A closer look at Vuclip’s emerging market strategy
By Benjamin Cher September 1, 2016
- Built a VOD platform for emerging markets from the get-go
- Now armed with a combo of tech, freemium model and localised content
THE video-on-demand (VOD) space in South-East Asia has certainly become crowded in recent times, with US giant Netflix competing against homegrown players like iflix and Hooq.
US-based Vuclip, which is offering a service called Viu with Hong Kong’s PCCW Media, however thinks it has the upper hand in emerging markets, according to its chief executive officer Nickhil Jakadar (pic above).
“Even though we are a US-headquartered company, our focus when we started eight-and-a-half years ago was on building a VOD service for emerging markets,” he says, speaking to Digital News Asia (DNA) in Singapore recently.
One reason was that, “having been brought up in India, I have a sense of how emerging markets behave, and I felt there was a need for a strong VOD service, especially on mobile devices,” he adds.
The second reason was pure business sense: Between Netflix and YouTube, then Hulu and Amazon, the developed market is pretty saturated, he notes.
Thus Vuclip’s focus on making sure its technology would work in emerging markets, where networks are not the most robust and where even getting a mobile phone call through can be a challenge.
“It requires a very different approach,” says Nickhil.
Vuclip worked on and registered a few patents that could make this viable, he declares, making it a “strong technology company that got into the media space, rather than a media company trying to figure out the technology.”
Freemium, data-driven content play
Having the best technology platform without a business model is akin to having a boat with no rudder, and Vuclip is banking on the freemium model.
“Advertising is not enough to support a purely free model, and a paid model will cause consumers to just run to free or pirate sites,” says Nickhil.
A freemium model allows Vuclip to offer some content for free to keep consumers on its platform, while upselling its paid content.
“If we can intelligently upsell them on the paid stuff, a percentage will convert,” he says confidently.
“From the ground up, we structure all our business models and contracts with our partners on a freemium model,” he adds.
Still, the most important piece of any VOD is ultimately its content, which Vuclip had eight-and-a-half years to figure out.
“We had all that data of what consumers wanted to watch because we had the search capability … and by determining what they actually watched, we also knew their consumption patterns,” says Nickhil.
“We discovered a certain theme – there was a lot of demand for Asian content in this part of the world, and trying to take on Netflix with a Hollywood strategy didn’t seem like a meaningful thing to do.
“Instead, we leveraged all this data we had and built a service on what consumers wanted to watch outside of Hollywood.
“And since there was very strong interest in Asian content, we decided to go with all these content studios, not only to get access to their content but to also localise the content [for each specific market],” he adds.
As case in point: Vuclip discovered that Korean dramas – popular in Indonesia, Malaysia, the Philippines and Singapore – were heavily pirated because for many people outside of that country, there were no legitimate ways of watching them.
Furthermore, most of these avid fans could not understand the Korean language, which meant local-language subtitles were needed.
The pirate sites have local subtitles, but done in a very amateurish manner, notes Nickhil.
“If we could take all this Korean content, for example, and provide HD (high-definition) quality and good subtitles in one place, via a freemium model but with the simulcast content behind a paywall, would consumers prefer consuming on our site instead of somewhere else?
“We found that the answer is ‘yes’,” he adds.
The telco gameplan
VOD players are finally starting to work with telcos to bundle their services, but for Vuclip, this was the gameplan from the start.
This approach also comes from the company’s deeper understanding of emerging markets, claims Nickhil.
“Outside of Singapore and Hong Kong, data plans are not 5GB to 10GB in size, they are only about 100MB to 200MB – which is okay for Facebook and WhatsApp, but not okay if you’re watching video.
“If you’re watching video, you’ll consume 200MB to 500MB in half an hour, and that’s your monthly quota – consumers will get really upset when their entire quota has been used up from watching one TV show,” he adds.
Vuclip’s approach of bundling its service with telcos is win-win-win for all concerned, Nickhil declares.
“Carriers want to sell more data plans, and if they gave consumers a reason to subscribe – like ‘buy our data plan and have access to the latest TV shows’ – that’s exciting for the consumer,” he adds.
Meanwhile, looking ahead, Vuclip is aiming to roll out its service at the rate of one country per month and cover the rest of South-East Asia this year, then look to countries like Australia and New Zealand.
“In parallel, we’ll look at the Middle East, which is a very big market for VOD services,” says Nickhil.
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