Tencent Acquired Iflix to Expand Footprint in Asia

Publication date: 26 Jun 2020 Author: Jun Wen Woo Senior Research Analyst, Online Video

Tencent acquired iflix to expand footprint in Asia

Brought to you by Informa Tech Tencent acquired iflix to expand footprint in 1 Asia

Chinese tech company Tencent has acquired iflix, regional streaming service headquartered in Malaysia. However, both companies have not disclosed details on the deal. Tencent’s video streaming service, Tencent Video operates only in China and it reached 112 million paying subscribers in first quarter of 2020. Iflix reported 25 million monthly active users, and Omdia estimates only half of them are paying subscribers, including subscribers taking bundled service from service providers. Iflix is currently available in Malaysia, the Philippines, Indonesia, Thailand, Sri Lanka, Brunei, the Maldives, Pakistan, Vietnam, Myanmar, Cambodia, Nepal and Bangladesh. Its biggest market in the region are Indonesia and Philippines. Our analysis:

Iflix’s localized content and telco partnerships will strengthen Tencent’s portfolio in the region The acquisition of iflix is by far the biggest international expansion by Chinese companies in the online video sector. Iflix’s local appeal and knowledge, including content and existing telco partnerships, will complement Tencent’s capabilities in technology and content. With the addition of iflix’s operations in the afore-mentioned countries, Tencent will considerably increase its presence outside of China. Following the acquisition, we expect Tencent Video will combine its international online video service, WeTV with iflix to streamline its online video operations in this region. As the online video market matures in China, Baidu, Alibaba and Tencent, collectively known as BAT, who are also the owner of leading streaming services in China, have started to diversify their portfolios in media sector and look beyond the domestic market. In second half of 2019, Tencent expanded its international version of online video service, WeTV to Thailand, Indonesia, Vietnam, and India. It also led a USD 111 million funding round in India’s video streaming service MX Player in October 2019. Tencent Video’s rival in domestic market, iQIYI announced a strategic partnership with Malaysian pay TV operator Astro Malaysia Holdings in November 2019 to launch its iQIYI streaming service in Malaysia. In May 2019, Alibaba invested an additional USD 100 million in its social video app Vmate to grow its presence in India, a comparatively younger market where social video is not as crowded as the Chinese market. Financial crisis in iflix comes after HOOQ filed for liquidation in March 2020 Iflix started laying off employee in late 2019 and recently close down iflix Bangladesh office to reduce operating cost. Covid-19 has increased financial burden and created uncertainties as this delayed the company’s original plan for IPO in the first half of 2020 on Australian Securities Exchange. Online video market outlook of developing markets in Asia Omdia anticipates there will be more consolidations in the next few years as the market grows. Covid-19 has driven digital uptake of video viewing habit, driving high subscription growth rate in 2020. Even though churns are expected after lockdown, we expect many will continue to use online video service even post Covid-19. Growth will come from developing markets with vast potential notably, India, Indonesia, Philippines and Vietnam.

However, it is worth-noting that challenges remain in these developing markets, where piracy is rampant and free-to-air channels and pay TV are still strong. Hybrid model which is the combination of advertising- supported model and subscription model is the best model to attract users and maintain source of revenue in this region. Citation policy Request external citation and usage of Omdia research and data via [email protected]. Omdia consulting We hope that this analysis will help you make informed and imaginative business decisions. If you have further requirements, Omdia’s consulting team may be able to help you. For more information about Omdia’s consulting capabilities, please contact us directly at [email protected]. Copyright notice and disclaimer The Omdia research, data and information referenced herein (the “Omdia Materials”) are the copyrighted property of Informa Tech and its subsidiaries or affiliates (together “Informa Tech”) and represent data, research, opinions or viewpoints published by Informa Tech, and are not representations of fact. The Omdia Materials reflect information and opinions from the original publication date and not from the date of this document. The information and opinions expressed in the Omdia Materials are subject to change without notice and Informa Tech does not have any duty or responsibility to update the Omdia Materials or this publication as a result. Omdia Materials are delivered on an “as-is” and “as-available” basis. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in Omdia Materials. To the maximum extent permitted by law, Informa Tech and its affiliates, officers, directors, employees and agents, disclaim any liability (including, without limitation, any liability arising from fault or negligence) as to the accuracy or completeness or use of the Omdia Materials. Informa Tech will not, under any circumstance whatsoever, be liable for any trading, investment, commercial or other decisions based on or made in reliance of the Omdia Materials.