Final Report Study of Procedures for Competition Regulation for OTT TV 25 January 2017 Time Consulting Co., Ltd. Informal translation provided for members of P. 1 Table of Contents 1. Executive Summary 1.1 Summary of understanding of Project Procedure and Methodology 1.2 Summary of International Comparison 1.3 Summary of Analysis of the Thai market 1.4 Summary of Gap Analysis and Policy Recommendations 14 14 21 25 34 2. Understanding the Project 40 2.1 Project Background 40 2.2 Project Objectives 41 3. Project Procedure and Methodology 42 3.1 Definition of OTT Words and their Value Chain 42 3.2 Key Points of the Study 45 3.3 Project Concept and Procedures 46 3.4 Plan 1: Project Planning 48 3.5 Plan 2: International Study 50 3.6 Plan 3: Thai Market Analysis 62 3.7 Plan 4: Gap Analysis and Policy Recommendation 65 3.8 Plan 5: Focus Group and Capacity Building 67 3.9 Plan 6: Conclusions and Final Recommendations 71 3.10 Work Plan and Timeline 73 4. OTT TV Systems, Types of Services and Devices Supported 74 5. International Study 82 5.1 United States of America Informal translation provided for members of 82 P. 2 5.1.1 OTT TV Providers in the market and Types of OTT TV Services 85 5.1.2 The Market, Competition and Impact from offering OTT TV Services 95 5.1.3 Regulations, Promotional Policies and Support for OTT TV Services 102 5.2 109 United Kingdom, UK 5.2.1 OTT TV Providers in the market and Types of OTT TV Services 112 5.2.2 The Market, Competition and Impact from offering OTT TV Services 120 5.2.3 Regulations, Promotional Policies and Support for OTT TV Services 125 5.3 131 Singapore 5.3.1 OTT TV Providers in the market and Types of OTT TV Services 133 5.3.2 The Market, Competition and Impact from offering OTT TV Services 139 5.3.3 Regulations, Promotional Policies and Support for OTT TV Services 143 5.4 150 South Korea 5.4.1 OTT TV Providers in the market and Types of OTT TV Services 153 5.4.2 The Market, Competition and Impact from offering OTT TV Services 159 5.4.3 Regulations, Promotional Policies and Support for OTT TV Services 162 5.5 170 Malaysia 5.5.1 OTT TV Providers in the market and Types of OTT TV Services 172 5.5.2 The Market, Competition and Impact from offering OTT TV Services 178 5.5.3 Regulations, Promotional Policies and Support for OTT TV Services 183 5.6 188 Australia 5.6.1 OTT TV Providers in the market and Types of OTT TV Services 191 5.6.2 The Market, Competition and Impact from offering OTT TV Services 196 5.6.3 Regulations, Promotional Policies and Support for OTT TV Services 204 5.7 The Overall Regulatory Scene in the Asia Pacific Region 206 5.8 The Global Consumer Response 216 5.8.1 Consumer Behavior in Choosing Contents 217 Informal translation provided for members of P. 3 Informal translation provided for members of P. 4 5.8.2 Consumer Behavior in Choosing Devices 222 5.8.3 Current Customer Satisfaction in OTT TV 224 6 Thai Market Analysis 227 6.1 Market Analysis and types of services for Pay TV Service in Thailand 227 6.2 Market Analysis for OTT TV Service in Thailand 230 6.2.1 Market Trends for OTT TV Service in Thailand 253 6.2.2 Analysis of interesting OTT TV Service Providers 260 6.2.3 Analysis of Relevant Laws and Regulations 275 7 Result of Focus Group 284 7.1 The Focus Group Program 284 7.2 Planning for Focus Group 285 7.3 Summary of Contents of Focus Group 288 7.4 Summary of Ideas on Competition Regulations for OTT TV 289 7.5 Scenes from Focus Group 291 8 Capacity Building for NBTC staff 293 8.1 Program for Capacity Building 293 8.2 Planning for Capacity Building 294 8.3 Summary of Questions on Competition Regulations for OTT TV 296 8.4 Scenes from Capacity Building 298 9 Report of Competition Regulation on OTT TV 300 9.1 Program for Competition Regulation on OTT TV 300 9.2 Planning for Competition Regulation on OTT TV 301 Informal translation provided for members of P. 5 9.3 Summary of Seminar on Competition Regulation on OTT TV 9.4 Customer satisfaction and ideas from seminar on 305 Competition Regulation on OTT TV 306 9.5 Scenes from Seminar on Competition Regulation on OTT TV 307 10 Final Recommendations and Regulatory Impact Analysis 309 10.1 Definition of OTT TV Service 309 10.2 Final Policy Recommendations on Competition Regulation on OTT TV 309 10.2.1 Policy Recommendations on Good and Creative Local Contents 310 10.2.2 Policy Recommendations on Regulatory Control of OTT TV through Licensing 312 10.2.3 Policy Recommendations on Imposing Content Regulations 314 10.2.4 Policy Recommendations on Regulating ISP through Net Neutrality 317 11 Appendices 322 11.1 Attendee List at Focus Group 322 11.2 Attendee List for Capacity Building of NBTC Staff 328 11.3 Attendee List for Seminar on Competition Regulation on OTT TV 330 11.4 Customer Satisfaction Questionnaire at Seminar on Competition Regulation on OTT TV Informal translation provided for members of 334 P. 6 CHARTS CONTENTS Chart 1-1 Project Design 15 Chart 1-2 Scope of OTT TV Project 16 Chart 1-3 Project Work Plan with Timeline 20 Chart 1-4 Market Development of OTT TV in other countries compared with Thailand 22 Chart 1-5 Dominant Players in US, UK, and South Korea 23 Chart 1-6 Dominant Players in Australia, Singapore and Thailand 23 Chart 1-7 Partnership among OTT TV and Supply Chain Providers 24 Chart 1-8 Policy Recommendation on Regulating OTT TV 36 Chart 2-1 Project Background and Objectives 40 Chart 3-1 Value Chain and Scope of OTT TV 43 Chart 3-2 Project Design 47 Chart 3-3 Sample of Project Status Report 48 Chart 3-4 Topics and Countries to be studied 51 Chart 3-5 Sample Analysis of Development of OTT TV in the US 54 Chart 3-6 OTT TV Monetization Model Overview 54 Chart 3-7 Video Service Monetization Model in Other Countries 55 Chart 3-8 Video Service Monetization of incumbents in the US 55 Chart 3-9 OTT TV Partnership with Incumbents 56 Chart 3-10 Trends in using OTT TV Features 56 Chart 3-11 Sample Regulation of OTT TV 57 Chart 3-12 Scope of Global Consumer Behavior 58 Chart 3-13 Information on Mobile Data usage for Video 60 Informal translation provided for members of P. 7 Chart 3-14 Sample of Viewing Behavior in foreign countries 60 Chart 3-15 Scope of Overview of Regulatory Framework in Asia Pacific 61 Chart 3-16 Video Service Provider Landscape in Thailand 63 Chart 3-17 Competition Analysis and Profiling of OTT TV Service Providers In Thailand 64 Chart 3-18 Key Issues for OTT Regulations 67 Chart 3-19 Sample Focus Group 69 Chart 3-20 Sample Capacity Building 70 Chart 3-21 Sample presentation of ideas from different sectors 72 Chart 3-22 Project Plan and Timeline 73 Chart 4-1 OTT TV Infrastructure 74 Chart 4-2 Categories of OTT TV Provider and Content 76 Chart 4-3 OTT TV Monetization model 79 Chart 5-1 OTT TV in USA at year 2004 to 2009 86 Chart 5-2 OTT TV in USA at year 2010 to 2016 87 Chart 5-3 Amazon Video Purchase and Rental 92 Chart 5-4 Popularity of OTT TV in the US 97 Chart 5-5 Pay TV subscribers in the US 2006 to 2015 98 Chart 5-6 Impact of OTT TV on Pay TV in the US 99 Chart 5-7 Future of OTT TV and Pay TV 100 