(Photo by: The Diary of a Hotel Addict)
Sushant SharmaAccedoBusiness Development Manager |
Indonesia, South East Asia’s largest economy, a member of the G-20 and the world’s 4th most populous nation, has been a big contributor to Asia, the center of attention and a growth engine of world economy. Corporations, big and small, foreign and domestic, look to Indonesia as an attractive and lucrative market in the region. However, Indonesia, without doubt, is in throes of change — politically, socially, economically and also digitally! The country boasts over 100% mobile penetration (280Mn mobile phones in a population of 250Mn) with Smartphones accounting for 23% of all mobile phones. Internet users, currently at 70Mn, are expected to reach an astounding 145Mn by 2015.The two biggest digital stories in the country are Social and Mobile. Social media is growing at a frantic pace with Indonesia the 4th largest country in terms of Facebook members. Indonesia is one of the very few markets where social networks, other than Facebook and Twitter, are gaining rapid adoption. Mig33 and Path are two such platforms, underlining the fact that companies can ill afford to ignore social media as an important means to connect with their consumers.Mobile, on the other hand, has emerged as the single largest instrument connecting Indonesians. According to Mobile Marketing Association, 49% of Indonesian Mobile Internet users consume videos, which is only second to the 70% of users downloading games and App. Music isn’t far behind, where 44% of users consume it on the mobile devices. “Affordable” smartphones are further changing the landscape of usage and consumer behavior, enabling a wider range of demographics and income groups to connect and access social networks, content, apps and so on. Along with Xiaomi and other consumer electronics makers, Mozilla, developer of the popular Firefox web browser, is also planning to bring a $25 smartphone to the market.Amidst all the optimism around economic growth and a burgeoning middle class with disposable income, the uptake of pay TV has been sluggish. In its two decade long history, pay-TV penetration has only reached a meager 3% and the primary reasons have been the availability of locally relevant content on FTA channels and rampant piracy. The Indonesian Cable TV Association claims that there are around 2,500 operators throughout the country illegally rebroadcasting pay-TV channels.Other industry participants concur that piracy has been the bane of the industry. “Piracy, for one, is a bigger issue than it’s historically been for pay TV. Low video CPMs is another issue but it should improve as piracy falls due to content protection measures which will give way to more confidence for brand managers”, opines Unmish Parthasarathi, who is driving NewsCorp’s BallBall service, a pure OTT content business in Indonesia and other emerging countries in the region.According to a survey by Irdeto, among 1,600 adults in Australia, India, Indonesia and Singapore, 37% of the respondents mentioned a lack of content availability through legal means as their top reason for consuming pirated content. Mentioned by 36% respondents in Indonesia, concerns over price is cited as the second most significant factor behind rampant piracy. “Sachet pricing is key as a low barrier to entry gives content the best chance of being tried/tested/tasted by a large segment. But we need to quickly move beyond low/competitive pricing to garner an audience and differentiate by always looking to deepen the localization”, says Unmish, based on his experiences in striving to monetize the service in the country.Other industry leaders share similar sentiments. Roy Simangunsong, CEO at PT LinkTone, a MNC Group company, added, “Digital has rarely been monetized except in the form of content marketing for the advertisers. Subscription based video content is in the early stage but has huge potential with the right content and pricing for consumers. In digital, most of the monetization is in the form of digital advertising.”Indonesian consumers cite poor quality of pirated videos as one of the main deterrents to content piracy. Innovation in payment mechanisms, such as Phone credits, will make it easier for consumers to purchase content and is another area expected to work to the benefit of the industry.
There are, without doubt, several challenges to overcome to make digital a sustainable and economically viable means for the media and entertainment industry. Nevertheless, industry players see immense potential and are increasingly willing to take a bet on the potential of digital adoption in Indonesia as a means to reach a wider audience and garner more eyeballs. “Internet penetration reaching 35% will be the tipping point for the industry and then we will see an explosion of many business models and revenue streams,” predicts Roy, emphasizing that improvements in infrastructure will unleash the real potential of the Indonesian market.
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