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Barrick Gold gets green light to resume Veladero operations

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


Barrick Gold gets green light to resume Veladero operations

TOP NEWS

Barrick Gold gets green light to resume Veladero operations

After 19 days under a suspension order, Argentine authorities let Barrick Gold Corp. resume normal operations at its Veladero gold mine in San Juan province. Barrick said it would assess the impact to Veladero production, but maintained companywide production guidance between 5 million ounces and 5.5 million ounces of gold for the year at all-in sustaining costs in the range of US$750 per gold ounce to US$790 per gold ounce.

Police clearing protesters at Goldcorp's Penasquito mine

Police started to clear trucks blocking Goldcorp Inc.'s Penasquito gold mine in Zacatecas, Mexico, on Oct. 4, the company confirmed to SNL Metals & Mining. "State government and law enforcement officials commenced the orderly removal of vehicles illegally blocking roadways earlier today," Christine Marks, director of communications, said by email.

Vale eyes iron ore supply deals with smaller Chinese customers

Vale SA is looking to expand its market share in China for the supply of iron ore as it is working up distribution deals with smaller Chinese customers in the country's interior, Bloomberg News reported, citing Humberto Freitas, the miner's logistics and mineral exploration executive director.

DIVERSIFIED

* Anglo American Plc shares rallied to over £10 per share for the first time in more than a year, recovering from a record low in January, on the back of improving commodity prices and the company's debt reduction efforts, Bloomberg News reported.

BASE METALS

* Independence Group NL has launched a A$20.5 million cash bid for 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.

* Central Asia Metals Plc posted record quarterly copper production in the third quarter of 4,102 tonnes, up 38% year over year from 2,966 tonnes. Nine-month copper production, meanwhile, increased by 31% year over year to 11,010 tonnes, from 8,410 tonnes.

* Kommersant reported that Russia's Finance Ministry proposes to introduce a flat-rate tax on mineral extraction for rich ores of the Polar Division of PJSC MMC Norilsk Nickel. It will increase the tax burden by 7 billion Russian rubles a year, but since September the company has benefited from the canceled export duties on platinum group metals, which totaled US$88 million in 2015.

* Antofagasta Plc reached a 36-month wage deal with unionized supervisors at its Chile-based flagship Los Pelambres copper mine, averting a possible strike. The terms of the wage deal were not disclosed.

* Nevsun Resources Ltd.'s Bisha zinc-copper-gold mine in Eritrea declared commercial production for its zinc expansion, effective Oct. 1 with the successful commissioning of a new zinc flotation plant.

PRECIOUS METALS

* 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.

* Compañía de Minas Buenaventura SAA CFO Carlos Galvez believes that gold is going to continue its run on the back of strong demand from India and China, and the inability of the U.S. to start increasing interest rates, Bloomberg News reported. The company intends to begin development at its San Gabriel mine in Peru in 2017.

* 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 that 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.

* Sibanye Gold Ltd. suspended all operations at the Cooke gold mine in Gauteng, South Africa, after a clash between two of South Africa's rival unions left two of its employees in critical condition, Reuters reported, citing a company spokesman.

* Norton Gold Fields Ltd., controlled by China's Zijin Mining Group Co. Ltd., is set to wind up production at the Homestead gold mine within the Paddington operations in Western Australia by year's end, which will result in about 50 layoffs.

* Jaguar Mining Inc. entered into an earn-in agreement allowing Avanco Resources Ltd., to earn up to a 100% interest in the former's Gurupi gold project in Brazil.

* Roxgold Inc. produced 32,987 ounces of gold in the third quarter and achieved commercial production "ahead of schedule and under budget" at its Yaramoko gold mine in Burkina Faso, effective Oct. 1. The company sold 34,594 ounces in the three-month period at an average sales price of US$1,334 per ounce.

* Kinross Gold Corp. has agreed to a new, three-year collective labor agreement with unionized employees at its Tasiast gold mine in Mauritania.