Chart 5-8 Comcast switch to usage based pricing for broadband 102 Chart 5-9 Relevant Regulation for OTT TV in USA 103 Chart 5-10 Net Neutrality Rules in the US 104 Chart 5-11 Net Neutrality Cases Comcast and Bit Torent 106 Informal translation provided for members of P. 8 Chart 5-12 Net Neutrality cases at Zero Rating 108 Chart 5-13 Major OTT TV players in the UK 2006-2015 113 Chart 5-14 Popularity of OTT TV in the UK 121 Chart 5-15 Online TV Revenue in the UK 122 Chart 5-16 Impact of OTT TV on existing platforms 124 Chart 5-17 Impact of EU Directives on OTT TV regulation in UK 126 Chart 5-18 The Audio Visual Media Services Directive 127 Chart 5-19 OTT TV Regulations in the UK 130 Chart 5-20 OTT TV Services in Singapore 133 Chart 5-21 Singapore’s Landscape of Linear TV 140 Chart 5-22 Singapore’s OTT TV Market Environment 141 Chart 5-23 OTT TV effect on Singapore 142 Chart 5-24 Pay TV Subscribers and ARPU 143 Chart 5-25 Singapore’s OTT TV related Rules and Regulators 144 Chart 5-26 Singapore’s OTT TV related Regulations: Licensing 145 Chart 5-27 Singapore’s OTT TV related Regulations: Consumer Protection 146 Chart 5-28 Singapore’s OTT TV related Regulations: Consumer Protection Cases 147 Chart 5-29 Singapore’s OTT TV related Regulations: Other Relevant Rules 148 Chart 5-30 OTT TV in South Korea 154 Chart 5-31 Readiness of South Korea for OTT TV 159 Chart 5-32 Market Leaders in OTT TV in South Korea 161 Chart 5-33 Effect of OTT TV 162 Chart 5-34 Relevant PTT TV Regulations in South Korea 163 Informal translation provided for members of P. 9 Chart 5-35 Net Neutrality and Internet Traffic Management Rules (2014) Chart 5-36 A study of Net Neutrality and 164 Internet Traffic Management Rules (2014) 166 Chart 5-37 Other Relevant laws for OTT TV in South Korea 168 Chart 5-38 OTT TV Service in Malaysia 173 Chart 5-39 Malaysia’s readiness for OTT TV 178 Chart 5-40 OTT TV and Advertising Spending 180 Chart 5-41 OTT TV and Partners 181 Chart 5-42 Relevant Regulations for OTT TV in Malaysia 183 Chart 5-43 Communications and Multimedia Act 1998 of Malaysia 184 Chart 5-44 Copyright Act 1987 of Malaysia 185 Chart 5-45 Sedition Act 1948 of Malaysia 186 Chart 5-46 OTT TV Service in Australia 192 Chart 5-47 OTT TV Viewing in Australia 197 Chart 5-48 SVoD OTT TV Service in Australia 199 Chart 5-49 Current TV Consumption Share in Australia 201 Chart 5-50 Future Outlook for TVM Market in Australia 201 Chart 5-51 Netflix Effect 203 Chart 5-52 Broadcasting Services Act 1992 205 Chart 5-53 Increase in watching On-Demand TV Series and Movies 217 Chart 5-54 Average Number of Self-reported Weekly Hours of Active TV/Video Watching Chart 5-55 Percentage of Consumers Watching YouTube With Different Frequency Chart 5-56 218 219 Percentage of People Watching Different Media Types At least once a day Informal translation provided for members of 220 P. 10 Chart 5-57 Global Consumer Behavior OTT TV Chart 5-58 Percentage of Consumers who Watch Each 221 Content Type on their Smart Phone 222 Chart 5-59 Share of Total TV Time by age Group 224 Chart 5-60 Consumer Evaluation of Content Providers 229 Chart 6-1 Current Situation of Pay TV Market August 2016 249 Chart 6-2 OTT TV Players in Thailand 254 Chart 6-3 Growth in Broadband Adoption in Thailand 255 Chart 6-4 SVoD OTT TV in Thailand 256 Chart 6-5 AVoD OTT TV in Thailand 257 Chart 6-6 Price Trends and Technologies 258 Chart 6-7 Is Thai Telecom Act Relevant to OTT TV? 259 Chart 6-8 Profiling and SWOT Analysis: MonoMaxxx 261 Chart 6-9 Profiling and SWOT Analysis: Primetime 262 Chart 6-10 Profiling and SWOT Analysis: iFlix 264 Chart 6-11 Profiling and SWOT Analysis: HOOQ 265 Chart 6-12 Profiling and SWOT Analysis: LINE TV 267 Chart 6-13 Profiling and SWOT Analysis: YouTube 268 Chart 6-14 Profiling and SWOT Analysis: Bugaboo 269 Chart 6-15 Profiling and SWOT Analysis: TrueVisions Anywhere 271 Chart 6-16 Profiling and SWOT Analysis: AISPlay 272 Chart 6-17 Profiling and SWOT Analysis: ThaiTV3 273 Chart 6-18 OTT TV Scoring System in Thailand 274 Chart 6-19 OTT TV Competitive Scoring in Thailand 274 Chart 6-20 Relevant Laws and Regulations 276 Chart 6-21 Cyber Crime Act BE 2550 278 Informal translation provided for members of P. 11 Chart 6-22 Intellectual Property Law Informal translation provided for members of 280 P. 12 Chart 6-23 Consumer Protection Law as regards OTT TV 281 Chart 6-23 NBTC Law as regards OTT TV 282 Chart 7-1 Photo 1: Focus Group on Competition Regulation OTT TV 291 Chart 7-2 Photo 2: Focus Group on Competition Regulation OTT TV 291 Chart 7-3 Photo 3: Focus Group on Competition Regulation OTT TV 292 Chart 8-1 Photo 1: Capacity Building for Competition Regulation OTT TV 298 Chart 8-2 Photo 2: Capacity Building for Competition Regulation OTT TV 299 Chart 8-3 Photo 3: Capacity Building for Competition Regulation OTT TV 299 Chart 9-1 Photo 1: Seminar Competition Regulation OTT TV 307 Chart 9-2 Photo 2: Seminar Competition Regulation OTT TV 308 Chart 9-3 Photo 3: Seminar Competition Regulation OTT TV 308 Chart 10-1 Policy Recommendation 309 Chart 10-2 Good Local Contents Support 311 Chart 10-3 Policy Recommendation: Licensing 312 Chart 10-4 Policy Recommendation: Contents 315 Chart 10-5 Policy Recommendation: Regulate ISP via Net Neutrality 318 Informal translation provided for members of P. 13 CONTENTS TABLES Table 1-1 Study showing comparison between foreign countries and Thailand 28 Table 3-1 Sample Regulation 66 Table 5-1 List of Service Providers in Telecom, National Television, Commercial Television, Pay Television, as connected to OTT TV service in the US 85 Table 5-2 Netflix monthly service charges in the US 90 Table 5-3 Package of Service offered by Hulu 95 Table 5-4 Viewers on YouTube by Content Providers 96 Table 5-5 List of Service Providers in Telecom, National Television, Commercial Television, Pay Television, as connected to OTT TV service in the UK Table 5-6 112 List of Service Providers in Telecom, National Television, Commercial Television, Pay Television, as connected to OTT TV service in Singapore Table 5-7 133 List of Service Providers in Telecom, National Television, Commercial Television, Pay Television, as connected to Pay TV service in South Korea Table 5-8 153 List of Service Providers in Telecom, National Television, Commercial Television, Pay Television, as connected to OTT TV service in the Malaysia Table 5-9 172 List of Service Providers in Telecom, National Television, Commercial Television, Pay Television, as connected to OTT TV service in Australia Informal translation provided for members of 191 P. 14 Table 5-10 Subscribers and households that watch Video and TV 202 Table 5-11 Overall Regulatory of OTT TV in the Asia Pacific Region 215 Table 6-1 Prime Time Fees in August 2016 233 Table 6-2 Thai Viewing Statistics through YouTube at August 2016 239 Table 6-3 Overall Service Provider in Thailand for OTT TV, and type of Revenue 253 Table 7-1 Opinions about Competition Regulation for OTT TV 290 Table 8-1 Summary of questions raised on Competition Regulation for OTT TV Informal