU private companies, by industry.

Source: S&P Global Market Intelligence. As of October 2018.

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  • Country Analysis (Figure 7):
    • Under a hard Brexit scenario, the PD of UK private companies increases between 2017 and 2020, entering the intermediate risk band and suffering even more than its Irish peers.
    • Notably, by 2020 the French private sector may suffer more than the Italian private sector, reaching the attention threshold (here shown as a red circle, and corresponding to a ‘b-’ level).
    • While it is hard to do an exact like-for-like comparison, it is worth noting that our conclusions are broadly aligned with the findings from the 48 banks participating in the 2018 stress-testing exercise, as recently published by the EBA:10 the major share of 2018-2020 new credit risk losses in the stressed scenario will concentrate among counterparties in the UK, Italy, France, Spain, and Germany (leaving aside the usual suspects, such as Greece, Portugal, etc.).

Figure 7: “Hard Brexit” impact on the median credit risk level of EU private companies, by country.

Source: S&P Global Market Intelligence. As of October 2018.

In conclusion: In Europe, the private companies’ credit risk landscape does not yet signal a distinct turning point, however Brexit may act as a pivot point and a catalyst for a credit cycle inversion, with an intensity that will be dependent on the Brexit type of landing (i.e., soft versus hard).

1 S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence.
2 Lowercase nomenclature is used to differentiate S&P Global Market Intelligence credit scores from the credit ratings issued by S&P Global Ratings.
3 Not shown here.
4 Measured via Gross Domestic Product (GDP) Growth, Long-term / Short-term (L/S) European Central Bank Interest Rate Spread, and FTSE100 or STOXX50 stock market growth, respectively.
5 Macroeconomic forecast for 2018-2020 (end of year) by economists at S&P Global Ratings; the baseline case assumes the UK and the EU will reach a Brexit deal (e.g. a “soft Brexit”).
6 When the credit cycle deteriorates (improves), default rates are expected to increase (decrease).
7 Source: “2018 EU-wide stress test – methodological note” (EBA, November 2017) and “Stress Testing the UK Banking system: 2018 guidance for participating banks and building societies”. (Bank of England, March 2018).
8 Source: “EU withdrawal scenarios and monetary and financial stability – A response to the House of Commons Treasury Committee”. (Bank of England, November 2018).
9 As a hard Brexit scenario, we adopt the stressed scenario included in the 2018 stress testing exercise and defined by the EBA and the Bank of England.
10 See, for example, Figure 18 in “2018 EU-Wide Stress Test Result” (EBA November 2018), found at:https://eba.europa.eu/documents/10180/2419200/2018-EU-wide-stress-test-Results.pdf

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2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Market-Driven View

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Credit Analysis
2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Market Driven View

Mar. 15 2019 — On November 20, 2018, a joint event hosted by S&P Global Market Intelligence and S&P Global Ratings took place in London, focusing on credit risk and 2019 perspectives.

Giorgio Baldassarri, Global Head of the Analytic Development Group, and I provided a review of the latest trends observed across non-financial corporate firms through the lens of S&P Global Market Intelligence’s statistical models.1 In particular, Giorgio focused on the analysis of the evolution of the credit risk profile of European Union companies between 2013 and 2017, and how this may change under various Brexit scenario; if you want to know more, you can visit here.

I started with an overview of key trends of the credit risk of public companies at a global level, before diving deeper into regional and industry sector-specific performance and pointing out some key drivers of country- and industry-level risk. Credit Analytics Probability of Default (PD) Market Signals model was used to derive these statistics. This is a structural model (enhanced Merton approach) that produces PD values for all public corporates and financial institutions globally. Credit scores are mapped to PD values, which are derived from S&P Global Ratings observed default rates (ODRs).

From January 2018 to October 2018, we saw an increase in the underlying PD values generated by PD Market Signals across all regional S&P Broad Market Indices (BMIs), as shown in Figure 1. For Asia Pacific, Europe, and North America, the overall increase was primarily driven by the significant shift in February 2018, which saw an increase in the PD between 100% to 300% on a relative basis. The main mover on an absolute basis was Latin America, which had a PD increase of over 0.35 percentage points.

Figure 1: BMI Benchmark Median credit scores generated by PD Market Signals, between January 1 and October 1, 2018.

Source: S&P Global Market Intelligence. As of October 2018.

Moving to the S&P Europe BMI in Figure 2, we can further isolate three of the main drivers behind the overall increase in PDs (this time measured on a relative basis), namely Netherlands, France, and Austria. Among these, the Netherlands had the most prominent increase between August and October. Again, one can identify the significant increase in the PDs in February, ranging from 150% to 230%, across all three countries. Towards July, we saw the spread between the three outliers shrink significantly. In August and September, however, the S&P Europe BMI began to decrease again, whilst all three of our focus countries were either increasing in risk (Netherlands, from a 150% level in the beginning of August to a 330% level at the end of September) or remaining relatively constant (France and Austria).

Figure 2: European Benchmark Median PD scores generated by PD Market Signals model, between January 1 and October 1, 2018.

Source: S&P Global Market Intelligence. As of October 2018.

