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Category: Research

Retail News Asia is committed to providing both local and global retailers with the latest Research throughout the Asian market. This on a daily base.

  • Cloud computing can help firms cut costs

    Cloud computing can help firms cut costs

    With the rise of cloud computing in business practices worldwide, Microsoft is encouraging Indonesian industries and businesses to take advantage of this technology in their day-to-day operations, mainly due to the cost-cutting advantages that it offers.

    Microsoft Indonesia’s national technology officer Tony Seno Hartono explained that by using public cloud services, such as the ones Microsoft offers through its Azure service, Indonesia’s businesses could significantly increase their operational efficiency, by 25 to 50 percent.

    This is due to the fact that cloud services provide many streamlined features such as server management, data storage and even the electricity to keep the data-storing servers alive. “It can help businesses decrease their operational costs, because using cloud services is basically like outsourcing. Microsoft has a huge data center, capable of storing data and managing it for you. Why not utilize our services?” he said on Monday.

    Microsoft, he continued, is in talks with an unspecified telecom operator to build a data center in Indonesia, but says the negotiations are still ongoing. Indonesian users of Azure currently have their data stored in Microsoft’s data centers abroad, such as in Singapore and the US.

    Adding to the virtues of cloud computing, Tony elaborated that the local creative industry could also harness the benefits of Microsoft’s multiple data centers for creating works of art. One example is in the animation industry, where higher quality animations require massive amounts of time and data to be rendered.

    During the making of James Cameron’s blockbuster film Avatar, Cameron collaborated with Microsoft to render the CGI animations using their public cloud services, thus saving the film production time and costs.

    Tony said that if Cameron had not utilized Microsoft’s multiple data centers, the animations from Avatar would have taken many years to render properly due to the film’s scale and size.

    Within the film industry in Indonesia, many have expressed interest in using Microsoft servers but none have used them so far, because the industry still remains small, and large-scale animation jobs in Indonesia tend to be taken to foreign animation studios to be worked on, Tony added.

    From the perspective of Winastwan Gora, chief operating officer of tech education start-up Kelase, the usage of Azure cloud services has benefitted his company’s operations and has helped cut costs.

    Kelase signed up for Microsoft’s BizSpark service, for three years of Azure usage with a usage cost limit of US$150 per month. The move guaranteed them space on Microsoft’s data centers abroad for storing and processing their information.

    “By utilizing the Azure cloud, we were able to improve our communications and marketing efforts and also, our analytical and source control mechanisms became easier to carry out compared with other means. In other words, it’s now easier for the company to be run digitally,” Gora said.

  • Digital content revenues to exceed $180b by 2017

    Digital content revenues to exceed $180b by 2017

    A new study from Juniper Research has found that consumer spend on digital content will reach $180 billion next year, up nearly 30% on last year’s figure of $140 billion. The research indicates that revenue growth will primarily be driven by continued migration to streaming video services, with broadcasters and telco operators increasingly deploying their own on-demand and IPTV offerings to compete with OTT players.

    According to the study – Digital Content Business Models: OTT & Operator Strategies 2016-2021 – telcos also recognize the pressing need to invest in attractive, original content to compete with shows developed by Netflix and Amazon. It cited the example of Spain’s Telefónica, which is to produce 8 to 10 TV series per annum from 2017. Both BT and AT&T have indicated that they might commission original drama or entertainment in the near future.

    Meanwhile, several telcos have partnered with OTTs to offer consumers bundled ‘zero-rated’ content that does not impact monthly data allowances. The study shows that more operators might consider enhancing the relationship through the acquisition of a strategic stake in the content provider, as with TeliaSonera’s investment in Spotify.

    The research also highlighted Twitter’s recent acquisition of the online rights for the USA’s NFL as the first move by an OTT player into the sporting arena, and said that other players could follow suit. However, according to research author Windsor Holden: “The spiraling cost of most premium sporting rights means that bidders for exclusive live rights for must now pay several hundred million dollars per season. With most streamed audiences well under a million, this is likely to deter online-only players in the short and medium term.”

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  • Asian mPOS use booming

    Asian mPOS use booming

    The fast-growing population of smartphones and tablets are driving an Asian mPOS boom.

    Mobile point-of sale (POS) terminals will take on a significant role in businesses, handling 40 per cent of all retail transaction value by 2021, up from an expected 12 per cent in 2016, finds Juniper Research.

