One of the most surprising first-time attendees at FilMart is Chinese tech giant Huawei, which has come to Hong Kong to acquire the video content it needs to support its strategy of expansion into Southeast Asia. The company is currently embroiled in a PR nightmare as it defends itself against accusations that its equipment could be used for spying by the Chinese government; the firm has filed a lawsuit against the U.S. government over a ban on its products.
At an information session Tuesday morning, a senior representative from Huawei’s Southeast Asia business and network consulting division described in depth the company’s to mission to “win broadband, win mobile, win video, win all” in the region.
“Broadband is more stable [business] than mobile, and finally if you have video as well, it’s a business model everyone can win from,” he said.
Huawei would only allow Variety to write about what was said in the open session if no individual was named, and repeatedly asked the reporter to drop the story, saying: “There’s no reason why – we just don’t want the media to expose this information.”
Huawei hopes to convert as many people as possible in Southeast Asia into 4G customers. With research showing that 4G penetration in developing countries such as Sri Lanka remains slow “because users haven’t yet found any strong incentive to use it,” Huawei hopes to acquire high-quality and high-resolution content in order to stimulate greater demand for faster Internet service.
“Our understanding is that when people see higher-quality videos, they will be more likely to pay for higher definition,” the representative said.
The content would go out either directly to users, via a branded video app currently pre-installed on all Huawei smartphones, or via third-party businesses delivering it to consumers via smart TVs.
Huawei currently sells phones in 170 countries, and the representative at FilMart said the app would be at the fingertips of 200 million mobile users by 2019. He said he expected “all Huawei smartphone users and technical subscribers” to be covered by its video-streaming service within three years.
Previously, it took Southeast Asian broadband operators seven or eight years before they broke even from investing in building fiber lines to a home, but the wait for a return on investment has now been cut to just four years.
According to a Huawei analysis of Facebook and YouTube viewing habits in various Southeast Asian countries, videos from a firm like Facebook reached user penetration levels of nearly 90% of mobile users, but viewers across the entire region spent less than 20 minutes watching them. That leads Huawei to conclude that “this kind of [passively watched] video has already reached its limits.”
Huawei is mulling over a business model for its video services in which either content is free and revenue comes from selling data packages and is redistributed to content providers via reversed revenue-sharing, or by bundling content and traffic packages together.
One strategy is to target young people and residents of rural areas who have lower incomes but more free time, and are thus bigger potential users of data.
The representative denied that the push into Southeast Asia was related to the recent pushback against Huawei products from the U.S. and Europe, saying that, as a neighboring region, it had been an area of strategic importance “from the beginning.”
A senior manager from Huawei’s content cooperation department said that the company’s broader troubles would have “no impact” on its development of content relationships or on its potential partners.