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Noble Group to sell energy unit for US$1.05B, completes US$2B fundraising spree

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


Noble Group to sell energy unit for US$1.05B, completes US$2B fundraising spree

TOP NEWS

Noble Group to sell American energy unit for US$1.05B, completes US$2B fundraising drive

Noble Group Ltd. has agreed to sell its Noble Americas Energy Solutions LLC unit to Calpine Corp. for a total of US$1.05 billion, comprising US$800 million plus the repayment of Noble Americas' working capital, amounting to US$248 million. The sale is expected to close in December and will complete Noble Group's US$2 billion capital raising initiative announced in June.

Fortescue acquires BC Iron's 75% stake in Nullagine for A$1.00

Fortescue Metals Group Ltd. has agreed to acquire BC Iron Ltd.'s 75% interest in the Nullagine iron ore joint venture in Western Australia for A$1.00, and will now evaluate the feasibility of restarting operations in the current market.

Mali shuts down Randgold offices, seizes bank accounts over US$80M in unpaid taxes

According to Mohamed Lamine Samake, an adviser to Mali's economy ministry, the government has closed offices of firms controlled by Randgold Resources Ltd. and seized their bank accounts, alleging that they owe about US$80 million in unpaid taxes, Reuters reported. The company said the closure does not affect the operations of its three mines in the country.

DIVERSIFIED

* Vedanta Resources Plc's second-quarter production for fiscal year 2017 at its Zinc India operations fell annually across three commodities — refined zinc by 29% to 150,000 tonnes, refined lead by 24% to 31,000 tonnes and silver by 4% to 3.5 million ounces. International zinc production, meanwhile, was down 38% year over year to 39,000 tonnes after the closure of the Lisheen mine in Ireland, which was partially offset by a 37% increase to 23,000 tonnes in production at the Skorpion mine in Namibia.

BASE METALS

* Freeport-McMoRan Inc.'s operations at the Grasberg copper-gold mine in Indonesia have returned to normal after the company resolved a 10-day labor dispute with a worker union at the mine, Reuters wrote.

* The environmental permit of Austral-Asia Link Mining Corp.'s nickel mine in the Philippines will be canceled just months after it started operations, Reuters reported, citing the environmental and natural resources secretary Regina Lopez. The suspension was not prompted by the country's mining audit but because it sits between a UNESCO World Heritage Site and a marine protected area.

* Independence Group NL has made its Windward Resources Ltd. takeover bid unconditional after Windward announced that Eastern Goldfields Ltd. has withdrawn from the funding agreement. Independence has already acquired a 19.9% interest in Windward.

* Vale SA is cutting jobs in its Swiss nickel marketing and sales operations as the company restructures its base metals business and consolidates its global presence to Toronto and Singapore, Bloomberg News reported, citing spokesman Cory McPhee.

* The government of Bolivia's President Evo Morales was unable to improve operations at the Karachipampa metallurgical plant and the Huanuni mining company since it came to power 10 years ago due to structural problems, according to state miner Comibol adviser José Pimentel, Página Siete reported.

* A worker died Oct. 6 after falling into a conveyor belt in the grinding area at the Coronel copper mine, operated by Minera Frisco SAB de CV, said the Mexican Office of the Attorney General, Jornada reported.

* Australian Mines Ltd. is acquiring the Flemington scandium-cobalt project in New South Wales, Australia, from Jervois Mining Ltd. and the Sconi scandium-cobalt project in Queensland from Metallica Minerals Ltd.

* The Botswana government has applied to the high court to place BCL Mine Ltd., its largest copper and nickel producer, under provisional liquidation due to nonprofitability, as the state is unable to afford costs of about US$713 million required to keep operations running, according to Mineral Resources Minister Sadique Kebonang.

* Rio Tinto has organized a trip for analysts and investors to the Oyu Tolgoi mine in Mongolia, scheduled for this month, as CEO Jean-Sebastien Jacques is facing increased pressure to justify the development of the US$12 billion project, which shareholders fear could turn out to be a financial disaster, The Times reported.

* Kosovo's parliament voted to give the government control of a huge mining complex, Trepca, making it the guarantor of the company's debt, despite strong objections from Serbia, which claims it owns the business, Reuters reported. The Trepca lead-zinc-silver complex is operating at minimum capacity, with creditor claims standing at €1.4 billion.

PRECIOUS METALS

* SolGold Plc has rejected a proposal by BHP Billiton Group, which offered US$30 million for a 10% stake in the company and a director position at its boards. BHP also suggested an earn-in arrangement over the Cascabel copper project in Ecuador, under which it would spend US$275 million to acquire a 70% stake out of SolGold's 85% interest in the company that holds the Cascabel tenements. SolGold's board determined that the BHP proposal is not in the best interest of the company and its shareholders, and still prefers the US$33 million financing deal with Maxit Capital LP and Newcrest Mining Ltd.

* Torian Resources Ltd. has launched an off-market takeover offer to acquire all of the shares in Cascade Resources Ltd. for a total of A$8.4 million.

* The Perth Mint and the ASX are working to launch a new gold futures contract. Richard Hayes, CEO of The Perth Mint in Western Australia, told SNL Metals & Mining on the sidelines of the Precious Metals Investment Symposium in Sydney, Australia, that the collaboration will allow customers to take physical delivery of gold.

* The royalties paid by gold producers to the New South Wales government in Australia rose by 12.5% in the 2016 financial year to about A$54 million, state Industry, Resources and Energy Minister Anthony Roberts told delegates on the first day of the Precious Metals Investment Symposium.