    The company says mPOS is enabling smaller merchants in emerging markets, particularly across India, Southeast Asia and Latin America, to accept card payments and grow their businesses.

    With larger retailers adopting mPOS in retail sales, Juniper forecasts the use of mPOS systems to account for more than one in three POS terminals by 2021

    “We are seeing several vendors tailor their software to the needs of specific industries, integrating mPOS capabilities as part of broader cloud-based business software,” said James Moar, research author.

    “These additional services can then make use of the sales data directly to manage inventory, monitor staff performance and other functions, which can all add more value to a business and justify a higher margin.”

  • IP traffic set to nearly triple over next five years

    IP traffic set to nearly triple over next five years

    Global IP traffic is on track to nearly triple over the next five years as more than a billion new internet users come online, according to Cisco’s latest Visual Networking Index.

    IP traffic is forecast to grow at a CAGR of 22% over the period of 2015 to 2020 to reach 194.4 exabytes per month, Cisco said

    APAC will account for more than a third of global IP traffic in 2020, the study predicts. Total traffic in the region is expected to grow at a 22% CAGR to 67.8 exabytes per month.

    By 2020, the company predicts that there will be around 4.1 billion internet users worldwide, up from 3 billion in 2015. Smartphone traffic accounted for 47% of total global IP traffic in 2015, and is expected to grow to account for a wide majority (71%) by 2020.

    Due in part to the rapid growth of the IoT, global IP networks are expected to support up to 10 billion new devices and connections over the five-year forecast period, bringing the total up to 26.3 billion, or 3.4 devices and connections per capita.

    Internet video will continue to dominate traffic, accounting for 79% of global internet traffic by 2020, up from 63% in 2015. Global networks will relay the equivalent of one million video minutes per second, Cisco predicts. HD and ultra HD video will make up 82% of internet video traffic.

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  • 9 in 10 telcos go Hadoop to fight revenue fraud

    9 in 10 telcos go Hadoop to fight revenue fraud

    Telecoms revenue fraud is a primary driver for increased Apache Hadoop adoption, according to a recent poll of telco and enterprise users by Cloudera and Argyle Data.

    Communication service providers lose around $38 billion to fraud every year.

    Conducted during a recent webinar to introduce Cloudera and Argyle Data’s joint fraud prevention platform, the survey indicated that over 90% of attending organizations already use or intend to use Hadoop for fraud prevention.

    About one-third (34%) of attendees said they already have Hadoop in place and may use the platform in their fraud prevention efforts.

    “Fraud prevention is a textbook use case for Hadoop-based analytics because the ROI is immediately visible,” said Vijay Raja, solutions marketing manager at Cloudera. “Real-time machine learning relies on large amounts of data to detect sophisticated revenue threats, making Cloudera the ideal platform on which to run Argyle Data’s threat analytics.”

    The platform enables mobile operators to reduce loss by detecting previously undiscoverable revenue threats, promising to deliver up to 350% improvement over rules-based offerings. The platform uses a native Hadoop architecture, combined with real-time data ingestion, analytics, and machine learning.

    “Unsupervised machine learning delivers everything telco fraud analysts need to be efficient at and deliver immediate ROI,” said Arshak Navruzyan, vice president of product management at Argyle Data.  “The Cloudera-Argyle Data solution interoperates seamlessly with all participants in the Hadoop cluster.

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  • The smartphone boon and bane

    The smartphone boon and bane

    Feature phones are on their last days, if not their last breath. Consumers’ massive shift in preference for smartphones have decimated feature phone sales.

    The upward mobility of smartphones contrasted with the downward spiral of feature phones has been an intriguing trend to observe. After all, it was only a decade ago when feature phones were enjoying its peak in popularity.

    The upheaval of the mobile industry arrived when Steve Jobs introduced the iPhone to the world in 2007. Steve Ballmer, Microsoft’s chief executive back then, claimed it was the most expensive phone in the world.

    Nowadays, feature phones are not ubiquitous anymore as new players from China, led by Xiaomi, continue to enter the market. These new upstarts not only produce smartphones with industry standard software and applications, but also price them very affordably.

    Asia-Pacific smartphone prices are predicted to drop to an average of $215, making it the region with the lowest price. APAC will be the region with the largest increase in smartphone usage from 2013 to 2019 with approximately 2 billion new smartphone users, where Singapore ranks the highest globally in smartphone users penetration.

