Profits from advertising flow into pockets of foreign OTT companies

Cross-border OTT television services are competing unfairly with Vietnamese firms, analysts say.
According to a report of the Ministry of Information and Communications (MIC), by Q2 2022, Vietnam’s pay TV market reached 16.9 million subscribers, with revenue of 4,500 billion VND, up 9.5% over the same period in 2021.

Revenue from OTT television services grew strongly, reaching 370 billion VND, up by approximately 300% year on year.

However, these are just statistics about OTT television services. In fact, the revenue and number of subscribers of cross-border TV service providers such as Netflix, Apple TV, Amazon Fire TV, WeTV, and more have not been reported yet, because they do not have legal entities and representative offices in Vietnam.

Statistics show that nearly 80% of the market share of pay TV services via OTT applications in Vietnam belongs to cross-border businesses.

According to App Annie, on Android phones alone, Netflix had 1.6 million service users in Vietnam by early 2020 while WeTV had more than 630,000 users, and IQIYI had more than 445,000 users.

With a large number of subscribers, earning huge revenue and profit from the Vietnamese market, cross-border OTT television service providers avoid tax obligations in Vietnam.

Only Netflix has paid 7.8 billion VND in tax. The basic package is 180,000 VND/month.

According to the Department of Radio, Television and Electronic Information (Ministry of Information and Communications), the domestic pay TV market had a number of foreign enterprises providing television services. They mainly provide content on demand, such as movies, cartoons, documentaries, TV series, reality TV shows and TV games.

Some services of this type have been found to have content that violates Vietnam’s legal regulations on journalism and cinema. “In 2020-2021, some content infringed on Vietnam’s sovereignty, and showed a lewd, depraved lifestyle that is not in line with Vietnamese customs and traditions on Netflix,” said the Department of Radio, Television and Electronic Information.

Regulating cross-border OTTs
Huynh Long Thuy, General Director of VieON Joint Stock Company, said that the content broadcast on local OTT platforms must pass a strict process, while that of cross-border OTTs do not have to pass this procedure.

Cross-border OTTs can also collect subscription fees without paying taxes and promote content that violates Vietnam’s customs without being fined.

The Vietnam Pay Television Association has proposed that the Government tighten regulations on management of cross-border OTT services. Accordingly, cross-border services need to carry out registration procedures under Vietnamese rules and the content provided on their platforms must be pre-checked in order to ensure State management of television and movie content like domestic OTT service providers. In addition, cross-border services have to declare revenue generated in Vietnam.

According to the Department of Radio, Television and Electronic Information, in the coming time, a number of legal documents will be issued to strengthen management of OTT services.

It is expected that from 2023, the new regulations will handle inadequacies, forcing foreign OTT television service providers to comply with Vietnam’s regulations as domestic enterprises.

The new regulations will promote the growth of the pay TV service market and create a healthy competitive environment.

The agency estimated that revenue of pay TV services in 2022 will reach about VND 9,300 billion, compared to VND 9,200 billion in 2021.

According to Akamai, the number of users of OTT platforms will create a market of $54 billion by 2026. In Vietnam, users of OTT TV services are expected to reach 36 million out of 180 million users in Southeast Asia. Vietnam Net