translation provided for members of 298 P. 15 1. Executive Summary This is the Final Report on ‘Competition Regulation on OTT TV’ (Over the Top Television) which covers understanding of the project, study guidelines, methodology, study of comparative OTT TV markets, impact of OTT TV, regulatory environment in foreign countries (International Study), analysis of the Thai market, summary of findings of focus group, response from capacity building of NBTC personnel, resulting in the final recommendations and regulatory impact analysis. The object of this study is to seek challenges in regulating OTT TV and providing recommendations in keeping with the role of NBTC in promotion and supervision including analysis of strengths and weakness of the regulatory issues where NBTC can intervene. The details of the study are presented as follows: 1.1 Summary of Understanding of Project Procedure and Methodology The project ‘Competition Regulation on OTT TV’ studies competition in Over the Top TV, with the key objective of studying comparative benchmark market conditions and competition in OTT TV services and impact on the relevant service market, together with regulatory environments. The objective is to analyze and provide policy recommendations suitable for Thai conditions, which will enable NBTC to adapt regulations in the period of convergence. In implementing the project according to the project objectives as declared above, the consulting company Time Consulting Co., Ltd. has designed this project in six sections over a total of seven months with details of how they are linked as follows: Informal translation provided for members of P. 16 Chart 1-1: Project Design Scope of the Study The project ‘Competition Regulation on OTT TV’ needs to define OTT TV clearly to provide the frame work for the study. In this project, OTT TV means the website or application which sends content to end user through any internet network. Chart 1-2 shows the value chain for OTT TV services which has five key parts – content owner, platform service provider, provider of devices used in OTT TV, end user, and the internet service provider. This study will show the types of service provided, market condition and competition in offering the OTT TV service, impact of the OTT TV service, and trends towards competition regulations mainly covering the service platform and will indicate use of devices in each work plan of the project. Informal translation provided for members of P. 17 Chart 1-2: Scope of OTT TV Project Work Plan 1: Project Planning Work Plan 1 involves detailed project planning where the consultant will provide clear definition of OTT TV for this project, summarize the choice of countries and study issues to provide a framework for the entire study including adapting the initial project plan to have the technical recommendations proceed according to NBTC’s requirement. Work Plan 2: International Study Informal translation provided for members of P. 18 Under this work plan the consultant will make a comparative study of 6 countries as follows: Type Country Countries with regulations United States of America United Kingdom Type Reason Provides widespread OTT service e.g.Net Flix, Hulu, with success with larger market share than original Pay TV and has regulations over contents, and over network through Net Neutrality Provides widespread OTT service e.g. BBC iPlayer, ITV Player, and has regulations over network through Net Neutrality policy and Audiovisual Media Service Directive of the European Commission Country Reason Has service providers who offer service in Thailand i.e. HOOQ a regional service provider who came from the cooperation between Telco and International Content Provider; and regulates through licensing, regulating the contents through OTT TV Singapore service and using Net Neutrality. OTT TV service came from Telco Pay TV Operator and partnership of major broadcasters. Regulation exist under the Countries with no South Internet Multimedia Boradcasting Business or little regulation Korea Act Offers OTT TV service as partnership with Telco in increasing market access and has service providers who are in Thailand like iFlix, which is a tech-start up company. They Malaysia regulate OTT TV content Regulates OTT TV through on-line content and has original Broadcaster/Pay TV operator ie. Nine Seven Foxtel which has a Australia role in offering OTT TV service Key issues to be studied cover several areas of interest to NBTC to set policies to regulate as follows: Market conditions and competition in linear and non-linear platform for Pay TV and OTT TV The business model, technology offered for OTT TV service and future trends for OTT TV Informal translation provided for members of P. 19 Monetization model of OTT TV Relationship between OTT TV, Telco, Pay TV Operator and Broadcaster Informal translation provided for members of P. 20 Analysis of impact in several areas including competition with other platforms such as DTT, cable, and satellite TVs, service fees charged, and impact upon the consumer Format and parameters of OTT TV related regulations such as network regulation, regulating through licensing authorization, and online content regulation Policy format, promotion and support to be offered e.g. support for Tech-start up OTT TV provider SWOT analysis of regulatory intervention through regulations and policies, with key implications for Thailand In addition, Consultant will add information to help NBTC understand behavior trends and regulatory implications which will offer the macro view of the international scene as follows: 1. Global overview of consumer behavior on video consumption on the following key issues: Behavior in choosing content through OTT TV Behavior in using devices to access OTT TV Satisfaction in using OTT TV services today 2. Overview of regulatory issues in five countries of Asia Pacific Region i.e. Japan, Hong Kong, China, Indonesia and the Philippines. The issues to be studied are: Regulatory structure for OTT TV Law protecting copyright Law covering issuance of license for OTT TV service providers Law covering fee structure (covering wholesale and retail) Investment law (covering foreign investment) Law covering sales promotion (e.g. service add-on) Law covering advertising (e.g. setting ceiling for advertising rate by the hour) Law covering content, and law covering consumer protection Informal translation provided for members of P. 21 Work Plan 3: Thai Market Analysis In this Work Plan the Consultant will analyze the market for Pay TV and OTT TV in Thailand, covering market trends and services, types of service offered, technology used in offering OTT TV services, types of revenue for OTT TV, types of relationship between OTT TV, Telco, Pay TV Operator and Broadcaster, analyzing impact on areas such as competitions with other platforms (DTT, cable and satellite), fee for the service, and the consumer impact. Consultant will also study various laws that may be related to OTT TV in Thailand and to the Ministry