OTT video streaming market opportunity in Vietnam

Filippo Giachi, VP – Asia Pacific, Middle East & Africa

When it comes to over the top (OTT) video streaming services, Vietnam is a country that presents a significant commercial potential for suppliers able to provide the right packages at the right price, especially for the country's large number of smartphone owners.

Market forecasts produced by Statista suggest that overall sales of video on demand (VOD) content in Vietnam totalled US$86m last year and are predicted to grow at a compound annual growth rate (CAGR) of 11.5% to reach US$141m by 2024. Video streaming subscriptions (SVOD) make up the lion share of that total, estimated to have generated US$71m in 2019 and predicted to account for US$120m in four years' time.

Much of that turnover will derive from smartphone viewing. For a population of around 97m, Vietnam has mobile phone penetration of around 150% with 145.8 million connections as of this January, according to the GSMA. However, the country may also be reaching a saturation point, with mobile phone connections having increased just 2% between January 2019 and January 2020.

Almost all Internet users aged between 16 and 64 years (93%) own a smartphone, considerably more than PCs (65%), tablets (32%) or game consoles (13%). Around 66m Vietnamese access the Internet through their mobile devices, spending an average of just over 3 hours a day in the process.

Those activities are well supported by a comparatively well-developed mobile network infrastructure in Vietnam, with average download speeds in 2020 reaching 30.4Mbit/s, up 41% in 2020 over 2019 after the country's mobile network operators (MNOs) expanded the reach and capacity of their fourth-generation (4G) networks.

At last count, around 53% of all mobile connections in the country were either 3G or 4G with mobile phones accounting for 16% of all web traffic in the country. Vietnam's biggest mobile operator, state-owned Viettel, has also pledged to start rolling out commercial 5G services in June 2020 which will push OTT video and gaming performance on smartphones even further. The extra geographical reach expected with 5G will also prove instrumental in helping operators deliver high definition content to more subscribers, with only an estimated 36% of Vietnam's population living in urban areas.

Estimated Internet usage amongst 16 to 64-year olds (6.5 hours a day) is much higher than television viewing (2 hours) in the country, with 60% having watched TV content via monthly streaming subscription services a month. In a ranking of mobile apps by active users, for example, VTV Now – the direct to consumer video service that streams live and video on demand (VOD) content launched by state-owned television company Vietnam TV (VTV) in 2018 - ranked 7th in 2019.

OTT Streaming Providers in Vietnam

Yet VTV Now is just one of around 30 OTT products available in Vietnam. K+ too is a premium pay-TV service delivered by Vietnam Satellite Television (VSTV) as part of a joint venture with French broadcaster Canal+ which had approximately 800k subscribers in 2016. SCTV Vietnam offers VOD services alongside its cable and digital TV platform, with streaming apps also available from broadcasters including VNPT's MyTV Net and HTV Online.

The country's telcos have introduced their own streaming services as part of bundled fixed/mobile broadband and telephony packages. Notable examples are FTP Telecom which launched its FTP Play SVOD platform on a mobile app as early as 2015 while MobiTV rebranded in April 2016 after MNO MobiFone acquired 95% of TV company Audio Visual Global JSC earlier that year. The service has since been revamped to integrate TV and telecommunication services offering a mix of direct-to-home (DTH), satellite/digital terrestrial (DTT), mobile TV, e-commerce and mobile connection services with various pricing tiers and was estimated to have had 700k subscribers in 2016.

Keeng Movies, the subscription video on demand (SVOD) and advertising video on demand (AVOD) service introduced by Viettel in 2018, also streams copyrighted movies sourced from Hollywood and South Korean TV companies to its subscribers.

Specialist global and regional OTT streaming video players have made their debuts too. Malaysia-headquartered OTT SVOD provider iFlix has been active in Vietnam since 2016 having established content distribution partnerships with the likes of the Walt Disney Company, MGM, Paramount Pictures, Warner Bros, Fox and Starz, and additionally launched a free to air sports channel Zsports in 2019.

