Indonesia's OTT market to hit $4.4 bil. by 2027 as video viewing and gaming boom

17, Mar. 2021

Indonesians are consuming much more OTT content such as movies and TV services delivered smartphones and other devices. (Antara)
Indonesians are consuming much more OTT content such as movies and TV services delivered smartphones and other devices. (Antara)

By Merliyani Pertiwi

JAKARTA, NNA – As demand for movies, TV services and gaming soars, Indonesia's over-the-top (OTT) market is projected to hit $4.45 billion by 2027 if it continues to flourish at a compound annual growth rate (CAGR) of 33.1 percent from 2020.

The boom is driven by rising smartphone adoption and compatibility with OTT applications, higher internet speeds, and a surge in video subscriptions in Indonesia, according to a report by Allied Market Research.

Not requiring cable or satellite television subscription, OTT content such as movies and TV services are delivered directly over the internet to connected devices such as PCs, tablets, smartphones and gaming consoles. OTT content can be directly downloaded and viewed on user demand.

Based in Portland, America, Allied Market said the COVID-19 pandemic lockdowns in 2020 have had a positive impact on the growth of the OTT market across the globe, especially in Indonesia where the market was worth only $360 million in 2019 before the shift in consumer viewing habits.

The media and entertainment segment held the largest share in 2019, accounting for more than one-third of the Indonesia market, as increasing popularity of OTT content transformed processes and operations of media and entertainment companies.

The rise in demand for OTT services is due to growth in online communication services and increased use of online entertainment platforms, said the research and consultancy firm, adding that economical service charges also helped the upsurge.

According to a survey, about 46 percent of viewers watched online content with their traditional primetime consumption of 10pm to midnight increasing and starting much earlier from 7pm, said Allied Market.

Indonesia's subscription video on demand (SVOD) market is dominated by players such as iflix, CatchPlay, Mola TV, Netflix Indonesia, PT. Media Nusantara Citra Tbk, PT Telekomunikasi Selular (Telkomsel), Vidio.com, PT. Telekomunikasi Indonesia Tbk, and Viu.

The solutions segment dominated Indonesia's OTT market share in 2019, accounting for nearly two-thirds of it, due to rise in demand for innovative solutions for media sharing by consumers. This trend is expected to stay during the forecast period.

However, the services segment is projected to deliver the highest CAGR growth of 35.1 percent during the same period, owing to increase in adoption of services among end users and effective functioning of software and platform throughout the process.

Moreover, the increase in adoption of OTT software and platforms is expected to boost demand for these services, said Allied Market.

As for the user type, the commercial segment held the lion's share in 2019, contributing to more than half of the Indonesia market. This is due to numerous benefits provided by services and rise in the number of enterprises using their own OTT services.

However, the personal segment is estimated to register the highest CAGR of 34.3 percent during the forecast period, as individual users adopt OTT services to launch their own videos.

Looking at the industry vertical of the market, the e-commerce segment is expected to be the shining star with the highest CAGR growth rate of 40.9 percent during the forecast period. Allied Market noted that e-commerce companies are not only using OTT services, but are also launching their own on-demand video streaming platforms.

Said Allied Market in its report, "Presently, over-the-top services are at a relatively nascent stage, and are trending across the globe. The over-the-top market is projected to witness further innovative and advanced transformation, which is anticipated to enable customers to access content. This makes over-the-top platforms adept at selling physical products along with audio and video service offerings."

Following new consumer habits, ad spend has flowed into OTT faster than expected.

According to a report by video advertising platform SpotX, 47 percent of brands are looking to increase OTT spend in Southeast Asia by 10-20 percent through May 2021.

It noted an upward spending trend in 2020 continuing in 2021 for arts and entertainment, health and fitness, education, hobbies and interests, and finance.