This market insight discusses Singapore's online streaming service HOOQ's filing for liquidation due to failure to grow revenues and cover its increasing operating costs. Competition, consolidation and exit are inevitable as market grows.

Online streaming service HOOQ which is jointly owned by Singapore telecoms operator Singtel, Sony Pictures Television and Warner Bros has filed for liquidation in Singapore due to failure to grow revenues and cover its increasing operating costs. Launched in 2015, HOOQ operated in India, Indonesia, Philippines, Singapore and Thailand.

Our analysis

It has been challenging for online video services to monetise the offering of their services especially in developing countries in APAC region where piracy is rampant and average revenue per user is low. As a strategy to diversify the source of its revenues, HOOQ launched, in parallel with its initial subscription offer, an advertisement-supported video on demand service in 2018. Despite having new revenue stream from advertisement, the service had been struggling to compete with developing short form video platforms, apart from Facebook and Youtube for advertising revenue.

HOOQ adopted a smart policy of extending the reach of its appeal and accessing another revenue source by partnering with the country’s largest and most popular OTT service, Hotstar. According to the partnership, HOOQ offered its catalogue of content to Hotstar subscribers. HOOQ also partnered with Grab, the ride hailing company in Southeast Asia to drive more subscribers and revenue. However, these were not enough for HOOQ to sustain its business financially.

Loss deepen as content spend increased

In its biggest market, India, Hooq had been struggling to compete against the top players, especially in the business of producing original content. in addition, HOOQ had deal with Disney and with Hotstar that will not be renewed in India as a result of the launch of bundled service Disney+ Hotstar.

To compete, major online streaming services are investing heavily to produce original content that would have driven out smaller service that could not follow this path with the same determination. Therefore, companies like iflix and HOOQ which operates in multiple countries, have been seeking for funding to grow while sustain its business operation.

Opportunity for competitor?

Both rivals iflix and Viu are also facing the similar challenges. iflix refocuses its business on developing markets in Asia by exiting Africa and Middle East, currently focus mainly on its advertising business; while Viu withdrew from India in December 2019 since it requires heavy investments for the company to compete with other services in the crowded online video market.

Both iflix and HOOQ have first mover advantage in Indonesia, Philippines and Thailand and have been competing fiercely in these developing markets. HOOQ’s exit indicates an opportunity for other local and regional services especially iflix, where it now has one less competitor for subscribers, advertisers and content rights.

Consolidation and exit are inevitable as market grows

In developing countries in APAC, competition is getting fierce as Netflix is gaining subscribers steadily in the region and started offering affordable mobile-only subscription in India, Malaysia, Vietnam, Thailand and Philippines. Omdia believes that competition is crucial to drive the growth of online video market and we expect there will be more exits as well as mergers and acquisitions in next few years as the market gets saturated.