PCCW’s freemium OTT video service Viu, which has more than 10 million paying users across 16 markets, continues to scale its global expansion.

The service is benefiting from recent launches of a direct-to-consumer service across Hong Kong and Southeast Asia, with more market launches in the works for 2H 2016.

Deeper monetization now needs to occur.

“We have some marginal advertising revenues coming in, but as we continue to move free users into pay subs in recent launch markets, you will see the revenue uptick,” said PCCW’s Group MD BG Srinivas, speaking on a recent earnings call.

“There is already momentum in Hong Kong and Singapore but in other markets, it’s early days,” he added.

Viu, which also offers white label mobile video services to telcos, generated US$55 million in revenue in 2015 (US$21 million in 1H; US$34 million in 2H).

Revenue reached US$35 million in 1H 2016. Losses, as expected, expanded to US$14 million at the Ebitda level, due to upfront investments in branding, content and market expansion.

Local interest

Consumer engagement, meanwhile, has been encouraging in recent launch markets.

In Hong Kong, the Viu app was downloaded 1.2 million times in Q1, and received 4 million monthly views. Monthly views in Singapore, meanwhile, were trending at 2 million in Q1.

“We believe we have the right proposition in terms of Asian content, regional content and localized content,” Srinivas said.

Viu has secured more than 10,000 hours of premium Korean programming (including day-and-date dramas) from four major broadcast groups, including CJ and SBS.

It also has over 30,000 hours of local content from India, Malaysia, Indonesia, Turkey, Japan, mainland China and Taiwan.

Global scale is key for OTT video offerings such as Viu, competing for eyeballs and telco integration in Asia with players such as CatchPlay, Hooq, Hotstar, Iflix, Netflix and Tribe.

Scale, as well as high levels of paid penetration in linchpin geographies such as India, Southeast Asia, the Middle East and Africa, are becoming increasingly important for investors in OTT, eager to see monetization and performance metrics.

Strategics, for example, valued Iflix at US$450 million earlier this year as part of a significant transaction.

Some investors are also keen to place similar bets on platforms such as Hotstar and Viu, should the economics stack up over the medium-to-long term.