    According to a recent survey, 90% of respondents in Singapore say they have access to smartphones. Factors which help facilitate this rapid adoption are fast connectivity and the availability of real-time information access at users’ fingertips.

    As smartphones become increasingly affordable, businesses become more complex specifically the IT infrastructure. Apart from individual and personal use, businesses also encourage employees to use their own devices for work with initiatives such as “bring your own device” (BYOD).

    Enterprises have gained a significant advantage with the modern development of mobile, but these positives also come with new challenges.

    When it comes to devices for businesses, applications play a big role. More and more enterprises are deploying business applications on smartphones and adopting cloud-based business models.

    This enables increased mobility and productivity, making businesses more efficient than ever. Unfortunately, now with various applications installed on smartphones and critical data being so easily accessible, businesses are more prone to virtual threats.

    In 2014, 16 million mobile devices have been contaminated by scams, and hackers are increasingly targeting mobile applications. It has been said that mobile apps are considered “low-hanging fruit” since it is rather fast and easy to exploit the vulnerability of apps as apps exist in an unregulated ecosystem.

    In Singapore alone, mobile security threats have affected 70% of companies. The majority of organizations saying “yes” to employees using their mobile phones for business without giving proper education on BYOD policies also contributed to this number. This trend will cease any time soon as the hackers are expected to continue focusing on mobile devices.

    Given the changes of this behavior and the advancement of technology on smartphones, organizations and governments will need to be able to serve this increasing number of mobile customers and employees while delivering applications and services seamlessly and securely.

    Businesses have always demanded agility and availability without worrying about the security of critical data. That mindset must shift — application security needs to be a top priority for businesses.

    With the rise of smartphones and mobile devices usage for business, the risk of enterprises’ critical data is increasing as well. Business flexibility provided by smartphones comes with a greater responsibility that requires enterprises to step up to secure and manage the applications to keep preforming.

    This generation will see the end of “dumb” phones, and the next might even see them in museums. With such rapid changes in the technology scene, it will be no surprise if the next big thing comes faster than the shift of feature phones to smartphones.

    Asia Pacific holds the biggest stake for smartphones companies, and any respectable industry player must look to the East whenever there is a shift in the mobile telecom enterprise industry.

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  • In-flight connectivity wants to be free

    In-flight connectivity wants to be free

    In-flight connectivity (IFC) is in high demand from consumers, but depending on where you are in the value chain, it won’t be easy to monetize that demand, especially when many passengers expect it to be free.

    “Right now the satellite operators are the ones making the profit on in-flight connectivity,” says Todd Hill, senior director of GCS Satellite Services at Panasonic.

    Part of the problem has to do with the cost of aircraft antennas, which are hard to install, “although the technology is improving.” Hill says.

    The other issue is the cost of the actually connectivity itself. While HTS satellites and Ka-band are touted for their ability to bring the cost per megabit down, the problem is that Ka-band isn’t an all-purpose solution that will be available everywhere.

    “We’re building a global network, so one size is not going to fit all,” Hill says. “Ka-band doesn’t fit every need. HTS can bring the cost down, but you also get these spikes in supply whenever a new gigabit satellite goes up that affects pricing.”

    Erwin Hudson, VP/GM at ViaSat, says that everyone in the IFC value chain – satellite players, the service providers and the airlines – can make money, but that for the airlines, it’s as much about value creation as literally earning money from in-flight broadband. “For example, enhancing customer satisfaction – there’s great value there for the airlines.”

    Which is as well, because if airlines have learned anything about IFC, it’s that customers generally aren’t willing to pay for it, especially as they become accustomed to Wi-Fi as a complimentary service in hotels, airports and coffee shops.

    “Customers do expect this for free, which is to say they expect it to be included in the ticket price, and that’s the way we’d rather see it go,” Hudson says. “There are different business models out there, such as pay-as-you-go, freemium or free, and we’ll see all three in play. But when you charge money for it, your take-up rate is around 10% to 15%, whereas when it’s free the take-up rate is as high as 100% or even 105%, because we count devices, not people, and many people have more than one device. So we think free is where it’s ultimately going to go.”