of Digital Economy and Society and to compare with studies in foreign countries. Consultant will also analyze at least 10 businesses of OTT TV service providers in Thailand in detail. For its information collection, Consultant will use desk research and collect information from market intelligence that Consultant already possesses. If more details are required, Consultant may interview executives of OTT TV service provider formally and informally. Work Plan 4: Gap Analysis and Policy Recommendations In this work plan, The Consultant will summarize information obtained in Work Plan 2 and 3 to identify challenges in regulation and in preparing recommendations according to the NBTC’s role of promotion, regulatory supervision and identifying the strengths and weaknesses of the regulatory issues where NBTC may intervene. Work Plan 5: Focus Group and Capacity Building In this work plan, The Consultant will organize one Focus Group meeting at the NBTC office to hear comments and opinions on the Consultant’s regulatory recommendations for OTT TV oversight. The Consultant will also organize a one-time capacity building seminar to educate NBTC staff about OTT TV services in foreign countries and competition regulation recommendations at the NBTC office. Informal translation provided for members of P. 22 Work Plan 6: Conclusions and Final Recommendations In this work plan, the entire study will be summarized and final policy recommendations will be made in regulatory oversight of OTT TV to the NBTC. The Consultant will prepare risk assessments in implementing OTT TV regulations or not implementing it, the impact on market and competition in Thailand. After summarizing, adjusting and improving the entire study, The Consultant will organize a one-time seminar for the public (OTT TV and Pay TV service providers, Broadcasters, Content producers, etc.) and relevant NBTC personnel. For the Project Work Plan and Timeline Chart 1-3 will show that all the work within the TOR will be completed within 7 (seven) months. The Consultant will finish Work Plan 1-6 in 180 days (6 months). The last month will be devoted to promoting the study to the public and NBTC staff and in adjusting the report according to NBTC’s recommendations. Chart 1-3: Project Work Plan with Timeline Informal translation provided for members of P. 23 Informal translation provided for members of P. 24 1.2 Summary of International Comparison OTT market in Thailand is at the infancy stage OTT TV arrived in Thailand in 2014, considered to be at the infancy stage when compared with other countries studied here, especially the United States, South Korea, Australia and the United Kingdom. These countries have been offering OTT TV for a long time and have a variety of OTT TV services available. Some service providers have merged businesses some have already left the field. While Singapore and Malaysia have offered OTT TV services for a while, their development is still at the infancy stage like Thailand, and both countries have OTT TV services which are developed by local people. YouTube and Netflix were successful at global level, especially Netflix was most popular in English speaking countries Comparing all the countries in the study, with the exception of South Korea, all countries favor YouTube in accessing OTT TV especially for contents which are UGC. On the other hand, in countries where English was the main language like US, UK and Australia, Netflix is the most popular channel for watching copyrighted movies and online TV. Thus the large service providers in each country tend to grow out of original service provider in television, broadcasters, and Pay TV providers. Informal translation provided for members of P. 25 Chart 1-4: Market Development of OTT TV in other countries, compared with Thailand Note: BE 2547 is the year 1994 BE 2548 is the year 1995 BE 2549 is the year 1996 BE 2553 is the year 2010 BE 2557 is the year 2014 The type of income of OTT TV service provider favor is related to the type of OTT TV service provided The new types of service providers tend to offer OTT TV service of SVoD type, while those who offer FTA tend to offer OTT TV of AVoD type because it is the type of revenue they have experience in. Pay TV providers who offer OTT TV service will go for As-a-feature (TV Informal translation provided for members of P. 26 Everywhere) to keep their original customer base and tend to offer OTT TV of the SVoD type also. Informal translation provided for members of P. 27 Chart 1-5: Dominant Players in US, UK and South Korea Chart 1-6: Dominant Players in Australia, Singapore, Malaysia and Thailand Informal translation provided for members of P. 28 OTT TV Service Provider join with other service providers in the supply chain especially internet service providers to spread services in each country The relationship between OTT TV service providers are of several types and can be summarized as -OTT TV service providers will join with service providers in the supply chain in which they do not offer service, and of where they have no expertise. The type of relationship is as follows: 1) joining with content providers from foreign countries and within the country, to make a difference and provide diversity in content in the platform while reducing the cost of finding content, 2) joining with device manufacturer for viewing OTT TV as a channel to spread services to service users and 3) joining with internet service providers to expand services to other countries. Chart 1-7 Partnership among OTT TV and supply chain providers Overall, OTT TV does not have negative impact with existing service provider in television, except for the US Because large service provider in different countries tend to be original service provider in television such as broadcasters of TV channels and Pay TV operators, OTT TV thus becomes an additional income earning solution or a way to ensure their customer base is secured. Studies in foreign countries showed that FTA and Pay TV service providers still have income and increase of customer base. In the US it was found that dominant OTT TV service providers were new entrants with no previous television customer base – e.g. YouTube and Netflix. Because of this OTT TV in that country impacted previous service Informal translation provided for members of P. 29 providers in the market leading to reduction of cable TV service providers, and led to ‘cord cutting’ among consumers in the US. Informal translation provided for members of P. 30 Offering OTT TV service affects internet service provider who must be responsible for cost of expanding network to accept higher traffic Offering high quality OTT TV according to technology needs and according to consumer demands especially in countries where OTT TV existed for a long time and is quite widespread means that the existing internet capacity is insufficient to handle the higher traffic volume, and the internet service provider must upgrade their network to handle higher traffic at their own cost, as OTT TV