Business Opportunity in the Video on Demand Industry

The Potential of Indonesia’s Video on Demand Industry

  • InCorp Editorial Team
  • 13 May 2024
  • 5 minute reading time

Entertainment consumption is experiencing a significant paradigm shift. The convenience and cost-effectiveness of Video on Demand (VOD) platforms are steadily eclipsing traditional, linear cable subscriptions. The growing trend offers numerous profitable business prospects for budding entrepreneurs and well-established companies.

The Concept of Video on Demand and Its Rise in Popularity

The popularity of Video on Demand (VoD) has surged due to its convenience, flexibility, and personalized viewing options. VoD represents a digital media distribution model, enabling users to conveniently access and watch video content, typically through online platforms.

Video on Demand platforms typically offer diverse content, such as movies, TV shows, documentaries, and more, accessible instantly or for later viewing. VoD grants users the freedom to select content, decide when to watch it, and how to view it. 

This eliminates the need for fixed broadcasting schedules or physical media, as users can stream or download content whenever they want.

The Growing VOD Market in Indonesia

Indonesia’s over-the-top (OTT) video-on-demand (VoD) industry has experienced significant growth in the past five years. According to the latest report from Media Partner Asia, VoD company revenue in the country reached USD 366 million or IDR 5.7 trillion in 2023, marking a 72% annual increase.

The online video market in Indonesia is USD 1.3 billion, with the premium VoD segment reaching USD 500 million. Each segment captures 21% and 17% of the audience share.

The increase in the middle-class population, particularly among Generation Z, reached 52% of Indonesia’s total population in 2023. This figure is expected to continue growing at least until 2028.

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The Biggest Video on Demand Platform in Indonesia

According to the latest report by JustWatch, Netflix maintains its position as the leading video streaming platform in Indonesia during the fourth quarter of 2023. 

The OTT giant has consistently controlled a stable market share for three consecutive quarters (Q2-Q4) throughout 2023, with percentages of 23%, 24%, and 24%, respectively.

Following Netflix is Disney+ Hotstar, which holds the second position and shows steady growth. Its market share reached 22% in Q4 2023, only 2% behind Netflix. Iflix and Viu are also experiencing positive growth, capturing 16% and 12% market shares, respectively.

Vidio, the only local OTT platform, holds the fifth position in market share throughout 2023. In Q4 alone, Vidio captured an 11% market share, showing a slight increase of 1% from the preceding three quarters, which remained stable at 10%.

Forecast on Video on Demand in Indonesia

Business Opportunity in the Video on Demand Industry

The projection also shows that the industry will thrive in Indonesia, given the current positive trend in the VoD industry. Below is the forecast:

Increase in Market Share

The VoD market in Indonesia is predicted to make around USD 756.70 million in revenue by 2024. This revenue is expected to grow annually at a rate of 8.10% from 2024 to 2027, resulting in a market volume of about USD 955.90 million by 2027.

Among the different parts of the market, Video Streaming (SVoD) has the most significant market volume, with around US$354.10 million in 2024.

Increase in Number of Users

The number of users in Indonesia’s VoD market is expected to reach 98.8 million by 2027. The user penetration rate, which shows the proportion of users compared to the total population, is expected to be 29.5% in 2024 and is likely to increase to 33.8% by 2027.

Rise of Local Content

Indonesia’s VoD market is experiencing a rise in local content consumption, mainly due to the growing popularity of Indonesian movies and TV shows.

Challenges and Considerations

Local players in the video-on-demand industry in Indonesia face several challenges:

Competition with Global Players

Local companies must compete with well-established global giants in the industry, which can be daunting due to their extensive resources and brand recognition.

Low Subscription Culture with Payment

There’s a prevalent culture of reluctance to pay for subscription services, resulting in low adoption rates for paid streaming platforms among Indonesian consumers.

High Piracy Rates

Piracy is widespread in Indonesia, posing a significant challenge to legal streaming platforms as it reduces their potential audience and revenue.

Difficulty in Increasing Average Revenue per User (ARPU)

Local companies need help raising the average amount each user earns due to various factors, such as consumer pricing sensitivity and competition from free or pirated content sources.

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Invest in the Video On Demand Industry with InCorp

The video-on-demand industry offers a promising future in Indonesia, with current trends showing positive results. 

These circumstances provide investors with huge opportunities to explore this lucrative sector, especially considering the potential increase in the middle-class population, particularly among Generation Z, who primarily use video-on-demand services.

Start your journey with InCorp Indonesia as we provide the following:

  • Streamlined Business Setup: We handle company formation and licensing complexities, allowing you to focus on your core business activities.
  • Local Market Expertise: Our team possesses in-depth knowledge of Indonesian regulations and the VOD industry, ensuring your business operates smoothly.
  • Reduced Risks and Costs: We help minimize potential risks and associated costs by navigating legalities efficiently.

Take advantage of this exciting investment opportunity. Contact InCorp Indonesia by filling out the form below.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

Get in touch with us.

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Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.

There are two main types, namely, primary business licenses and non-primary business licenses. The primary ones commonly apply to various industries, such as general and industrial business licenses. Additional non-primary ones are included, depending on the operations of your business. Examples of non-primary business licenses are operational and commercial licenses.

Yes, you must apply for it to be able to issue work permits for your foreign employees. This permanent business license is also a prerequisite for the applications for other business licenses and import licenses.