    Hudson adds that IFC is a segmented market – commercial airlines, private jets, military/government, etc – with different requirements and business models for each, “so there’s a substantial opportunity there.”

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  • Singapore to lead the way in tropical data centers

    Singapore to lead the way in tropical data centers

    Launching the Infocomm Media Business Exchange’s Ministerial Forum on ICT on Monday ahead of the official kickoff of CommunicAsia2016, Singapore Minister for Communications and Information Dr Yaacob Ibrahim (pictured) spoke of the progress that the country had made in becoming the world’s first Smart Nation – to include the world’s first data centers designed specifically for tropical climates.

    Dr Ibrahim explained how he has partnered with industry and academia to launch testbeds for green data centers and is now looking at whether it is possible to design and operate data centers at temperature and humidity levels that are double the current norm.

    The tests for these so-called Tropical Data Centers (TDCs) will target an ambient temperature of 38 degrees Celsius and humidity exceeding 90%. The trial will test how data servers react under various “live” situations, such as peak surges or transferring of data, and in diverse conditions, such as with no temperature or humidity controls. TDCs could reduce energy consumption by data centers by up to 40%.

    This would not only expand the geographical limitations of locating data centers, but also cut back on existing energy requirements of the running of such centers – all of which is part of the Singapore Smart Nation Vision.

    Data centers accounted for 7% of Singapore’s total energy demand in 2012 and is projected to reach 12% by 2030.

    On the cyber security front, Dr. Ibrahim said that Singapore has signed a number of bilateral agreements with France, the UK and India in the area of cyber security. It is also supporting the annual ASEAN computer emergency response team incident drill exercises.

    Earlier, the Cyber Security Agency of Singapore successfully completed a multi-sector exercise a few months ago to strengthen the ability of agencies to cooperate in handling cyber attacks. In October, Singapore will hold its inaugural International Cyber Week, which will also see the unveiling of the country’s national cybersecurity strategy document by the Prime Minister.

    Dr Ibrahim also stated that Singapore will complete its switchover to digital TV by the end of 2017, freeing up spectrum for mobile and mobile broadband services, and will be one of the first countries in the world to impose minimum standards for 4G QoS.

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  • Singapore e-commerce market to exceed S$7b in 2025

    Singapore e-commerce market to exceed S$7b in 2025

    The e-commerce market in Singapore is expected to be worth US$5.4 billion (S$7.46 billion) by 2025, according to a report by Temasek and Google released on Tuesday (May 24).

    This is larger than the casino industry in 2015, which was valued at about US$4 billion.

    The report found that Singapore’s e-commerce market was valued at US$1 billion in 2015, with online shopping making up 2.1 per cent of retail sales – the highest proportion of all Southeast Asian countries surveyed.

    Come 2025, Singapore’s e-commerce market is expected to make up 6.7 per cent of all retail sales, behind Indonesia’s 8 per cent, the report stated.

    Southeast Asian e-commerce markets in 2015 and projected figures for 2025. (Chart: Google, Temasek)

    Countries covered in the report included Indonesia, Vietnam, the Philippines, Thailand, Malaysia and Singapore.

    The report also highlighted the growth of ride-sharing services such as Grab and Uber. It noted that in 2015, the Singapore market was valued at US$800 million, tying with Indonesia. Overall, the region’s ride-sharing market was worth US$2.5 billion in 2015, with the figure expected to exceed US$13 billion by 2025.

    Ride-sharing market in 2015 and projected figures for 2025. (Chart: Google, Temasek)

    It added that Singapore will continue to record the highest fare per trip, three times that of the average fare in Southeast Asia.

    The report, which also looked at the venture capital and startup landscape in Southeast Asia, also found that as of 2015, Singapore is the most active country with 37 per cent of deal quantity and 72 per cent of deal value. Activity was mainly driven by two startups – Grab and Property Guru, which recorded investments of about US$350 million and US$130 million, respectively.

    It found that Southeast Asia is the world’s fastest growing Internet region, with an existing Internet user base of 260 million. This is expected to grow to 480 million users by 2020. Consequently, the Internet economy in Southeast Asia is expected to exceed US$200 billion by 2025, driven mostly by the growth of the e-commerce market, followed by online media and online travel, the report said.

    Driving growth are three factors unique to the region: A young population, with 70 per cent under the age of 40, a lack of big-box retail, as well as a rapidly growing middle-class, the report said.

