| When asked to name the next big market for online video, media executive Michael Pusateri jumped at the chance to shout: "Indonesia!" Kevin Lin, a co-founder of Twitch, agreed. While major multinational companies spend billions of dollars chasing customers in China, Japan, India and South Korea, executives who work in music, gaming, short-form video and film all say that Indonesia, the world's fourth most populous country, may have the most growth potential of any market in Asia. Indonesia boasts a young population and a growing economy. YouTube, Instagram and TikTok are already thriving in the market, at least in terms of users. YouTube and TikTok combine for more than 80% of all time spent watching video in Southeast Asia, according to Media Partners Asia. But when it comes to premium video, Netflix and Disney+ are trailing a local player. Vidio, a streaming service owned by Indonesia's second-largest media company, is the most popular service in terms of consumption, according to MPA. While Disney+ has more subscribers, most of them come courtesy of a partnership with Telkomsel, a local telecom provider. People use Vidio, which has 3.5 million subscribers, a lot more. Vidio is a rare local success story -- and a lesson for other local media companies worldwide. Western giants dominate the online video market in just about every major territory outside of China. Netflix raced to a leading position in Brazil, Mexico, South Korea, Australia and much of Western Europe. Amazon is one of the largest players in Japan and select European territories. Disney+ is the leader in India. (YouTube is the most popular video service in just about every country on earth, but let's focus on paid video for now.) Local efforts to create an alternative to these foreign interlopers have largely failed. But there is still an opportunity in markets where the big Western players aren't yet spending pots of money. Netflix and its peers have yet to make a major investment in Indonesia. Despite its large population, it doesn't have a significant local film industry and its people are relatively poor. (GDP per capita sits between Thailand and India.) "Most of the competitors that you mentioned, at least the western ones, are not really at the point of investing a lot of money in local Indonesia originals," said Sutanto Hartono, the chief executive officer of PT Suya Citra Media, the Indonesia media company that owns Vidio. That's not to say there isn't a big opportunity. Premium video accounts for just 7% of time spent, as you can see in that chart. But use of subscription video-on-demand services is surging, and has already surpassed pay-TV in the market. If any service can attract even 10% of the population in the country, it will have about 30 million subscribers. Hartono, who has worked for both Microsoft and Sony Music in Southeast Asia, secured the engineers to build out Vidio only after a failed effort to revive Blackberry Messenger in Indonesia. But he has wasted no time jumping on the opportunity before its Western rivals can catch up. The company is funding close to 40 original series a year, more than every Western player combined, and has also secured the rights to most major sports leagues, including the English Premiere League and the National Basketball Association. (The audience for the NBA is relatively small, but quite wealthy and loyal.) Vidio offers its service at more price points than the competition as well. There is a free tier and three different paid tiers, grouped based on what devices and programming you can use. Sports fans must pay more than people who don't want sports and sports fans must also pay more to watch on devices besides a phone. Netflix has been more rigid about pricing than most of its peers. That's a big reason it generates more revenue in Indonesia than any service despite having a smaller user base. There is little question that Netflix or Disney+ could overtake Vidio -- if they chose to spend the money. But tailoring a service to Indonesia would be time-consuming and expensive relative to the return on that investment. Most Western companies have decided to sit it out and hope that their catalog of shows from other parts of the world will help them sign up enough customers. That's not going to fly in Indonesia, or dozens of other markets across Southeast Asia, the Middle East and Africa. And therein lies an opportunity for local players with the resources to get an early advantage on their larger western peers. Now, all that being said... Netflix is the No. 1 paid streaming service in Asia (by a lot)Netflix is the dominant subscription video service in South Korea, as well most of the Southeast Asian markets. That includes Australia, Malaysia, Vietnam, Singapore, Thailand and the Philippines. Most of the big Western entertainment companies are afterthoughts in Asia. Paramount+ doesn't exist in most markets, nor does HBO Max. Everyone here is waiting for them to come, but that's not happening until next year at the earliest. Peacock, forget about it. Netflix's pricing strategy means that even in markets where Disney+ has more users (like Indonesia), Netflix still makes more money. It generates more revenue in the Asia Pacific than Prime Video and Disney+ combined. However, Netflix has yet to crack the two largest markets in the region. China isn't open to Netflix and won't be any time soon. We covered Netflix's struggles in India here. If there is one other company to watch in Southeast Asia, it's.. Amazon.It's not only the US where the retail giant is spending pots of money to catch up with Netflix. The company has committed hundreds of millions of dollars to fund programming in Southeast Asia. This is notable because Amazon doesn't have a large presence in the region as a retailer. Amazon has typically invested in Prime Video in places where it's already selling lots of other goods. (Amazon Prime Video isn't a player in South Korea, for example.) But Amazon has clearly decided there is a big opportunity in Southeast Asia and is pressing the advantage it already has in India. Local players say Amazon has done a better job at local programming in some Asian territories than Netflix, and the field in most of these territories is still wide open. — Lucas Shaw The horror movie smile topped the US box office with about $20 million. Not bad for a movie that was previously slated as a direct-to-streaming movie. Billy Eichner's gay romantic comedy "Bros" bombed despite strong reviews. This weekend adds more evidence that horror movies are still considered must-see in theaters while comedies may not. It seems odd. Comedies are best watch around other people laughing. And yet, we haven't had a hit comedy in theaters in a long, long time. For what it's worth, I will go see "Bros" in theaters when I get back to the States. The No. 1 new TV show is…"Dahmer." Ryan Murphy has his first smash hit for Netflix. The show has scored one of the biggest debuts in Netflix history, and is more popular in search results than Amazon's "Rings of Power." The power of CoolioConsumption of Coolio's "Gangsta's Paradise" surged over the weekend after his death. While YouTube views are up about 300%, it is from a fairly large base. The song was already getting about 500,000 views a day on the video site, and often ranked as one of the 100 or 200 most popular videos decades after its initial release. Live music's 'new reality'The musician Santigold published a long note on Instagram explaining why she canceled her tour that speaks to all of the problems in live music right now. She talked about the mental health strain of the pandemic, the logistical challenges posed by inflation and the economic challenge of trying to mount a tour when so many other musicians are on the road. Give it a read. Deals, deals, dealsA friend of mine from tennis made a great K-Pop playlist if you are looking for inspiration. My email is lshaw31@bloomberg.net. Reach out via email, text or Signal if you hear anything I should be writing about. (And if you aren't yet signed up to receive this newsletter, you can do so here.) | 
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