operators are not responsible for such costs. OTT TV service offers the consumer a large viewing choice in terms of content, price and types of service OTT TV offers a large variety of services which responds to changing consumer behavior. Consumers can choose to view or pay for contents to view at specific times that they wish to view only. They can also choose to view through stationary devices, or portable ones. In some countries it is seen that the competition of OTT TV of SVoD type has led to reduced fees. OTT TV regulatory measures works on many dimensions, basically it is about regulating content, licensing, network and support measures OTT TV is regulated basically on content. However the regulatory measures are less stringent than the ones on existing television. Some countries choose to regulate through licensing, and/or service support measures. Then there is the net neutrality that regulates internet service providers so that consumers will have equal opportunity to access contents that are legal. Countries in the Asia Pacific region largely do not have measures specifically to regulate OTT TV Overall countries in the Asia Pacific region regulate OTT TV through existing laws such law on Intellectual Property, regulations controlling advertising, etc. Most of the regulatory framework on OTT TV do not clearly regulate, but do show plans to regulate in future. 1.3 Summary of Analysis of the Thai Market In Thailand, OTT TV’s market condition and services offered shows that its development is still in the infancy stage. OTT TV showed up in Thailand in 2014 together with the required internet infrastructure, especially internet stations and was offered to consumers in a limited area and with high fees when compared with mobile telephones services. The consumer’s access to OTT TV is thus largely through mobile telephones and other portable devices with access to internet. Informal translation provided for members of P. 31 OTT TV service providers in Thailand are of 4 types: 1) Independent OTT TV provider, these are largely in the Tech-start-up group, in the country e.g. Hollywood HD Primetime, YouTube, Line TV, iflix, and Netflix. There are two types of revenue earning methods AVoD and SVoD. 2) From free TV to OTT TV offering expanded choice to original viewers thereby keeping them in-house. Type of revenue is AVoD. 3) From Pay TV to OTT TV e.g. PSI and True Vision Anywhere. Their revenue comes from AVoD and SVoD types. 4) Telecom provider to OTT TV e.g. AIS Play who offers As-a-feature and viewers may have to offer more money for specific content. Types of service and content are in different proportions e.g. movies and TV series from abroad, Thai movie, Variety, sport, youth’s program, whereby viewer can demand to view specific content (video on demand) or has additional features such as ability to check the program in advance, favorite program can be recorded, can watch live program within 2 hours’ time shift, or can view the live program with 2-days catch-up. Competition in the OTT TV market for the service providers of SVoD types shows that Hollywood HD leads among the new service providers in the market. When considered from revenue earned in 2015, Hollywood HD earned 299 million baht followed by Primetime and MonoMaxxx at 143 million baht and 98 million baht respectively. The monthly service fees are in the range of 99-200 baht. This rate is similar to Malaysia and is considered not much higher than other countries studied. The total revenue of all three players in the SVoD market is about 10% lower than income of OTT TV service providers who also offer Pay TV service. (Compared with TrueVisions revenue at 2nd quarter of 2016). When the revenue from OTT TV of SVoD type is compared with revenue from dominant AVoD player in Thailand i.e. YouTube (percentage of income from advertising is higher than 75%), and others (LINE TV, One, Mono 29 etc.), the proportion of income at start-up of OTT TV service is approximately 25%. The entry of new OTT TV players in the market in both SVoD and AVoD types do not have much impact on the revenue of original service providers in the current market situation. Informal translation provided for members of P. 32 This is because the services offered are still quite recent at the beginning stage, and the contents offered are not the same. The growth of advertising from video is on trend to double its growth in 1-5 years ahead. This could be a factor to impact the competition in future. At the same time, what OTT TV service provider may face and could be an obstacle is the rise in royalties and problems of piracy, price competition, and good viewing quality for customers. For these services OTT TV service providers need heavy investments which could be a limitation for smaller or new OTT TV players who begin with smaller investments. Again, because OTT TV is a new type of service which grew from media fusion and sending pictures through the internet network, it is thus inescapably connected to internet service provider and telecom operator. With this comes the issue of bandwidth management, depriving viewers of viewing content by OTT TV service provider, thus law and regulations changes becomes another issue that is important to OTT TV service provider. In summary, it can be said that overall in Thailand OTT TV is still in its infancy, having entered the market only 1-2 years ago. There are different types of service providers offering a variety of contents. The top three major players are YouTube, Line TV and TrueVision Anywhere. These three have advantages of viewers’ volume, interesting and variety of content, financial status, and stability of platform which offers good experience for viewers. All three service providers do not collect fee from end-user, offering services of AVoD OTT TV as a feature which is popular in Thailand. Informal translation provided for members of P. 33 Table 1.1 Study showing comparison between foreign countries and Thailand United States of United Kingdom South Korea America OTT TV service providers in the market and types of services offered Market * Offers * OTT TV in the * OTT TV condition widespread OTT UK began from services grew and TV services, and existing players in from 4 existing dominant was the start of the market from types players worldwide FTA and Pay TV Convergence, players like Channel YouTube, Netflix * Global players broadcasters, and Amazon from the US have Pay TV and Web Prime a large role in Portal the market * Today Pay TV especially in * Foreign service SVoD players do not providers and have important Content * Dominant OTT role in this providers are in TV players are market the OTT TV BBC iPlayer system (AVoD), Sky (mix), * Dominant OTT Netflix (SVoD) TV players are * Dominant OTT and Amazon Pooq from FTA TV players Prime (SVoD) etc. and Oksusu, are YouTube Olleh Mobile, (AVoD) Netflix U+SDTV, Tving, (SVoD), Amazon Everyone TV Prime (SVoD) from Pay TV and Hulu Plus (SVoD) etc. Singapore Malaysia Australia Thailand * Prior to 2016 