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Analysts: Asian OTT players need less regulation, stricter piracy rules


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Analysts: Asian OTT players need less regulation, stricter piracy rules

As a range of Asian countries are stepping up efforts to regulate over-the-top platforms, analysts warn against potential overregulation.

Asia experienced a surge in international and local online video providers in recent years. The proliferation of digital content has led to a need for a regulatory framework. Watchdogs in several Asian markets are therefore in the process of drafting new rules for OTT players.

Analysts, however, warn that — since Asia's OTT industry is still relatively immature excess regulation and censorship could undermine the industry's growth. Rather than imposing too many rules on online video platforms, authorities should focus more on combating piracy.

"You do not want to regulate the industry to such extent that you completely choke out any opportunities for the business to grow, or companies to turn profitable, because too much regulation can stifle the industry," according to Aravind Venugopal, vice president at Media Partners Asia.

"It's a very thin line between ample regulation and overregulation," he said in an interview.

China is considered to be the most tightly regulated market in the region. Last month, 10 live streaming platforms and over 30,000 studios were shut down, while 48 companies faced fines following a crackdown on illegal live streams.

Also in May, China banned broadcasters and online streaming sites from covering the first of three Go matches between Chinese Go player Ke Jie and Google unit DeepMind's AlphaGo program. DeepMind was streaming all three matches on YouTube. However, the site is formally banned in the country, alongside Alphabet Inc. unit Google Inc.

Apple Inc. was also recently on China's radar, namely for making third-party live streaming apps available via the App Store.

China plans to further tighten its grip on the internet under a five-year cultural development and reform plan, in a bid to retain online content under state control.

Global streaming giant Netflix Inc. has been trying to enter China for years, and was partly successful this April, following a licensing deal with Baidu Inc.-owned iQiyi. Whether Netflix will be able to launch in China as a stand-alone service remains to be seen.

In Thailand, the government recently announced a planned complaint-based regulatory approach for OTT platforms, and is eyeing fines for platforms like YouTube and Facebook Inc. if they fail to remove illegal content within a given time frame. Thai authorities recently threatened to sue Facebook over a viral video of King Maha Vajiralongkorn, wherein the Monarch, in crop top and fake tattoos, was strolling around a mall with a woman.

"I do not really think the Asian market has something set in stone for how [OTT] content should be regulated at this time," according to S&P Global Market Intelligence media analyst Abigail Cruz.

She related the acclimation of Asians to OTT platforms as a reason for the fragmented approach to regulation.

"There is a lot more to go before we reach that point where people are really accustomed to using online video streaming or subscription video-on-demand platforms," she explained.

In the Philippines, for example, the Movie and Television Review and Classification Board wants to expand its reach to cover films distributed via OTT. However, that proposal seems to have remained in the drawing board.

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Aside from regulation, piracy is another burden for OTT platforms in Asia. The rapid development of broadband infrastructure in the region allows OTT platforms to expand, yet faster internet also means faster access to pirated content, according to Venugopal.

Singapore, despite having one of the fastest internet speeds in Asia, ranked ninth for global piracy in 2016.

The study by tech firm Muso found out that Singaporeans visited piracy sites 191 billion times last year, with an average of 179.38 visits per user.

Next to billing concerns, Venugopal thinks that piracy is the next big challenge for OTT platforms.

"Some [piracy] is because of historical reasons, the way content owners used to sell pieces of content to pay TV platforms and the way they used to slice and dice the rights," he said.

This, in turn, creates a big time lag between when content is released in its home market versus when it is made available elsewhere. Therefore, OTT platforms aim to offer episodes of TV shows at the shortest possible time.

For example, India's Hotstar streams "Game of Thrones" the same day as its U.S. airing, following an exclusive deal between Time Warner Inc.'s HBO and Hotstar owner STAR India Pvt. Ltd.

Iflix, meanwhile, offers episodes of Filipino fantasy series "Encantadia" 24 hours after their original broadcast, while PCCW Ltd.'s Viu has episodes of popular Korean dramas like "Weightlifting Fairy Kim Bok-Joo" and "Dr. Romantic" eight hours after airing on TV.

Cruz believes that OTT platforms must treat piracy as a competitor. Telco partnerships and differentiation in terms of offerings and user experience proved highly successful, and increased cooperation between governments and OTT platforms could lead to greater improvements.

"Convenience is a possible perspective that [OTT platforms] can consider when they try to take piracy as a competitor, like how can they make it more convenient for people to get the content that they want, or how else can they make the OTT service more affordable or more reasonably priced," she noted.

Venugopal stressed that OTT operators and content providers must unite against piracy, stressing that, on a pan-Asia perspective, governments need to step up.

"Much more can be done by regulators and governments to tackle piracy," he said, concluding that "it has not been at the top of their to-do list, unfortunately."