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Viu Ramps Up Asia Expansion After Canal+ Deal

(Bloomberg) -- Viu, the streaming unit of Hong Kong billionaire Richard Li’s business empire, is considering an Asian expansion and creating more premium content through a partnership with Canal+ that could see the French broadcaster eventually invest $300 million in the firm.

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The platform is assessing the potential of new markets across Asia, as well as the possibility of utilizing Canal+’s extensive presence in Europe to strengthen its distribution networks, Chief Executive Officer Janice Lee said in an interview, without identifying specific countries.

The collaboration could also provide opportunities for Viu to adapt some of Canal+’s biggest offerings for Asian audiences, Lee said. Some of the French company’s best-known titles include the Paddington films and the crime thriller series The Brigade.

One of the largest streaming platforms in Southeast Asia, the firm set up by Li Ka-shing’s younger son Richard Li in 2015 wants to accelerate growth after reporting its first annual profit last year. A deal in June saw Canal+, part of billionaire Vincent Bollore’s media conglomerate Vivendi SE, pay $200 million for a 26.1% stake in Viu. The investment could swell to $300 million if certain conditions are met. After that transaction is complete, the French firm would then have the option to further increase its holding to 51%.

“We want to look at growing ourselves in our markets more rapidly, but also consider strategic partners who can bring and reinforce what we want to achieve,” said Lee. With the backing of Canal+ and Viu’s parent PCCW Ltd., “we are set up well for the next stage of growth,” she said.

Read more: The Next Phase of the Global Streaming Wars

Global streaming services are increasingly looking to expand in Asia as growth stalls in saturated Western markets. Southeast Asia is particularly attractive, with its increasingly wealthy population of 675 million pushing the value of the streaming market to $3.2 billion this year, according to consultancy Media Partners Asia, which predicts further growth to $5 billion by 2028.

But Viu’s regional dominance faces growing competition and the strategy it deployed to build its presence — supplementing paid subscriptions with a free, advertising-supported tier — has become commonplace. Smaller rivals such as Indonesia-based Vidio and Tencent Holdings Ltd.-backed WeTV operate tiered subscriptions, while international names like Netflix Inc. and Walt Disney Co. are doubling down on investment in premium content, from Korean dramas to local-language shows targeting specific markets.

Critical Mass

The deal with Viu is also a boon for Canal+, which will expand its footprint in Asia beyond its current presence in just Vietnam and Myanmar, Canal+ International Chief Executive Officer Jacques du Puy said in an interview.

The companies are already collaborating in Vietnam, where Viu doesn’t operate. Canal+ has started broadcasting some Viu series in the country and Viu could soon carry the French firm’s original Vietnamese productions across its networks, said du Puy. The platforms also want to work together to produce Korean and Thai content — one of Viu’s major focuses at the moment, he said.

“We’ve been looking for getting a critical mass in Asia for quite some time,” said du Puy. “Vietnam and Myanmar are very specific and relatively small markets. So if we want to be a player in Asia, obviously that’s not enough. There is a need to invest into Asian content.”

Viu currently operates in 16 markets across Asia, the Middle East and Africa. Its growth has driven PCCW’s streaming business to report $22.8 million in earnings before interest, taxes, depreciation, and amortization last year, and $21 million in the first half of this year. Viu had 11 million paid subscribers as of June, which is down from 12.2 million at the end of 2022, in a reflection of intensifying competition throughout Asia.

PCCW’s net loss for the first half of the year widened to HK$486 million, significantly missing estimates due to higher-than-expected interest costs, but the growth momentum of its media business, especially streaming operations, is likely to last, Citigroup Inc. analysts including Michelle Fang wrote in a note. The Canal+ partnership will support further revenue growth, they wrote.

The platform has almost tripled the number of original titles it created since 2021, and has also attracted subscribers by offering popular Asian series. Hit Korean drama Reborn Rich, which was aired by Viu exclusively in markets outside of Korea and China, helped it add 1.2 million subscribers in Southeast Asia in the fourth quarter of last year — one of the biggest gains in the period among all paid streaming services, according to data from Media Partners Asia. It’s now making a Thai-language version of the series.

Local language offerings are a core part of many streaming services’ expansion plans and Viu joins rivals like Netflix and Disney in tailoring content to better target domestic audiences. Its Indonesian-language series Bad Boys vs Crazy Girls was the platform’s most viewed show in the country last year and second most watched in Malaysia.

The firm is now looking at further fine tuning local content and is not just dubbing shows in Southeast Asian countries’ main languages, but also the myriad of less widely spoken dialects throughout the region. In Thailand, shows are dubbed in Isarn as well as dialects of the country’s north.

“We are in big markets like Indonesia, Thailand and Malaysia,” Lee said. “There is a lot of growth which we can tap into in these big markets and we want to not just aggregate more content, but we’ve also been hyper localizing.”

(Updates to add analyst comment in the 12th paragraph.)

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