In addition to maintaining partnerships with local Vietnamese telcos, iFlix has also shown itself sensitive to the variations in mobile coverage in different parts of the country. In December 2018 the OTT service launched its Progressive Web Application, which provides video streaming capabilities via web browsers for Android devices that let consumers continue using iFlix even with unstable network conditions while consuming lesser data and storage space.

iFlix has also invested in premium local content, having released the Vietnamese remake of the Korean movie "Scandal Makers 2018" and partnering with local content creation company Happy Canvas to bring popular dating reality show "The Bachelor" to Vietnam.

The same commitment to localised content cannot be said for Netflix however, estimated to have acquired only 300k subscribers since its Vietnamese debut in 2016 according to a report by the Vietnam Investment Review – partly due to its lack of localised content but also because it only accepts card payments.

And Amazon is yet to launch Prime in Vietnam, having only begun to offer its Global Selling e-commerce service late last year in cooperation with a Ministry of Industry and Trade programme aimed at helping Vietnamese businesses sell into international markets.

On a smaller scale, Indian pay television music channel ZingTV is distributed in Vietnam while Clip TV, owned by the Vega Corporation, is a multi-platform Internet TV service available via a mobile app. Content producers like BHD (DANET) have also branched out to offer OTT streaming platforms of their own.

While the tussle for Vietnamese subscribers between those licensed streaming content providers is intense, they all compete with the large volume of pirated media which is widely available in Vietnam. In a recent survey done by information and consultancy group Kantar Media Vietnam 45% of respondents in the cities of Hanoi, Ho Chi Minh City, Da Nang and southern Can Tho said they watched a video on demand (VOD). Yet pirated content is also estimated to make up about 95% of OTT services in Vietnam according to media firm BHD, predominantly supplied by unlicensed or illegal websites.

While nine out of 10 Vietnamese use OTT services on a weekly basis according to global market research and data analytics company Nielsen, a smaller proportion actually pay for it. An estimated 236m unique visits to illegal streaming sites were clocked in the first half of 2017, where the quality of content is often good enough to rival paid-for alternatives. That trend led Kagan – the TMT research arm of S&P Global Market Intelligence – to estimate that paid OTT video subscriptions reached only 4.1% of broadband households in Vietnam in 2018, though it predicts the figure will grow at a CAGR of 21% through to 2023.

Payment trends favour direct carrier billing

Competing with free and pirated OTT content relies on more than just pricing services to suit local market demand and expectations. Providers also need to pay close attention to how consumers in Vietnam can and want to, pay for their streaming video subscriptions.

Around 90% of all business in the country is still conducted in cash according to Banking Vietnam data, while only 30% of the population over the age of 15 have an account with a financial institution. Similarly, just 4% have a credit card and 3.5% a mobile money account, so payment options tied to bank accounts and debit cards are unlikely to enjoy much traction with the majority of the population.

In contrast, almost two thirds (59%) of 16 to 64-year-olds in the country already make online purchases via their mobile devices. That, combined with the high level of smartphone penetration in Vietnam presents a significant opportunity for OTT providers to sign more customers by making content subscriptions and purchases available through direct carrier billing (DCB) relationships forged with multiple telcos..

The long-term potential for growth is certainly attractive. Statista estimates that SVOD penetration rates in Vietnam was only 4.5% of the population in 2019, expected to reach 5.6% by 2024, during which time the average revenue per user (ARPU) will increase from US$15.90 to US$21.24.

With an estimated 89% of all mobile phone subscriptions in Vietnam being prepaid, operators have to be flexible in how they bill users for OTT services, however. But iFlix has already shown what is possible, having partnered Viettel to offer almost 70m pre- and postpaid subscribers three months unlimited access to streamed video content on up to five connected devices (plus local download options) in 2018, then offering DCB payment options for customers that liked what they watched.