By Ardian Wibisono
The over-the-top content (OTT) streaming industry is among the few industries benefitting from the COVID-19 pandemic. As movie theaters stopped selling tickets and popcorn to moviegoers, OTT players like Apple TV, iTunes, and Netflix provide the alternative for entertainment from homes. Ireland based market research company Research and Market expect the global OTT streaming market to grow from $104.11 billion in 2019 to $161.37 billion in 2020, a growth of 55.0%, mainly a result of the lockdown due to the COVID-19 outbreak. The market is then expected to stabilize and show a compound annual growth rate (CAGR) of 14.0% from 2021.
Even before the pandemic, Indonesia was already a promising market for the industry. Despite being currently valued as just a couple of hundred million US dollar market, some research companies predict a higher CAGR for the Indonesian market over the next ten years period. Competition is also fierce. While some OTT players gained new subscriptions and viewership due to the pandemic, some failed to compete. Singapore—based OTT company Hooq, for example, closed its service in Indonesia at the end of April. Its competitor in the Indonesian market, Iflix, was reported to have been bought by China’s Tencent after it was said to be having financial issues. However, the market potential still offers sweet promises and attracts more players. In September 2019, Gojek jumped into the competition with its video on demand platform GoPlay. As well as using Gojek’s 150 million downloads ecosystem to leverage its penetration into the market, Edy Sulistyo, CEO of GoPlay, says that the company plans to rely on quality local series and movies to attract viewers. So far, the company has launched several original series like Gossip Girl Indonesia and Filosofi Kopi Series. The strategy seems to be working. Edy claims the number of subscribers and viewers jumped tenfold from March to May. The company doesn’t disclose how many subscribers they have, but currently, GoPlay has over 100,000 downloads on Android and more or less the same on the Apple App Store.
“I’ve talked with Hooq, Iflix, and other competitors in the market. From them, I learned not to repeat the same mistakes,” Edy says.
Edy says Indonesians want to see content in their own language and culture rather than foreign ones. However, some issues mean the local movie industry fails to unlock its full potential to grab a greater audience and compete with foreign movies. The first the quality of the content. Edy is familiar with the entertainment business having founded the ticketing platform eEvent back in 2013 and Loket in 2017. Edy says he used to look down on Indonesian movies as for him, the term Indonesian movies correlated more with the local television series that he felt were poorly made, with unnatural storylines and poor character development, for example. It was only in 2018 he watched a movie in a theater titled Yowis Band that his perceptions changed.
“I’m from Surabaya, and I felt the movie related to me. The actors were speaking Javanese and the movie was natural and funny. The movie changed my perspective, Indonesian movies can be awesome. I then started investing in Indonesian movies with my friends, Keluarga Cemara and Kulari Ke Pantai, to name a couple, and after a few investments, I learned a lot about the industry,” Edy says.
From an investor’s point of view, Edy learned that it’s hard to expect a good investment return in the conventional ecosystem, acknowledging that most of his investments in movies went south. Most of the good quality Indonesian movies are screened in theaters and this is the second issue. The number of cinema screens in Indonesia is underdeveloped compared to other countries like China and the US. At the end of last year, there were only two thousand movie screens in Indonesia compared to over 41 thousand screens in the US, for example. And in those theaters, Indonesian movies mostly lose out in the competition with popular foreign films when measuring ticket sales and thus screen time. So, for Indonesian movie lovers, it’s not easy to access good quality films. Edy believes if more opportunities and access is given to quality Indonesian movies, more people will fall in love with them.
Like other OTT players in the market, GoPlay is subscription-based. While other OTT usually requires a credit card for subscription, the customer subscribes to GoPlay with GoPay, which is more commonly used in Indonesia, as credit card penetration remains low. However, to make the platform more accessible and affordable, GoPlay is also bundled with other Gojek services like GoFood or GoSend. GoPlay also partners with ecommerce companies for its distribution channel.
Edy says what differentiate GoPlay with competitors is its premium quality Indonesian content. The company has a few things to deliver this objective. First, Edy claims that GoPlay has in-house script doctors and production experts who can help moviemakers improve their storyline and cinematography. Also GoPlay uses a revenue-sharing model with the movie producer instead of implementing the commonly practiced buyout model.
“To make this ecosystem work, we have to think about how the content creator could benefit. We use a minute-watch revenue-sharing model, meaning 10% of our revenue pool will go to the filmmakers. This incentive model removes the ceiling. Other OTT commonly use the buyout model, so if the movie is so-so or can’t generate audiences, the production house could benefit. But if the movie is good and attracts viewers, they have a revenue cap. We are removing the cap because when the movie attracts more viewers, production houses should get the revenue they deserve,” Edy says.
On top of that, using Gojek’s ecosystem, Edy says GoPlay could help filmmakers look for investors or sponsorship. Recently, GoPlay also launched a live performance platform that would enable the content creator to unlock more incentive features like virtual gifting or selling merchandise while at the same time allowing them to be more interactive with the audience.
However, film director and founder of Visinema Group, Angga Dwimas Sasongko, says that GoPlay still has to prove its business model in the country’s challenging environment. Besides the fierce competition with other OTT, Angga says that Indonesian audiences, which are used to watching low-quality content on the free-to-air television, need to be educated, so they are willing to buy good content. Content piracy has always been one of the major issues with too many people being unwilling to buy legal content. He says good content comes with a hefty price tag, often ranging from Rp 1.5 billion to Rp 2 billion per episode. Thus the business model should assure the investment could be returned and even bring profit. Angga also highlights the lack of transparency among the OTT players who are often reluctant to share viewership data to filmmakers as a significant constraint to the revenue sharing model.
“Without transparency, I would prefer the buyout model. But this pandemic should bring awareness to the film industry stakeholders that we need to coexist. The platform should be aware that they don’t just need the audience, but also the content and that the industry benefits should be proportional,” Angga says. Visinema is already a partner in producing one of GoPlay’s original series.
Nevertheless, GoPlay’s business model seems to convince investors to start pouring in money. In June, the company announced the closure of its first funding round with an undisclosed value. ZWC Partners and Golden Gate Ventures led the funding round. Other investors involved were Openspace Ventures, Ideosource Entertainment, and Redbage Pacific. Some of these investors have had experience investing in the media and entertainment business. Edy says the investment will be used to build up GoPlay’s technology.
“Indonesia is now entering the industry 4.0 era that relies on the creative economy driven by the film industry. The movie industry is like a locomotive that pulls other creative industries, like music, travel & tourism, F&B, fashion and beauty, and many more. The Korean movie industry is a good example of this. So if we wholeheartedly believe that we could improve the local movie industry, the impact towards the Indonesian economy will be tremendous,” Edy notes.