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  • Demand for inflight broadband in APAC hits new heights

    Demand for inflight broadband in APAC hits new heights

    Airlines in Asia-Pacific are seeing soaring demand for inflight broadband service, with a majority of passengers in the region expecting to have such services onboard, a new survey said.

    The survey, conducted between August 2015 and March 2016, garnered respondents from more than 9,000 passengers in Asia, Australasia, Europe, and Central and South America who had taken a short, medium or long haul flight in the past year and carried at least one personal device onboard the aircraft.

    According to the survey, conducted by Inmarsat and market research firm GfK, nine out of ten respondents from the region say the availability of onboard connectivity would influence their choice of airline, while over two thirds are willing to pay for the service.

    Meanwhile, 54% and 57% of Asia Pacific passengers would choose inflight broadband as a preferred service in short-haul and long-haul flights, compared to only 16% and 18% choosing traditional in-flight entertainment (IFE) as their preferred onboard service.

    Business flyers are even more likely to recognize the value of paying for high-speed onboard connectivity than vacationers, with 74% of business travelers surveyed indicating they are willing to pay more for faster inflight broadband compared to 62% of leisure travelers.

    The survey revealed that 64% of passengers felt that in-flight broadband can deliver all of their onboard entertainment needs. This highlights an opportunity for airlines to use in-flight broadband to increase ancillary revenues, as the majority of passengers are willing to pay for the service, with 68% of passengers under 34 years old and 55% of passengers over 45 years old willing to pay for unlimited internet usage during a flight.

    When it comes to the quality of the inflight broadband service, passengers are most concerned about reliability (that a connection does not drop out or cut off), availability (that the connection is available throughout the flight), and speed of the connection.

    Inflight WiFI reliabilityThe survey showed that quality is even more important than price in Asia Pacific, as passengers are prepared to pay more for a quality service. Some 72% of flyers in Asia Pacific would prefer not to use broadband that is of poor quality with 62% stating they would pay more for faster in-flight broadband

    “Our survey has highlighted a growing appetite for fast, reliable and consistent broadband in the air, with more than half of Asia-Pacific passengers preferring in-flight connectivity over a meal or traditional IFE,” said Bill Peltola, Asia Pacific regional director at Inmarsat Aviation.

    “Although three-quarters of Asia Pacific flyers would like to try onboard broadband in the future, only 3% of aircraft operating in Asia Pacific today offer the service, highlighting the potential for airlines to use it as a differentiation point to attract more customers.

    The inflight broadband connectivity survey

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  • On the cusp of a Vietnam franchising boom

    On the cusp of a Vietnam franchising boom

    A Vietnam franchising boom is nearing with about 40 foreign brands reportedly seeking franchise partners in the nation.

    With the signing of several free-trade agreements and Vietnam’s involvement in the Asean Economic Community (AEC), the franchise industry is expected to boom, reports VietnamNet.

    Figures from the Ministry of Industry and Trade show that it has licensed more than 150 foreign-brand franchises since 2007.

    VF Franchise Consulting CEO Sean Ngo says the recent free trade agreement with the EU and, more importantly, the upcoming TPP, promise to be beneficial for Vietnam. He is also Southeast Asia MD for global franchise consultancy Edwards Global Services (EGS).

    While industries such as manufacturing, textiles, and food processing are sure to benefit, he says other franchised businesses that will also do well include equipment, furniture and fixtures and raw materials, as Vietnam drops import duties or lowers them to near zero under the new agreements.

    He says that when the AEC materialises it promises even more benefits, as the focus in franchising is to offer products and services that cater to the Asean consumer.

    “This will help many regional franchises successfully enter markets like Vietnam, and help Vietnamese franchises also expand further into the region,” says Ngo.

    Retail & Franchise Asia chairwoman Nguyen Phi Van says 90 per cent of the franchisors its represents in Vietnam are from the EU and the US, primarily in the fields of food, education and training, and gyms.

    “Although 90 per cent of franchise brands are in the food industry, as the market thrives over the next five years, the percentage of franchises in the service industry will increase substantially,” says Van.

    She says Vietnam has the three factors needed for developing franchising. Besides its large market size, the country’s stable macro-economic situation is also key to development.

    Meanwhile, Vietnamese enterprises have not really seized the opportunities from franchising. Van says the main drawbacks include inefficient operations, weak management and lack of finance.