OTT TV were only local service providers * Prior to 2016 OTT TV were only local service providers * Today many service providers are regional players i.e. HOOQ, Viki and Spuul * OTT TV service developed from existing FTA players followed by Pay TV * Existing players including FTA and Pay TV began developing own OTT TV * OTT TV appeared in the market in 2014 from new players in the techstart-up group * From beginning of 2016 foreign players began offering services * Dominant players are YouTube (AVoD), Toggle (Free Premium), Starhub Go (SVoD), Singtel TV * From 2016 foreign players entered the market offering niche content * Dominant players are YouTube (AVoD), Tonton (Free Premium) and Astro on the Go * From beginning of 2015 domestic traffic grew more than 50% * Netflix received the highest popularity in SVoD type impacting competition with original players and internet service providers. * Popular players are YouTube, Netflix, Stan, Foxtel Play and Presto Informal translation provided for members of P. 34 * Foreign players entered in 2015 i.e. iflix, Netflix, HOOQ * OTT TV who were FTA players like Bugaboo (Ch. 7) are not very popular * Dominant players are YouTube (AVoD), Line TV (AVoD) and MonoMaxxx (SVoD) Popular methods of earning income United States of America * New OTT TV Players earn income from SV0D type * OTT TV Players who come from Pay TV and Content Producers offer service of TB Everywhere (As a Feature) to retain existing customer base Types of partnership with other players * Partnering with telecom service provider in promotions such as Zero Rating where viewers can view without losing data * Partnering with device manufacturers for viewing purpose like Netflix with Apple TV, and LG in imbedding application in devices United Kingdom South Korea Singapore Malaysia Australia Thailand *OTT TV players who come from FTA such as BBC and ITV do not charge end-users * SVoD is the most popular type of income generation both from FTA service providers such as PooQ and Pay TV (both IPTV and Cable TV) such as Oksusu of B TV * OTT TV players who come from FTA such as Toggle of the Free Premium type * Two most popular OTT TV are YouTube, Tonton, they generate AVoD type income * All OTT TV who are FTA offer AVoD type revenue generation * OTT TV of YouTube and LINE TV get income from AVoD * OTT TV players who come from Pay TV offers the service to retain existing customer base in general Star Hub Go offers SVoD type * Number 3 is Astro on the Go which does not charge Pay TV subscribers * Other types of OTT TV tend to be SVoD type * New OTT TV in the market offers SVoD type of income * Partner with telecom service in the country in sales promotion activities * Foreign OTT TV players partner with Telco in the country which led to reducing sales to MYR 10/month *OTT TV players who come from Pay TV e.g. Sky and Virgin Media do it to maintain existing customer base * OTT TV service provider from abroad partner with contents provider to offer service in the UK e.g. Netflix partner with BBC to produce the Watership Down Series * Partner with device manufacturers in viewing such as Youview box where OTT TV application of FTA, Netflix, and NOW TV are imbedded * Dominant South Korean OTT TV player offers telecom service/Pay TV/ and channel broadcasting in the country and benefits from the vertical extension service of OTT TV Informal translation provided for members of * Partner with telecom service in sales promotion Activities * Partner with Contents provider e.g. TV programs to offer on OTT TV P. 35 * OTT TV from Pay TV and telecom operator generally do it to retain existing customer base (As a Feature) * New OTT TV service provider and foreign players partner with telecom service provider in the country * New OTT TV for alliance with local content providers United States of United Kingdom South Korea America Market condition, competition and impact from OTT TV services Impact on * Number of * OTT TV has not * TV viewing existing Cable TV users Impacted through FTA Broadcast reduced and led advertising reduced er FTA to 'cord cutting' revenue through affecting and Pay among linear TV whose Advertising TV American advertising revenue overall consumers due revenue has to rather high steadily increased * OTT TV prices of cable over the past 5 N-Screen is a TV and diversity years Pay TV strategy of content to which both which is offered * OTT TV has not IPTV and Cable through the impacted Pay TV TV give rapidly as can be seen importance. expanding from steadily OTT TV's internet rising number service enabled of subscriber both * Original (CAGR 4.4 %) subscription television which could be and advertising service due to the fact revenue to grow providers which that Pay TV also steadily include contents offers OTT TV owners service to their channels, and subscribers Pay TV who expanded to OTT TV like Hulu Plus of the Sling TV of Pay TV etc. Informal translation provided for members of Singapore Malaysia Australia Thailand * OTT TV shows no impact on Pay TV in Singapore. The Pay TV subscribers have not reduced while ARPU overall has risen * OTT TV is still new to Malaysia and no impact on existing market players can be seen at this point. What can be seen is that Astro which offers AOTG (OTT TV of Astro) has partnered with its own Pay TV to attract more customers * OTT TV did not take over or replace original television service as can be seen from number of subscribers of Pay TV and IPTV and FTA viewers still growing at the time OTT TV is growing fast. ACMA's research show that 59% of time that Australians watched media, it was still through FTA, after which 25% watched through Pay TV. * Problems of competition from other new technologies, high cost of content production, low number of new initiatives in revenue creation, the bottleneck in service, rules and regulations leading to stoppage of Pay TV services P. 36 Impact on Telecom Service Providers Impact on Consumers United States of America * The increased data traffic had made US Telco suppliers invest more to expand their network capacity to carry higher traffic volume which meant higher fees that became usage based according to monthly quotas instead of unlimited usage * Consumers have greater choices both in terms of content and price United Kingdom South Korea Singapore Malaysia Australia Thailand * Higher traffic of internet usage but there is no confrontation between ISP and OTT TV service providers in the UK * Dominant OTT TV in South Korea is from convergence of suppliers OTT TV is converged with their own packaged internet and Pay TV * Because OTT TV is in its early days, no impact on Telecom companies were found in Singapore * Today cooperation exist between OTT TV and Telecom supplier for joint marketing * Because OTT TV is in its early days, no impact on Telecom companies were found in Malaysia * Today only see cooperation for joint sales promotion with telecom suppliers * OTT TV in the latter stage caused traffic to rise where traffic from December 2014 rose by 54% to