BULK COMMODITIES

* Workers at Anglo American Plc's German Creek coal mine, part of the Capcoal operation in Queensland, Australia, have written to Capricornia MP Michelle Landry for a meeting. About 80 workers are at risk of losing their jobs as part of the redundancies recently announced by the company.

* The Chamber of Minerals and Energy and the Minerals Council of Australia has 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.

* Ferrexpo Plc produced 2.60 million tonnes of iron pellets from 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 consortium formed by Dutch multinational Trafigura Beheer BV and Abu Dhabi sovereign wealth fund Mubadala still has not been able to acquire MMX Sudeste, a subsidiary of MMX Mineração e Metálicos SA. The initial plan was to invest 260 million reais in the next four years to take over the iron ore operations consisting of the Tico-Tico e Ipê mines in Brazil. However, the mines continue to be under an embargo by the environment ministry of Minas Gerais state, Semad, daily Valor Econômico reported.

* Brazilian administrative tax court CARF decided to maintain a ruling against Gerdau SA unit Gerdau Aços Especiais SA in regards to taxes for the period between December 2006 and December 2007 concerning operations by a subsidiary in Hungary, where profits obtained from other countries were consolidated. Gerdau said that it would continue appealing the ruling, daily Valor Econômico reported.

* Puls Biznesu reported that in August, Poland's coal production was nearly 270,000 tonnes more than its monthly sales. Unsold coal exceeded 5.7 million tonnes, according to data from the Industrial Development Agency.

* Kazuo Tanimizu, managing executive officer of Nippon Steel & Sumitomo Metal Corp., expressed concern about the tax hike proposal in Western Australia, saying it would present uncertainty for future investments in the mining sector and could also jeopardize Western Australia's global iron ore competitiveness, The West Australian wrote.

* Australia's biggest iron ore producers may fail to meet their full-year guidance on the back of lower-than-expected shipments in the past three months, Bloomberg News reported, referring to a note by Macquarie Group Ltd. Data from Western Australia's key iron ore terminals showed that exporters moved combined cargoes totaling about 209 million tonnes in the three months to Sept. 30, falling short of Macquarie's forecast of 216 million tonnes.

* A joint venture between state-owned Steel Authority of India Ltd. and ArcelorMittal is anticipated to start producing automotive-grade steel in two years, Reuters reported, citing Indian Steel Secretary Aruna Sharma. Officials from the two companies are scheduled to meet Oct. 6 to advance discussions on a proposed 60 billion Indian rupee plant, with a projected annual steel output of 1.2 million tonnes.

* Ukraine's merchant pig iron producer Donetskstal Iron and Steel Works CJSC, idled one of its two blast furnaces, which is expected to remain shut until October-end, Metal Bulletin reported, citing industry sources.

SPECIALTY

* A review by Premier African Minerals Ltd. of immediately available tungsten rich material at its RHA tungsten operations in Zimbabwe has 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.

* Anglo American unit De Beers SA sold US$485 million worth of rough diamonds during its eighth sales cycle, down from the US$639 million posted for the seventh sales cycle of 2016.

* CGN Mining Co. Ltd. entered into a mining principles agreement with CGNPC, CGNPCURC, National Atomic Co. Kazatomprom JSC and UMP, setting out key principles and terms for the parties' cooperation in fuel and mining projects. This comes after the companies inked a deal to jointly build a nuclear fuel assembly plant and mine uranium deposits in Kazakhstan in December 2015.

INDUSTRY NEWS

* Indonesian Mining Minister Luhut Pandjaitan said the government is finalizing revisions to the country's mining laws, with more details on the changes expected to be released in the coming weeks. The revision could give companies up to five more years to build smelters and resume nickel ore exports, which have been banned since 2014.

* The Philippines' Environment Secretary Regina Lopez said remaining mine operators unaffected by the recently concluded mining audit in the country must prove their effectiveness in boosting socioeconomic activity in host communities before the government resumes approving new projects, BusinessWorld reported. Apart from ordering the industry-wide audit, Lopez also halted new mining applications in July.

The Daily Dose is updated as of 7 a.m. London 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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