    She says that devising the right pricing strategy will be critical to success, as consumers typically have lower disposable incomes than other Asean markets.

    Meanwhile, the Vietnam Retail & Franchise Show will be held in Ho Chi Minh City from June 8 to 10.

  • Taxing the internet giants: Catch me if you can

    Taxing the internet giants: Catch me if you can

    Southeast Asia is experiencing rapid growth in digital technology, social media, mobile activity and internet usage. Like every other emerging market that is witnessing rapid smartphone adoption, Indonesia is seeing mobile phones increasingly chosen as the platform for digital content consumption. According to US research firm eMarketer, spending on digital advertisement is growing very fast in Indonesia.

    The world consists of hundreds of different nations and legal jurisdictions, each with their own set of tax regulations. In cross-border transactions, the interaction of domestic tax systems can leave gaps that result in income not being taxed anywhere.

    Google is the poster boy of companies successfully practicing “tax optimization”. In the last couple of years, there have been intense discussions on how foreign-based online businesses have apparently failed to pay their “fair share” of tax.

    Multinational internet corporations with the help of their financial advisers used the tax treaty network and international structuring regime to minimize their tax burden through various mechanisms. In the digital era, taxing multinational companies becomes a lot more complicated.

    First, under international tax rules, local corporate tax will usually be levied on a business in its home country. The target country has the right to tax under traditional international tax concepts, if a non-resident business has a permanent establishment.

    Permanent establishment typically requires a relatively strong physical presence or a relatively high number of activities before a state has source-based jurisdiction over income.

    Most online businesses do not need these to do business; their online presence and payment systems are sufficient. It is very easy for businesses to claim that they have no taxable presence in a country. It becomes more difficult to apply traditional concepts to link an item of income with a certain location.

    Second, having a taxable presence is only the beginning of the story; countries then have to determine how much profit is attributable to that entity.

    There is a lack of definite legislation for guidance on this. Tax authorities have often left it to the companies to bargain with them.

    However, while negotiating, both parties will also be looking over their shoulders at their home country.

    Especially companies from the US, such as Google and Facebook, would prefer any tax they pay in other countries to be deductible as a credit against taxes to be paid in the US.

    Another question is how the government could tax a large business that has not yet been monetized, meaning it does not really earn any money, like WhatsApp? It is pretty much playing on the valuation, and taxes are applicable only when the business is sold.

    Third, governments are often slow to adapt their tax laws to technology. Many countries are now struggling with how streaming video services like Netflix fit into their tax structure.

    Historically, the problem with the taxation of digital goods is that the sales tax was designed to be imposed on the sale of tangible personal property.

    The tax base has been expanded over time to include several specific services, but many digital products are a mix of an intangible product and a service. Most transactions do not systematically fit into existing tax laws.

    Indonesia’s government has tried to address some of these problems. The Communications and Information Ministry has issued Decree No. 3/2016, which stipulates that internet companies providing services in the country must establish a permanent establishment.

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  • Asia Pacific Premium OTT Market Will Experience Exponential Growth Despite Challenges

    Asia Pacific Premium OTT Market Will Experience Exponential Growth Despite Challenges

    Vindicia, the leader in enterprise-class subscription billing, and Ooyala, a leading video, analytics, and advertising technology provider, today announced key findings from a study that explores the Asia Pacific (APAC) market opportunity for premium over-the-top (OTT) services. Conducted by top research and strategy consultancy, MTM, the findings reveal significant challenges to expansion due to broadband infrastructure and content localization, revenues are expected to grow strongly between now and 2019.

    The report explores the evolution of premium OTT in APAC, focusing on three key territories: Australia, Indonesia and Thailand. Over 80 participants, including a broad range of senior industry professionals, provided their perspectives on current and future market trends and developments.

    The study’s central finding was that despite challenges, APAC’s premium OTT market will undergo rapid growth by 2019: from around $85M in 2015 to $230M in Australia; from $7M to $40M in Indonesia; and from $8M to $45M in Thailand. Local service providers will own a significant portion of the market and will dominate in Indonesia and Thailand, while Netflix will be the dominant player in Australia.

