Taiwan’s National Communications Commission (NCC) has recently introduced draft legislation to regulate operations of the OTT (over-the-top streaming services) industry — also called VOD (video on demand).
The NCC has reportedly coordinated with Taiwan’s Mainland Affairs Council, Ministry of Economic Affairs (MOEA) and the Ministry of Culture to draft this new legislation. The draft legislation would regulate both domestic and international VOD services and is now available for public comments.
The planned legislation will address increasing concerns that Mainland Chinese-run VOD services are gaining a foothold in the Taiwan market through partnerships with local companies, a loophole that seems to allow circumvention of the law.
In April, Focus Taiwan reported that “the National Communications Commission (NCC), said Chinese companies in the over-the-top television (OTT TV) industry are not permitted to operate in Taiwan, under the Act Governing Relations between the People of the Taiwan Area and the Mainland Area.”
If the objective is to address the issue of Mainland Chinese-run VOD services, the Taiwanese government should exercise prudence and ensure that there are no spillover effects on all foreign services.
At the same time, planned legislation would be a great opportunity to build on the greater VOD industry in Taiwan.
What’s at Stake?
In its Global Entertainment & Media Outlook 2019-2023, PricewaterhouseCoopers estimates that by 2023 VOD video revenue in Taiwan would have grown to USD1.1 billion from USD655 million in 2019.
Broadly, as stated by AlphaBeta in their report Asia-On-Demand: The Growth of VOD Investment in Local Entertainment Industries, investment in local content by non-linear media outlets in the region is seen to potentially tip USD6 — 10 billion by 2022, with more than half of that investment being spent on original content.
The same report also surveyed paid VOD viewers in Taiwan and saw that they had an almost equal preference for local and foreign content. If the country continues to take the pro-business approach, Taiwan has the opportunity to position itself to attract a healthy slice of the available content investment pie.
Content Asia, in June 2018, reported that Taiwan was one of the most vibrant countries in the number of major VOD services present. Of the 23 services available in the country, the report stated that 16 were home-grown services.
The first VOD service in Taiwan, myVideo, which was founded by Taiwan Mobile Co., launched in 2012. The growth of foreign and local VOD services has provided consumers with more choice, presented content creators with more potential partners, and allowed Taiwanese content to travel far beyond its shores.
The Taiwanese Wave
The country has developed a reputation as one of the most liberal countries in Asia. It has a multi-party system and is ranked as one of the freest democracies in the world. With new legislation coming into play, it is an opportunity to set best practices in the region, build up the local media industry, and encourage further investment in Taiwan.
The legislation must strike a delicate balance between artistic aspirations, freedom of expression and business considerations, while at the same time look into developing, exporting and protecting local content.
Taiwan has a deep pool of creativity, and the legislation needs to embrace and build on this. The Taiwanese wave spread across Asia and the rest of the world in 2001 with the immense popularity of the TV drama Meteor Garden.
The show catapulted its lead actors to global superstardom and resulted in the formation of the widely popular band F4. In addition, local shows such as The Prince Who Turns Into a Frog, Fated to Love You, Autumn’s Concerto and Hi My Sweetheart, among others, achieved international status.
In music, artists like Jay Chou, Jolin Tsai and Show Lo, gained a massive following from legions of fans around the world. Multi-award winning director Ang Lee is Taiwanese.
Competing with established VOD giants will be a gargantuan task for smaller players. However, there is always likely to be room for niche diverse services catering to specific audiences.
One such niche player is GagaOOLala, operating from Taiwan and owned by Portico Media. As the world embraces diversity, GagaOOLala offers a streaming service catering to the LGBTQ community.
The service was recently made available worldwide. Its Originals slate includes series Handsome Stewardess, the first Singaporean series to feature a lesbian couple, the Taiwanese film, The Teacher, which won the Best Supporting Actress award for Winnie Chang at the Golden Horse Awards last year, and the Thai-Taiwanese co-production Present Still Perfect. To create original content, the company partners with studios in the region like Harvest Production Films Co., The 3rd Vision Films, Swallow Wings Films, and Commetive Production Company, among others.
New VOD legislation in Taiwan needs to incentivize Taiwanese services both locally and internationally and respond to the creative and business needs for these services to flourish.
CatchPlay, another homegrown and locally-popular Taiwan OTT service, has also found big success in Indonesia where it has outpaced Netflix according to CommonWealth Magazine. As of last year, CatchPlay has become the largest pay OTT platform in Indonesia. More than half of its content is exclusive and 25% of the content is local Indonesian fare.
In March 2019, CatchPlay marked the company’s first outing exporting a Taiwanese TV drama series, becoming the first transnational service to exclusively stream The World Between Us in partnership with HBO Asia.
The success of GagaOOLala and CatchPlay proves two things. First, that local players can gain international prominence and develop a viable export business for Taiwan content. Second, that content will always be a driver for demand and engagement.
Legislation must take into account the potential investment in the creation of content, as well as grants that reward the export of Taiwanese services and content. Subscription costs, though seemingly minimal on a per-platform basis, maybe a barrier to the uptake of any service. Perhaps initial subsidies should be provided to players?
Piracy Remains a Big Threat
In addressing piracy, guidelines should be strong, flexible and effective. The over-riding aim should be to grow the VOD industry in Taiwan and not restrict it. Should new legislation be too restrictive, legitimate services will face greater barriers to growth while people will continue to source illegal copies of films and TV shows.
Low-cost subscription fee options may also help combat piracy. With high internet penetration and access, the country’s infrastructure is no deterrent for that intent on piracy.
On Feb. 21, 2020, Taiwan News reported that the country is ranked number 1 globally for download speeds, with a rate of 82 MBPS per second. By their estimation, a movie of 5GB could be downloaded in just about eight minutes.
Again, in February this year, the Asia Video Industry Association (AVIA) released a study on the online viewing behavior of Taiwanese consumers. The study revealed that 33% of consumers have accessed streaming piracy websites or torrent sites to access premium content without paying any subscription fee.
In addition, 28 percent of consumers use a TV set-top box which can be used to stream pirated television and video content. It is clear that the industry and government must work more closely together to protect intellectual property.
The entertainment industry continues to see a shift in the amount of time that consumers/subscribers watch traditional linear and pay TV services. These days, more and more content is being viewed on VOD services. While keeping an eye on driving the VOD industry’s growth and development, innovative regulatory approaches are needed for new, equally innovative services.
For example, many jurisdictions in the region such as New Zealand and India are working with VOD services to endorse self-regulation with respect to classification. Other jurisdictions such as Australia, Japan and Thailand are encouraging local production through incentives. These light-touch approaches augur well for the development of VOD services for the benefit of consumers and local production communities alike.
Any new legislation aimed at regulating VOD in Taiwan should seriously consider encouraging the growth of Taiwan VOD services, both locally and internationally, future proof light-touch regulation for new technologies, and effectively combat piracy.