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Friday, March 29, 2024

PLDT, Globe duel over content

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It’s three in the morning but Charles Viernes, 23, is still awake, chatting with Facebook friends and watching YouTube on smartphone.

Viernes, a graphic artist working in Makati City, says he usually spends eight to 10 hours on digital media. “I rarely watch television shows now,” he says.

Viernes is one of the millions of young Filipinos or the so-called millennials who are more inclined to engage in online activities than watch TV.

Jay Bautista,
 senior advisor of Strategic Consumer and Media Insights Inc.

Over the past four years, television viewership in the Philippines has been on a downtrend because of increased access to Internet and proliferation of smartphones.

Jay Bautista, senior advisor of Strategic Consumer and Media Insights Inc., says Filipinos began moving away from TV as early as 2010.  This is especially true among kids, teenagers and those in the age group 29 to 39 years, he says.

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“It’s the first time in history that kid’s TV viewing index has dropped. They still watch TV, but not as much as before,”  Bautista says.

Bautista blamed the declining TV viewing index among Filipinos to the improved accessibility of Internet services via smartphones.

Citing data from SCMI, Bautisa says 49 percent of Internet users in the Philippines are found online every week.

Internet penetration rate among Filipinos aged 10 to 19 years is the highest at 84 percent, followed by 20 to 29 years old at 65 percent; 30 to 39 years old, 42 percent; 40 to 49 years old, 25 percent and 50 and up, 12 percent.

The top reasons for Internet use among Filipinos are social networking, academic study, downloads, using email playing games, watching video and others.

“All of their time is now confined to online because the lifestyle has changed now,” Bautista says.

Next battleground

This scenario brought telecommunication companies to the next battleground. Philippine Long Distance Telephone Co. and Globe Telecom are now dueling over content, which they believe to be the future source of profits.

PLDT recently invested $15 million in iFlix, in line with the strategy to develop new revenue streams and complement present business by participating in the digital world beyond providing access and connectivity. 

It also teamed up with Fox International Channels, which allows subscribers to view nine live Fox channels including three channels for Fox Sports, National Geographic, NatGeo People, NatGeo Wild, Fox News, Channel M and Star Chinese Channel.

Globe partnered with HOOQ, an online entertainment service offering more than 10,000 foreign and local movies and TV series that can be watched on personal computers, tablets and smartphone connected over the internet.

Globe and PLDT also teamed up with Walt Disney Company Southeast Asia to expand content offerings.

Bautista says telcos saw the opportunity for people to use data, if made attractive to them.

Telcos revenues have recently shifted from short messaging system and voice to broadband data over the last three years to five years.

Edgardo Cabarios, director of the National Telecommunications Commission regulation branch agrees with Bautista, saying that telecom companies revenue stream has changed because of the popularity of social networking sites.

The number of text messages per day has dropped to one billion from two billion text messages a day in the last five to 10 years.

“Mobile broadband is the next growth area for telcos,” Cabarios says.

“Certainly from the Globe perspective what we see the consumer demand for rich content is growing as more and more customers get smartphones, tablets and devices that have the capability to display and show rich content,” Daniel James Horan, Globe’s senior advisor for consumer business says.

According to Horan, 37 percent of Globe’s customer base are using mobile data on a regular basis this year, up from last year’s 20 percent.

As of end-June, Globe’s subscriber base stood at 48.4 million.  The actual data traffic was also higher at 82 percent year-on-year.

“The number of smartphone in the customer base of Globe is about 35 to 37 percent and growing rapidly as well. All of those have been driven primarily by wonderful content and services that we have been providing in the market,” Horan says.

“We all know that call and text revenues will eventually start to shift and the future obviously in the data services, Globe is in the forefront of creating this digital lifestyle for customers and this is part of that building the lifestyle and the ecosystem,” he says.

Globe’s SMS revenues fell  6 percent to P14.43 billion in the first six months of 2015 from P14.24 billion last year.  Revenues from voice services went up 7 percent to P18.62 billion from P17.34 billion a year ago.

The Ayala-led telco’s mobile browsing and other data, on the other hand, grew 53 percent to P9.53 billion in the first semester from P6.22 billion in the same period last year.

The significant growth in mobile data revenues was driven by the increasing popularity of Globe’s GoSurf promotions, which provide free access to premium content, such as Spotify and HOOQ, and top mobile games.

Globe’s mobile revenues climbed 10 percent to P41.58 billion in the first six months from P37.80 billion last year.

Ariel Fermin, PLDT executive vice president and group head of consumer business says:  “We’ve gone beyond telecom. So, we are moving into digital media, that’s the direction of PLDT.”

“Content will give more value to our broadband services,” Fermin says.

PLDT Group’s mobile internet revenues rose 21 percent to P4.78 billion in the first six months of the year from P3.96 billion last year.

The higher traffic for mobile internet browsing was mainly due to prevalent use of mobile apps, social networking sites and other over-the-top services.