    The study highlights three main challenges to premium OTT market expansion:

    • Broadband infrastructure. Industry executives believe broadband infrastructure challenges and limited access to affordable fixed-line services are significant barriers to growth. In Australia, the average connection speed is 8.2 MBps, about half that of the UK and US. Thailand has a similar average of 9.2 MBps, but only 9 percent of consumers subscribe. In Indonesia, there is only 1 percent broadband penetration with an average speed of 3.9 MBps. Participants view APAC as a mobile-first market.
    • Content localization. Despite the appeal of international content, respondents believe local-language programming is essential to the proliferation of premium OTT services in Indonesia and Thailand. Furthermore, they expect stiff competition among local pay-TV providers over licensing of existing local content libraries.
    • The Netflix Factor. While the presence of Netflix will drive OTT market expansion in general, consumers will struggle with Netflix’s one-size-fits-all offering. Because of this, there will be a period of uncertainty as consumers choose between standalone Netflix and competing offerings from local content providers, whose multiplatform and bundled packages ultimately may prove more appealing.

    “There’s no doubt that Asia Pacific is a hotbed of premium OTT service expansion that will evolve based on regional nuances, tastes and economics,” said Bryta Schulz, Vindicia senior vice president of marketing. “The next 12 to 24 months will function less as a test of whether or not premium OTT will take off, but more as a measure of how it will penetrate popular appetites. Among the creative and flexible approaches to generating reliable revenue, service providers will need platforms that can accommodate a range of content delivery and payment preferences. This is where solutions from Ooyala and Vindicia become vital.”

    “Intensifying OTT competition and major market consolidation, like what we’re seeing in Australia, are key identifiers of an industry on the crux of a massive opportunity,” said Vice President and General Manager of APAC for Ooyala, Keith Budge. “APAC OTT providers must build a rich, personalized user experience with unique content offerings that are competitively priced, and further, have a data-driven approach to understand audience behavior and preferences. Having analytics and insights will be a major differentiator to drive revenue and reduce churn as new OTT services launch into the market.”

    “The study provides a snapshot of industry perspectives about the prospects for premium OTT across the region. Local executives are positive and excited about future market prospects – and expect local players to perform strongly, especially in Thailand and Indonesia,” said Jon Watts, managing partner and co-founder at MTM. “International providers will need to find ways to partner with local pay-TV providers, telcos and ISPs to gain traction with local customers.”

  • Use Data To Show Customers They’re More Than Just A Number

    Use Data To Show Customers They’re More Than Just A Number

    Companies claim that customers aren’t “just a number to us,” but that’s more than a catchphrase for number-crunching analytics firm 84.51°.

    The company is the recent spinoff of former Kroger-Tesco analytics joint venture dunnhumby, now wholly owned by US supermarket giant The Kroger Co. Renamed for the longitude of its Cincinnati headquarters and rebuilt from the ground up in 2015, 84.51° now focuses much of its activities on Kroger customers and partners, such as global consumer packaged goods companies. It believes that its core competitive differentiator is not technology, but rather its focus on helping customers build long-term relationships with their consumers and other customers.  (The company says its new name also represents the “longitudinal view” it takes on understanding customer behavior.)

    Most retailers rely on segmentation analysis to determine which promotions to send consumers, creating blocks of homogenous groups of people (such as single-parent households in middle-class neighborhoods). But 84.51° uses analytics differently, eschewing what CIO Yael Cosset calls an “archaic” approach in favor of a much more relevant, personalized one.

    “We think of it as a snowflake, because we believe no two individuals are the same, and hence we should not engage them the same way, send them the same promotions,” he says.

    So, for example, you might send a promotion for a particular kind of bottled water to consumers who have already demonstrated an affinity for that kind of product, but you wouldn’t send them a promotion for a cola drink just because the supplier is offering one. This is the kind of commitment necessary to develop long-term relationships with consumers, Cosset says.

    The company goes beyond knowing which consumers like to buy bottled water or condiments; it tries to identify which ones prefer sparkling water to flat, or Dijon mustard to steak sauce. “You can’t do that with segmentation,” Cosset says.

    That approach requires investing in the development of sophisticated algorithms that enables 84.51° to analyze millions of data points about each individual consumer, including their reactions to previous promotions.

    Using Oracle Exadata and Oracle Big Data Appliance, teams of analysts and data scientists at 84.51° leverage a combination of conventional statistical packages and more advanced machine learning algorithms to generate the analytics foundation required to deliver personalization at scale.