December 2015. ISPs have to invest more to expand network to receive growing data traffic * The number of viewing hours on mobile devices increased * Consumers have greater choices in terms of content and price which has greater variety * Consumers can watch at any place any time * Consumers can watch at any place any time * Consumers can watch at any place any time * Consumers have greater choices in terms of content and price which has greater variety * Consumers have greater choices in terms of content and price which has greater variety * Consumers have greater choices in terms of content and price which has greater variety * TVs are showing greater diversity of style and content and offering more ways of viewing * Consumers can watch at any place any time * Consumers have greater choices both in terms of content and price which are more diverse and better reflect consumer behavior * From the N-screen strategy, existing service suppliers can offer consumers ability to watch video in various modes and at any time any place Informal translation provided for members of * Competition between OTT TV and telecom service providers led to reduced OTT TV fees of around MYR 10/month * Competition between OTT TV and telecom service providers led to reduced OTT TV fees of around AUD 10/month P. 37 * Viewing is by streaming * There is a need to watch video which is higher quality and high resolution * Ability to watch on internet in real time United States of United Kingdom South Korea America Regulatory guidelines, policies to support and promote OTT TV Services Form and * Federal * Office of * Korean scope of Communications Communication Communications regulating Commission (Ofcom) has the Commission OTT TV (FCC) is the main authority to (KCC) and the body which has regulate OTT TV Ministry of oversight of under the Science, ICT and TV and Telecom Broadcasting Act Future Planning with guidelines (MSIP) are the * Regulating OTT from EU chief authorities TV is not strict, directives to who regulate OTT emphasizing regulate content, TV Ex-post policy licensing, and auditing consumer * Today OTT TV specific cases protection requires license and together from MSIP, while * In the case of with Advertising content and content OTT TV Standard mergers must be use the same Authority to approved by KCC regulation as regulate followed by FTA advertising * ISP must and Pay TV content comply with net neutrality * Net Neutrality * Today OTT TV policy is applied must request * KCC also Ex-post only after permission and regulates complaint is content must not consumer made have prohibited protection material * OTT TV advertising producer must follow ASA directives Singapore Malaysia Australia Thailand * Infocom Media Development Authority (IMDA) has oversight of OTT TV * The following authorities are responsible 1) Malaysian Communications and Multi Media Commission (MCMC) 2) Royal Malaysia Police 3) Ministry of Domestic Trade, Co-operatives and Consumerism (KPDNKK) which today controls OTT TV Content * Australian Communications and Media Authority (ACMA) has oversight of OTT TV * No direct control of OTT TV, instead it falls under several government departments. * OTT TV must receive licence from IMDA * Contents must follow Internet Code of Practise for services and Subscription TV Code for content organization like other TV content * ISP must follow Net Neutrality guidelines * Today there is no Net Neutrality policy for ISP * Control is quite loose. ACMA is in charge of determining prohibitive content and copyright of content. The content must first receive approval for grouping from ACMA first * Today no Net Neutrality policy has been announced for ISP * Today no Net Neutrality policy has been announced for ISP * ISP must follow Net Neutrality Informal translation provided for members of * The platform of OTT TV is regulated through its content especailly what is prohibited from broadcasting . * As OTT TV operates under television in Thailand, a TV broadcasting license is required from NBTC P. 38 Relevant Policy Promotion and Support involved United States of America * The US government has no policy to directly support OTT TV, but has no policy to directly support OTT TV, but can support the service providers in general through financial support for quality content for the general public, education for accessing financial sources, and support linkages through start-up using the Start-up-America Program * Policy to develop internet network through the Connecting America Program to develop internet in the country and to push towards 5G network United Kingdom * The EU single digital market supports contents production in EU countries. In 2016 argument was made that higher than 20% of OTT TV platform should be contents made in EU or as EU co-production. * EU also supports content copyright for distribution all Through Europe and Gives importance to basic internet infrastructure for the roll out of 5G in Europe South Korea Singapore Malaysia Australia Thailand * South Korea built Digital Broadcasting Contents Support Center as a One-stopService supporting small scale contents producer in the country * IMDA has no budget to directly support OTT TV, but offer general support which can benefit OTT TV in terms of technology and tax reduction for start-up and for SMEs * Malaysian government has no budget for OTT TV, but offers general support which also benefits OTT TV * Malaysian government supports content production with tax reduction for Malaysian companies and foreign companies who produce in Malaysia. The Content Malaysia Pitching Center promotes and Supports creative content made in Malaysia * Australian government supports basic internet network through National Broadband Network (NBN) * Thai government does not have direct support for OTT TV but offers general support * Established a commission for Promoting Digital Broadcasting to help the public in remote areas of the country understand digital media. * Support Internet network at Gigabit level * Australian Government has no budget for OTT TV but offers general support through tax reduction for start-ups * A creative content fund called Technology Innovation for Globalization Fund (TIG) can also help * Media content producer can access 'Broadcasting and Telecommuni -cations Research and Development Funds for the Public Interest' (BTFP) for development of creative contents and from the Fund for Development of Safe and Creative Contents' for contents suitable for children and Youth * OTT TV service producer can obtain tax reduction for start-up and SME * Help exist for business startup * MDE Ministry is pushing for nationwide broadband network Informal translation provided for members of P. 39 1.4 Summary of Gap Analysis and Policy Recommendations Policy on Contents Regulation in OTT TV The comparative study on regulating OTT TV content can be summarized in 5 key points as follows: 1) to set types of prohibition and rating for content appropriateness – both in foreign countries and in Thailand types of prohibition are set out, and /or with levels of rating of content which can be broadcasted on-line. 2) In case of protection of minor - in foreign countries minors under 18 years cannot watch R 18 rating, in Thailand rating exist for certain types of media but did not extend to OTT TV. 3) In setting the proportion of local content quota in the platform - in foreign countries the minimum proportion is set, but in Thailand there is no minimum for local content in FTA, Pay TV and OTT TV. 4) In regulating the advertising content on OTT TV platform both in foreign countries and in Thailand there is the same type of regulation covering advertising on OTT TV as for other television and broadcasting media. 