Revenues from text messaging services dipped 5 percent to P17.88 billion in the first semester from P18.77 billion last year.  While wireless broadband revenues increased 4 percent to P5.21 billion from P4.99 billion last year.

Streaming war

Globe’s Horan says they are offering a fantastic range of content through HOOQ, which no other telcos provide.

“There’s a lot of video services in the market today, but HOOQ has the biggest portfolio of content in the country,” he says.

Globe’s subscribers can access more than 10,0000 movies and television episodes and TV shows including titles from partners Sony Pictures Television and Warner Bros. It also has local content such as GMA Network Inc., Viva Communications, Regal Entertainment and ABS-CBN Corp. Globe’s offers monthly rates of P199. 

“For us, we see video as a very important part of the future and we  will continue to build this partnership to allow us to provide the best local content and the best international content and I think it’s really important from the Globe perspective,” Horan says

Horan says since Globe started offering the service in February, the result has been “fantastic” with over 3 million minutes already streamed.

PLDT’s Fermin says iFlix is “doing very well, but it’s too early to tell.  The indication is very, very positive because the content line up is strong.”

He says the Philippines is moving in line with global trends.

“With iFlix, PLDT and Smart can offer the widest library of video content to more Filipino homes when and where they want it.  Our subscribers can access and enjoy more than 11,000 hours of TV and movie entertainment from the best content providers around the world,” Fermin says.

He says all video content can be viewed at home or on the move – using their TV screens, desktop computers, laptops, tablets and smartphones at very affordable monthly rates staring P99 a month.

“The good news is we have already started stimulating usage among our subscriber base with breakthrough partnerships with the likes of FOX and iflix for mobile entertainment,” Fermin says.

Internet TV streaming service iflix, for example, is now the fastest growing service of its kind in Southeast Asia after reaching more than 150,000 subscribers in less than three months after it launched in Malaysia and the Philippines.

Fermin says the combination of rising smartphone adoption, coupled with attractive data packages and bundles, could further boost the growth of its mobile data business through 2015.

Currently, smartphone penetration within the Smart and Sun networks stands at 35 percent and is expected to grow more rapidly in the months ahead.

Mobile data traffic passing through Smart’s mobile network surged almost 170 percent  year-on-year in the first half of the year.

“This ‘data explosion’ started when we introduced our ‘Free Internet’ promo last year which aimed to give our subscribers an opportunity to try out various Internet and digital services,” Fermin says.

“We see this trend continuing for the remainder of the year as  we introduce more engaging content and digital services coupled with very affordable data service bundles that bring in added revenues for the mobile group,” he says.

According to a Nielsen report in 2014, viewing online video content has become a pastime for digital consumers in the Philippines with 85 percent watching at least weekly, the second highest in the region. 

The same report also reveals that seven in 10 digital consumers in the country are watching TV content and movies via online sources such as video-on-demand, the second highest penetration of Internet TV in the region at 71 percent.

Digital worries TV network?

Emmanuel Lorenzana, TV5 president and chief executive says he is not worried about the impact of the ongoing video streaming war between Globe and PLDT on traditional TV viewing habit.

Rolando Valdueza, chief financial officer of ABS-CBN Corp., says the new development gives the company an opportunity to expand its audience reach.

“We are not ignoring it. We know our strength and we know our strategy. With Globe, they pay us for the use of our content. In a way, you also expand your reach,” Valdueza says.

ABS-CBN is the only broadcasting telecom company offering mobile phone services, using the network of Globe.

The Lopez-led network also offers content such as StarFlix, an exclusive mobile movie series available for ABS-CBNmobile subscribers.

Rival GMA Network Inc. is looking for a telecom partner to distribute its content in different platforms.

Pinoy cord-cutters

SCMI’s Bautista says the millennial generation is driving the change in the telecommunication industry in the Philippines.

“In the US, they called cord-cutters, they don’t want devices with cords. They want to be mobile. they want to have the decision on when and what to consume,” he says.

According to a recent report on the Global OTT TV and Video Forecast from Digital TV Research, the number of homes globally with subscription video on demand will rise by 485 percent to about 120 million by end-2015 from 20 million in 2010.

By 2020, the total number is expected to reach 250  million, up over 100 percent from 2010.

Globe’s Horan says Filipinos love content, whether it is telenovela, long movies, music or games.

“The desire for the content is already there, the challenge is how we get it to pay for an affordable manner. The service of HOOQ has really changed the way we do things because if you buy our data plans, it comes bundled. You can get thousands of videos,” he says.

Bautisa says the main challenge for the shift is the Internet speed.  “That’s the main hurdle. If we are able to improve the speed, the experience would be better,” he says.

Last year, a report by Ookla, an Internet broadband testing company, ranked the Philippines 160th out of 190 countries in terms of download speed.

The Philippines is also one of the most expensive among 64 countries with median monthly cost per Mbps at $26.60.

 

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