In the emerging markets, Turkey, United Arab Emirates (UAE), and Qatar were the most prominent outliers from the S&P Mid-East and Africa BMI. As visible in Figure 3, the S&P Mid-East and Africa BMI saw less volatility throughout 2018 and was just slightly above its start value as of October. Two of the main drivers behind this increase were the PDs of the country benchmarks for Turkey and the UAE. Turkey, especially, stood out: the PD of its public companies performed in line with the S&P Mid-East and Africa BMI until mid-April, when it increased significantly and showed high volatility until October. On the other hand, the benchmark for Qatar decreased by over 60% between May and October.

Figure 3: S&P Mid-East and Africa BMI Median PD scores generated by PD Market Signals, between January 1 and October 1, 2018.

Source: S&P Global Market Intelligence. As of October 2018.

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We then looked at different industries in Europe. As shown in Figure 4, the main shift in S&P BMIs occurred in February, with most industries staying on a similar level for the remaining period. The main outliers were the S&P Industrials, Materials, and, in particular, Consumer Discretionary Europe, Middle East, and Africa (EMEA) BMIs. The S&P Energy BMI saw some of the highest volatility, but was able to decrease significantly throughout September. At the same time, the Materials sector saw a continuous default risk increase from the beginning of June, finishing at an absolute median PD level of slightly over 1% when compared to the start of the year.

Figure 4: S&P EMEA Industry BMI Median PD scores generated by PD Market Signals, between January 1 and October 1, 2018.

Source: S&P Global Market Intelligence. As of October 2018.

In conclusion, looking at the public companies, Latin America, Asia Pacific, and Europe pointed towards an increase of credit risk between January 2018 and October 2018, amid heightened tensions due to the current U.S. policy towards Latin-American countries, the U.S./China trade war, and Brexit uncertainty.

1 S&P Global Ratings does not contribute to or participate in the creation of credit scores generated by S&P Global Market Intelligence.

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2019 Credit Risk Perspectives: Is The Credit Cycle Turning? A Fundamentals View

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AVIA OTT Summit 2019 Offers Insight Into Changing OTT Roadmap

Mar. 06 2019 — Over-the-top video in the Asia-Pacific has been rapidly evolving as OTT players continue to learn and understand the landscape. Industry experts who participated in the Asia Video Industry Association OTT Summit 2019, held February 20 in Singapore, emphasized the importance of relevant content and adaptability of OTT players, particularly in finding the right business model.

According to Media Partners Asia's Vice President Aravind Venugopal, most OTT players that entered the region in 2016 — citing Netflix Inc., HOOQ and iflix — primarily offered a subscription service, whereas PCCW Media Ltd's Viu provided ad-supported content. He said that a year after, each one was trying to figure out what revenue model would work best. It was at that time that sachet pricing, transactional video-on-demand and ad-supported content became more prevalent.

As for 2018, it was said that OTT players moved toward paths through which monetization could continue to grow, and advertising video-on-demand had to be maximized. Venugopal cited that in one of Media Partners Asia's studies, online video platforms that were more ad-focused came out on top. China players such as iQIYI Inc., Tencent Holdings Ltd.'s Tencent Video and Youku Tudou Inc. are able to monetize consumers by adding sachet pricing, as well as allowing customers to purchase magazines or books, or any other offering that would make them stay on the service.

As more OTT services enter the region, finding the most ideal business model to retain and grow viewership can be a challenge. Panelists who were part of the "AVOD vs SVOD vs TVOD: Finding the Right Business Model" discussion, however, agreed there really is not any right model — it is yet to be discovered as OTT players learn more about their respective areas of operation.

Services will have to adapt and should be open to evolving content offerings based on consumers, while also taking regulatory policies into consideration.

In the case of HOOQ, CTO Michael Fleshman highlighted that the company is moving toward using a freemium model, through which consumers may eventually no longer need to register on the site. The OTT player is also trying to maintain simpler packages, with free content very much accessible for everyone.

He also said that HOOQ was initially worried about cannibalizing the subscription video-on-demand business, but as it turns out, engagement is still doing well.

HOOQ recently added linear channels to its offering, and Fleshman emphasized that the OTT service is not shifting but expanding its service so customers will not feel the need to go somewhere else to watch linear channels.

When global OTT player Netflix entered Asia in 2016, it had an international playbook in hand, which made collaborating with local operators a crucial step in learning more about the region. Subscription payment was one of its main concerns and having local partners became beneficial in addressing this.

When asked how the company felt about competitors and what its competitive advantage was in the Asia-Pacific region, Tony Zameczkowski, Netflix's vice president of business development in Asia, said the company sees competition as a good thing.

He also said Netflix's competitive advantage is its platform, content, marketing and partnership. In terms of platform, Zameczkowski elaborated that Netflix provides a "hyper-personalized" service capable of providing recommendations and personalizing the customer's content library.

In terms of content, Zameczkowski acknowledged that the OTT player's local content offering was initially weak. Soon after acquiring various licensing content from producers, however, Netflix started producing original content. The company will continue to invest in relevant titles. In relation to marketing the service, Zameczkowski said that Netflix banks on its titles, part of its promotional strategy.

Partnering with telcos was also very instrumental in establishing Netflix's presence in the region. Likewise, partnering with device manufacturers was important — a different approach for the company, as the Netflix app would normally be included on most devices in U.S. and European markets.

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