    A single campaign uses dozens of targeting models in combination with complex optimization algorithms to send the right offers to the right people. Often, offers are based on contextual cues gathered in real time and are specifically targeted for each customer.

    “We spend a huge amount of time, money, and resources to really get solid sustainable data assets,” Cosset says. “Our data asset is a competitive advantage.”

    Retailers cannot expect to build long-term, sustainable relationships with customers if they base the terms of those relationships on financial incentives alone, Cosset says. “They’re transactional, not relationship-based,” he says. “The real differentiator is what you do with the data—how do you provide real and relevant value to every single customer, how do you engage them the way that matters most to them, how do you create this personal relationship.”

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  • Does Your Brand Need a Store in China to Succeed?

    Does Your Brand Need a Store in China to Succeed?

    As brands speculate about continued economic buoyancy in China, the necessity of having physical stores has come under increasing scrutiny. The unrelenting enthusiasm for e-commerce shown by Chinese consumers has also given cause for questioning the relevance of physical retail.

    Luxury and fashion brands have scaled back on their original optimistic plans to store expansion in China. Most notably, Louis Vuitton announced the closure of several Chinese stores last November. Also Walmart, has this week, launched a major brand repositioning to offer e-commerce solutions to Chinese consumers.

    Pessimism about store space is becoming endemic. Dangdang.com, a local online bookseller similar to Amazon, has launched an audacious plan to create actual bookstores based on the idea they will receive free-rent in increasingly vacant shopping malls in big cities.

    When a store, is not just a store

    Looking at the importance of a store presence in China requires a specific cultural lens. A key starting point for most, if not all, foreign brands is that they are not inter-generational. That is, the reputation and trust of the brand has not been passed down through family legend. Instead, brands are initiating relationships from scratch with a fresh generation of consumers.

    Taking the case of luxury, consumers have experienced the brand as a personal form of development. A key moment of truth in their relationship with brands is formed through store experiences –the physical inspection and feeling of products.

    When interviewing Chinese consumers, the key difference that strikes me is how emotional the store experience and service are in the stories they tell about their favourite brands. Often, they become aware of a brand through peer recommendation, but their loyalty and ultimate advocacy is created through their retail experience.

    Forgoing or not maintaining a retail presence is like introducing a ‘circuit breaker’ at the most crucial stage of brand adoption. Stores, irrespective of economic forecasts, must be seen as a symbolic, practical and emotional stepping stone for new consumers in China.

    In one particular interview with in Chengdu, the thriving city in the Western part of the country, a Chinese entrepreneur was describing to me that one of his favourite brands was Tod’s (which he could not pronounce, and jokingly called it “potato slices” because it was the closest Chinese word he could find).

    Despite having extreme difficulty in engaging with the brand at the official level, he has become a Tod’s aficionado based on his experience at the store – that he described as “like the home I imagine I would live in Italy”.

    For him, the brand was the retail experience, it was enough to cement this loyalty and enthusiastic promotion to a large group of businessmen, who like himself, were ‘finding their feet’ with luxury brands.

    Beyond a transaction point: Chinese stores as brand equity

    From a broader strategic point of view, brands need to see stores in a wider cultural perspective. Beyond a point of transaction and sales number, stores are the clearest and most uncompromised expression of your brand to new consumers in China.

    In the context of ‘face’, retail presence in new malls and as part of the new middle class’ weekend walkabouts is essential to suggest status and respect to Chinese consumers.

    Once again, using Chengdu and luxury as an example: The way foreign brands were perceived in terms of their premium offering was directly related to their presence in two of the city’s new mall developments –meaning Burberry and Michael Kors enjoyed almost equal rating as early-arriving European brands.

    Adding to perceptions is the way that Chinese consumers share their recommendations with others in-person and online is almost always footnoted with a proof point on quality. Invariably, this is described as the look, feel, or physical appearance of the product materials – the fabric of the dress or the sheen of the casing. In this initial peer-to-peer introduction to brands, physical inspection at a store is an essential part of the purchase journey.

    Forgoing or not maintaining a retail presence is like introducing a ‘circuit breaker’ at the most crucial stage of brand adoption. Stores, irrespective of economic forecasts, must be seen as a symbolic, practical and emotional stepping stone for new consumers in China. Something that e-commerce, or lack of stores, can not address.

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