5) In case of enabling disabled persons to access content on the platform – in some countries it is regulated that disabled must be able to access the content through use of subtitles instead of sound and use of sound to tell the story. Thai regulation requires that FTA offer service for the disabled in their content, but this does not extend to Pay TV or OTT TV. Policy to regulate OTT TV through licensing From foreign studies, Singapore, South Korea and the UK regulate OTT TV through licensing, and requests for license are of different formats. In Thailand OTT TV operators do not require license to operate. Regulating OTT TV through the network using Net Neutrality Studies show that countries like USA, UK, South Korea, and Singapore use Net Neutrality to oversee internet service providers management of data between OTT TV and data users in a fair and appropriate manner. This allows end-user to access content and the services freely and in legal way on the internet. Thailand does not have net neutrality law but has other laws governing ISP. Informal translation provided for members of P. 40 Policy to promote OTT TV Studies show that in countries that offer OTT TV service – whether it is still at a fairly new stage, or of long standing, no country directly promotes OTT TV. They do have general promotional policies which also benefits OTT TV such as: 1) Policy to promote good content production in the country which is also creative. This is done in two ways – offering investment capital to produce the content, or funds to produce good quality content; setting a center to promote and develop content. In Thailand investment capital is offered for production of quality content, or funding with emphasis on developing creative and safe content. 2) Policy to promote expansion of broadband internet infrastructure – every country including Thailand, is studying or has active policy to support quality internet broadband for the whole country which is the basic infrastructure for OTT TV service. 3) Policy to promote business startup and SMEs – all countries in the study including Thailand have support and investment for business startups and SMEs to support growth of service businesses leading to a wide range of innovative products and services. The government support policies have their pros and cons. The plus side is that the support is at the upstream point sending benefits downstream which is not only for OTT TV and will lead to higher employment, while content diversity benefits FTA, Pay TV and OTT TV. The public will receive basic internet in every part of the country. Small companies will be encouraged to grow. The minus side is that such promotional policies will lay a heavy burden upon the government which has to manage and find funding sources for such activities. From the gap analysis mentioned earlier, the Consultant has compiled the format for regulating OTT TV and prepared recommendations for Thailand to establish rules and regulations for supervision or promotion of OTT TV. The Consultant has considered about appropriate timing for enforcing such regulations to match the growth of the OTT TV business as follows: Informal translation provided for members of P. 41 Chart 1-8 Policy Recommendations for OTT TV Policy for support of good and creative local content on OTT TV This should be enforced at the beginning stage of the OTT TV market to support good, creative and diversified Thai content which has lower cost because it has government support. OTT TV service providers will benefit for ease of getting content which will reduce obstacles in market entry at the beginning stage. Policy for supervision of OTT TV through licensing This should be implemented at two levels. 1) At the stage when there is fast growth of OTT TV services, it is recommended that the service provider register with NBTC for ease of collecting data, and follow up including learning about market impacts. All these can be done without hindering the activities of OTT TV at the infancy stage. 2) At the stage when OTT TV becomes competitive and impacts upon other television service providers, it is suggested that NBTC regulates the industry through licensing to create a level playing ground for other broadcasters. Policy for supervision of OTT TV through content This should be implemented in the period when OTT TV has more players in the market and begin to compete with contents to attract viewers. At this point it becomes important to supervise contents through rating which offers viewers a way to choose appropriate content. It is also suggested that NBTC establish local content quota to promote locally produced content. Addition regulation may be required to protect minors and youth from inappropriate content and service the disabled people with sound and subtitles. Informal translation provided for members of P. 42 Informal translation provided for members of P. 43 Policy for supervision of OTT TV through Net Neutrality This should be regulated through ex-post when there is dispute between ISP, OTT TV, and end-users to supervise internet service when there is interference by unfairly blocking the signal or reducing the quality of OTT TV in some cases. Additional recommendation To improve efficiency in regulatory supervision of television and broadcasting, it is recommended that fair competition is encouraged. The Consultant has additional recommendation to NBTC to coordinate actions with relevant government agencies on the following issues: The problem of copyright: Copyright is the problem faced by original players in the market and OTT TV players and they fear its impact on their services. At this point NBTC has no right to interfere where there are copyright problems. Supervision of competition to bring revenue from foreign service providers back into the country. For example, today Thailand is unable to impose tax on companies who register and operate in Thailand but does not pay tax in Thailand. With these reasons The Consultant has made recommendations to NBTC to consult with or search for new ways of cooperating with relevant government agencies like Intellectual Property Department, Revenue Department, Ministry of Digital Economy and Society etc. Informal translation provided for members of P. 44
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