25 October 2016
A Muslim woman looks at her mobile phone after taking part in morning prayers at the Luneta Park in Manila. Photo: Reuters
A Muslim woman looks at her mobile phone after taking part in morning prayers at the Luneta Park in Manila. Photo: Reuters

Get ready for an explosion of subscription content in Asia

In 1985, the first Blockbuster video rental store opened in Dallas, Texas. Less than 10 years later, Blockbuster was named the undisputed global leader in video rentals, with a value of US$8.4 billion.

The company reached its peak in 2004 with 9,000 stores around the world, but by 2010, Blockbuster was filing for bankruptcy.

The fall of Blockbuster and similar physical entertainment giants has much to do with disruptive innovators such as Netflix and Amazon which have brought with them the rise of the subscription content model.

Video may have killed the radio star but the internet killed the video rental industry.

Today, there are 40 million Netflix subscribers in the United States.

Sweden has 20 million Spotify subscribers and it is looking into expanding pay-per-month e-book and video game services as well.

In Asia, the subscription model has taken off more slowly.

Pirated downloads of music and movies are common (with one survey indicating that more than half of Hong Kong consumers download music even though they know it’s illegal ) and pirated hard copies of CDs and DVDs are widely sold as well.

Additionally, many households in Southeast Asia still don’t have fixed broadband, making it difficult to view subscription content on a computer or television, as is common in the West.

Merchants in Asia considering which subscription model to employ must take this consumer landscape into account.

One way in which the Asian subscription market is opening up is with premium and original content.

In China, for example, online video platform iQiyi has managed to attract about five million monthly subscribers by producing quality video viewers can’t find anywhere else.

iQiyi’s original series, The Lost Tomb, debuted in June 2015 to rave reviews and 100 million hits.

Viewers who wanted to immediately watch the rest of the series rushed to sign up for iQiyi’s paid subscription service — a clear indication to digital businesses that if they can offer quality, unique content, the Chinese market will subscribe.

An alternative way of approaching subscription models can be taken from Europe where Dutch news aggregator Blendle has gone to great lengths to ensure access to premium content by allowing its users to pay for articles individually and then refunding those that said the article wasn’t worth their time or money.

Such alternative and flexible payment models could prove successful in Asia, where the majority of consumers are less accustomed to strict subscription models but still have a desire to receive quality content.

In Southeast Asia, digital subscription services have been slower to take off in part due to a heavy reliance by consumers on mobile devices, rather than computers, to view online entertainment.

However, subscription-based carrier billing or micropayment models have the potential to gain traction.

They give customers the ability to enter their personal details just once in order to conduct small transactions and receive low-cost games or stream content straight to their smartphone.

Additionally, they can choose to opt out when they please and make payments straight from a mobile device, making them feel more comfortable when signing up for a subscription.

Mobile payment capabilities are particularly key in the Hong Kong market where daily mobile internet usage is the highest of any Asian region.

With many Southeast Asian readers now enjoying ebooks straight from a mobile device, we may soon see a rise in ebook subscription models in Asia.

In the West, Amazon launched Kindle Unlimited in July 2014, promising users as many ebooks as they like for US$9.99 per month.

The service is limited to certain countries, with India being the only Asian nation currently eligible — leaving plenty of room for other merchants to take the lead.

After all, the Asian e-book market is forecast to reach US$2.2 billion by the end of 2016 and in Hong Kong, the market for straight-to-mobile ebook subscriptions is growing too thanks to popular services like 24Reader which charges users a monthly fee to access magazines, books and comics on a phone, tablet or PC.

Merchants who want to get an early foothold in the subscription reading market should consider working with pay wall operators who support metered payments in addition to traditional subscriptions.

That way, readers have the option to only pay for what they read before deciding if they want to commit to regular fees.

As subscriptions grow in popularity, digital content businesses looking toward Asia will need new, innovative payment solutions to streamline subscription billing and recurring payment processing.

Integrated payment solutions ensure merchants have access to cloud-based capabilities and global payment processing via a single connection.

With that, merchants can accept payments from customers around the world, especially if they wish to pay in their local currency or use a preferred payment method.

Subscription content is starting to dominate the digital content market in the West and researchers in the know say subscriptions are set to hit Asia with force, particularly markets like Hong Kong in which a technically savvy population wants access to the quality programming and subscription freedom enjoyed by users of Netflix and other such services in the West.

Digital content providers should get a head start now by examining their subscription payment models and preparing to tailor them to the Southeast Asian market.

Working with a payments partner is a good way to start building capabilities to accept multiple currencies and alternative payments, and to provide tailored and flexible payment options to consumers in Asia.

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In June 2015, iQiyi’s original series, The Lost Tomb, debuted to rave reviews and 100 million hits. Photo:

VP Business Development, APAC, Global eCommerce, Worldpay

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