Why Asia’s biggest players are investing in media and entertainment

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This is a Discuss post, where we feature short but insightful opinions from the Asian tech community on startup, entrepreneurship, and tech topics. Got a topic or question to suggest? Drop us an email or leave a comment.

Asian tech giants have been investing big in media and entertainment. In the past month alone:

1. Tencent invested in Indian news business Newsdog.
2. Baidu-owned iQiyi is reportedly considering an Iflix investment.
3. Go-Jek announced that it’s launching its own video streaming platform, Go-Play.

We asked two experts to dig deeper into this trend.

Editor’s note: Answers have been edited for clarity.

Jianggan Li, founder at Momentum Works

This is not specifically on media and entertainment, but the ability to reach out to millions of customers at relatively low cost is strategically important for big internet companies. Utility tools such as phone cleaning and weather apps come with high frequency usage but very low stickiness and switching cost.

Chat apps are the best, but you can only have one extremely successful chat app in each market due to the network effect (think WeChat in China, Line in Vietnam, and WhatsApp in India). Good content platforms, therefore, become the next best choice. As people also become more affluent, they have more free time to kill and more ability to pay for entertainment. So, the content business itself can be quite profitable.

While digital media doesn’t always have the most clear-cut model, it is all about timing. Big companies can afford to take a longer-term view as compared to VC funds. If these big companies believe that there will eventually be a market here, they will come in and bet on whoever is most likely going to win this market.

I also think it is about time for companies to look into this region. Smartphone penetration has reached a good level and bandwidth cost has lowered. Now, there are also companies big enough that are worth investing in.

In the future, I see big players hedging their bets a bit, as many of these media companies’ growth will come from sector growth rather than fighting over existing market share.

Lawrence Cheok, senior research manager of digital commerce and marketing at IDC

Let’s discuss