* Avocet Mining Plc entered into a conditional joint venture deal, in which a subsidiary of Managem SA will acquire up to a 70% stake in the company's Tri-K gold project in Guinea for a total investment of at least US$14.0 million. Should the ore reserve defined in the bankable feasibility study be less than 1 million ounces, Managem's ownership will be limited to 60%.

* PJSC Polyus Gold is planning to pay semiannual dividends equal to 30% of its EBITDA, provided that the ratio between net debt and adjusted EBITDA is lower than 2.5x.

* BWR Exploration Inc. executed a definitive acquisition agreement to fully acquire Puma Exploration Inc.'s Little Stull Lake gold project in northern Manitoba.

* Primary Gold Ltd. completed the formal acquisition of the Coolgardie gold project in Western Australia from MacPhersons Resources Ltd.

* Goldcorp Inc. started ramping up mining operations at the Penasquito gold-silver mine in Mexico after the removal of an illegal blockade that started Sept. 26. The protest, which forced Goldcorp to temporarily shutter the mine Oct. 3, dragged on for almost two weeks over issues including trucking, water quality and access, and the perceived unfulfilled company promises in the local communities.

* Aura Energy Ltd. Executive Chairman Peter Reeve believes the company's recently acquired gold deposit next to its Tiris uranium project in Mauritania could boost Aura's revenue while it finishes the feasibility study on the main mine, The Telegraph reported.

* The Ontario Superior Court of Justice granted its final order approving Nord Gold SE's all-share takeover of Northquest Ltd. after Northquest shareholders voted in favor of the arrangement at a special meeting Sept. 28. The deal is expected to close in the coming days.

* Ramelius Resources Ltd. posted record gold production of 36,179 ounces of gold from its operations in Western Australia in the September quarter, exceeding the guidance of between 31,000 ounces and 35,000 ounces of gold.

BULK COMMODITIES

* In a bid to fast track the remaining approvals for the project, the Queensland government has declared Adani Enterprises Ltd.'s A$21 billion Carmichael coal mine to be "critical infrastructure," ABC reported, citing State Development Minister Anthony Lynham.

* The troubled Welsh steel industry will get a windfall of nearly £20 million over the next five years as Wales cuts business rates, The Daily Mail reported.

* Mozambique's government is in negotiations with Vale Moçambique SA to restart the transport of coal mined at Vale SA's Moatize operations through the Sena railway in the country, Macauhub reported, citing Carlos Mesquita, the minister of Transport and Communications.

* Early bidders for Anglo American Plc's Dawson coal mine in Queensland, including Australian Pacific Coal Ltd. and Stanmore Coal Ltd., are set to visit the mine this week, The Australian Financial Review's Street Talk reported. The final bids will be submitted following the site visits, while the sale is expected to occur before Christmas.

* According to the company's latest accounts, Tata Steel Ltd.'s U.K. operations incurred a pretax loss of £599 million in the year to March 31, reflecting the deficit widening nearly two-fifths as compared to the previous financial year after adjusting for disposals, the Financial Times reported.

* Tata Steel is understood to be in talks with the U.K.'s Pension Protection Fund and the pensions regulator, and is said to be close to a restructuring deal that would pave the way for the proposed merger of Tata Steel's U.K. business with ThyssenKrupp AG, according to The Sunday Times.

* Mexico has again extended a 15% tariff against imports of slab, hot-rolled coil, heavy plate, cold-rolled coil and wire rod from the countries with which it does not have free trade agreements, Metal Bulletin reported. The levy will be valid for a further six months starting Oct. 8.

* BMI Research shows that India is set to outstrip the U.S. as the world's second-largest coal producer after China, citing the country's global production share increasing to 12.7% by 2020 from 9.8% in 2016, Bloomberg News reported.

* Brazilian steelmaker Companhia Siderúrgica Nacional's Portuguese flat steel subsidiary, Lusosider, plans to increase the capacity of its continuous galvanizing line by 20,000 tonnes per annum to about 250,000 tonnes per year, Metal Bulletin reported. The capacity expansion follows a revamp of the horizontal furnace at its plant in southern Portugal.

* About 70 million tonnes of minerals have been extracted using illegal mining in Poland, which is equal to the country's annual coal production, Puls Biznesu reported. The value of illegally mined minerals is about 1 billion Polish zlotys, Chief National Geologist Mariusz Orion Jedrysek said.

* Thailand's Central Bankruptcy Court will mull a rehabilitation plan for domestic steelmaker Sahaviriya Steel Industries on Nov. 9, Metal Bulletin reported.

SPECIALTY

* An estimate for Global Geoscience Ltd. pegged the maiden mineral resource at the Rhyolite Ridge lithium-boron project in Nevada at 393 million tonnes at 0.9% lithium carbonate, 2.9% boric acid and 1.7% potassium sulfate.

* AREVA SA is in discussions with Kazakhstan over a possible investment in the French nuclear giant, Reuters reported, citing a spokeswoman for the French industry ministry. According to the report, a delegation from Kazakh miner National Atomic Co. Kazatomprom JSC met with French officials and would probably focus on buying out AREVA's 51% stake in Katco, a joint venture with Kazatomprom.

* Agave Silver Corp. entered into an agreement to acquire a 100% interest in the Kootenay lithium project, which comprises three groups of mineral claims covering 4,050 hectares in British Columbia.

INDUSTRY NEWS

* India's Mines Ministry is assessing funding options to support exploration activities of government-owned and -operated mining firms in a bid to increase the sector's contribution to the country's gross domestic product to 2% from 1%, according to Mining Weekly.

The Daily Dose is updated as of 7 a.m. ET, 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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