Will Malaysia be a viable market for Disney to launch its VOD service in?

Disney last week announced its massive move to pull the plug on all of its movies from Netflix US, and provide its own streaming services. Consumers can soon expect a Disney branded direct-to-consumer streaming service in 2019 in the US, before expanding globally. It’ll also launch its own ESPN video streaming service in early 2018, showcasing about 10,000 sporting events annually.In Malaysia, some local industry players and experts can’t help but wonder if Disney will also enter the local VOD scene as part of its global expansion. Competition in the video streaming industry in Malaysia is clearly heating up, with new and existing players such as dimsum, iflix, Netflix, tonton and Viu all aggressively fighting for consumer attention.If Disney really were to enter the Malaysian VOD market, it could potentially affect many established players on-ground.This is given the popularity of live sports and kids content in Malaysia, content areas Disney and ESPN already lead in, said Prashant Kumar, partner at Entropia. Another advantage Disney will definitely have is its strong branding, and its already established trust with consumers that it produces powerful content.Kumar added that if Disney was keen to enter a local market like Malaysia,  pricing will no doubt be one of the most important factors in determining its success.He also added that despite the competition, currently many of the new-age streaming services in the country are not yet profitable."It’s a cut-throat world out there, and VOD service providers are throwing free things at will, fueled by venture funds,” he said.Bala Pomaleh, current CEO of IPG Mediabrands agreed with Kumar on the cost factor, saying Disney will not likely be able to acquire a big subscriber base in the Malaysia market it were to stamp on a higher subscription fee, as compared to the local providers.Whilst he expects audiences in the VOD sector to grow exponentially, Malaysia does have significant content piracy issues. If the issue is not curtailed, then VOD operators will probably need to have a very aggressive pricing strategy in order to attract subscribers, Pomaleh added.How likely is it to enter?Pomaleh said the decision to enter Malaysia for Disney would largely depend on the market potential.“As there are currently more than ten VOD operators in Malaysia, many with overlapping content strategies, it will be the more aggressive operators with a longer break even business plan who will have an edge,” he added.Yap Chee Weng, CEO of dentsu X Malaysia said, "It’s too early to say if Malaysia is part of Disney’s global expansion plan with regulatory barriers, language adaptation, and local market demand for video streaming services being some of the consideration factors."Yap also agreed that Disney may pose a threat to local players given that it is undeniably one of the world’s most powerful brands in the world, with a rich history and timeless original creations.“It seems to be a smart, practical and strategic business move by Disney to retain original content in an owned platform," he said, adding:Indeed, we expect nothing less from an iconic brand like Disney to has the confidence and audacity to evolve its business to stay competitive and dominant.Strategic considerations for DisneyApart from pricing, Pomaleh said there are several strategic considerations for Disney should it decide to enter the local market.“First, it remains to be seen which subscription model Disney would go for, be it a paid or 'freemium' model. On pay-TV in Malaysia. Disney used to be ad free, but has recently become more flexible with airing ads, so it looks like a freemium strategy could be possible,” Pomaleh said. Freemium, he explained, is a pricing strategy by which a product or service especially a digital offering is provided free of charge, but a fee is charged for proprietary features, functionality, or virtual goods.Disney would also require high quality local content to attract a larger fan and subscriber base, if it were to enter into the local market. And whilst it appears that Disney wants to create its own distribution, tying up with local operators in addition to its own platform, may speed up adoption in a localised market like Malaysia, Pomaleh said.Business as usual for NetflixMeanwhile Netflix told A+M, that the split with Disney will not affect Singapore or the rest of its Asian markets.Pomaleh said one of the key reasons, Netflix has been able attract a strong subscriber base is because it is able to pull together good original content. Meanwhile, Dentsu’s Yap deemed the latest move by Disney as “a minor” setback to Netflix which has been actively creating its original Netflix-exclusive shows and movies.In Malaysia, Netflix is also getting aggressive to establish a local footprint. For example, just this week, it has partnered with Telekom Malaysia (TM) to offer TM customers access to content available on its platform, come October 2017. In the same week, it also announced a new tie-up with Primeworks Studios, Malaysia’s leading content production house to allow its Malaysian customers to now enjoy their "favourite" local films and series on its platform.