- The Runway Ventures
- Posts
- 📺 The Netflix for Southeast Asia died
📺 The Netflix for Southeast Asia died
How Hooq went from 80M to 0 subscribers (a $95M mistake)
Admond Lee
August 04, 2024
Hey Founders,
Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.
Today’s story is about how the Netflix for Southeast Asia died. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Hooq
⚠️ 2 Mistakes → Pivoted to slow
🧠 3 Lessons Learned → Corporate ventures don’t always win
🔗 The Runway Insights → 21 lessons from building a VC-backed startup
💰 Southeast Asia Funding Radar → Indonesia’s AwanTunai secures $18.5M for MSMEs from HSBC’s $1B Growth Fund
☠️ 1 Failed Startup: Hooq
🚀 The Rise of Hooq
On 30 January 2015, 3 giants of the telecommunications world (Sony Pictures, Warner Bros, Singtel) came together to create a new kind of entertainment service. And Hooq was born — a Singaporean video-on-demand streaming service.
The Problem — 🌏 People in emerging markets in Southeast Asia lacked accessible, high-quality, and diverse video content.
Back then, Netflix has yet to establish a significant presence.
Piracy was rampant, and consumers often struggled to find reliable and affordable streaming options.
The Solution — 📺 Hooq provided a subscription-based video streaming service that catered to the unique tastes and preferences of viewers in these regions, offering everything from blockbuster movies to local TV dramas.
⚡️ Users could stream or download content on their smartphones, tablets, and smart TVs, even in areas with limited internet connectivity.
This was a game-changer, especially in regions where internet infrastructure was still developing.
At its peak, Hooq boasted over 80 million subscribers and was available in countries like the Philippines, Thailand, India, Indonesia, and, of course, Singapore.
🏆 The streaming service won several awards and was hailed as a pioneer in the Southeast Asian streaming market. More than that, it also secured partnerships with major telecom operators and content creators, solidifying its position as a leading streaming service in the region.
📉 The Fall of Hooq
Hooq has not been able to grow sufficiently to provide sustainable returns nor cover escalating content costs and the continuous operating costs of an independent OTT distribution platform.
While you might think Hooq would dominate the video streaming market in Southeast Asia, that wasn’t the case.
🥵 Suddenly, in March 2020, Hooq announced that it was filing liquidation. The liquidation process was swift and brutal, leaving many local filmmakers and content creators in limbo.
📌 Here’s what happened to Hooq:
Jan 2015 — Hooq was launched by the 3 musketeers (Sony Pictures, Warner Bros, Singtel) 🕺🏻🕺🏻🕺🏻
Raised $70M in 2015.
Singtel owned 65% shares.
Sony Pictures & Warner Bros owned 17.5% shares each.
2016-2018 — 🌏 Expanded rapidly across Southeast Asia and India, amassing millions of subscribers.
Raised another $25M.
Entered into partnership with Disney’s Hotstar in 2018 and telecom operators Airtel and Vodafone.
2019 — Competition + Huge Losses
Feb — Hooq partnered with Grab to provide on-demand video streaming on Grab app, boosting 10,000 hours of content for Grab users to enjoy.
Mar — Hit annual revenue of $21.9M, but losses grew to $62.5M.
Late 2019 — Streaming giants like Netflix and Amazon Prime Video entered the market.
These big players brought with them vast resources and extensive content libraries.
It was very competitive and Hooq struggled to keep up.
Mar 2020 — Hooq filed for liquidation for a few reasons:
🔥Intense competition — Hooq struggled to compete with big players in terms of content and technological innovation.
🩸 Financial difficulties — The high costs of acquiring and producing content, coupled with the competitive pricing strategies necessary to attract and retain subscribers, put immense pressure on Hooq's finances.
Total loss = $220.8M
Total liabilities = $70.8M
💸 Hard to monetise its services — Consumers in certain markets were not accustomed to paying for digital content. In short, consumers were not willing to pay for streaming.
As a result, 240 employees at Hooq were let go with only a few of them offered a job at Singtel.
Farewell message from Hooq
Actually, Hooq’s problems were more than that. The company had also accumulated significant debts, and its funds had dried up dramatically when the COVID-19 pandemic hit.
🏦 Talks of further investments quickly shut down as investors’ risk appetites changed, and Hooq's financial backers decided not to inject more capital into the struggling venture.
🙅🏻♂️ Hooq finally got disowned by its parents
In short, Singtel didn’t want to bankroll Hooq to cover its losses any more as it failed to win significant market shares across Southeast Asia.
🙏🏻 Despite its promising start and significant traction, Hooq was ultimately killed by the harsh realities of the competitive streaming market as it couldn’t sustain its growth in the face of mounting challenges.
Want to learn more about Hooq’s downfall?
⚠️ 2 Mistakes
Mistake 1: Pivoted too slow
Iflix started around the same time as Hooq, but both of them started with the wrong business models:
At the beginning we focused on western-centric content, and expected that people would pay for it. Both assumptions were wrong.
After the launch, Iflix and Hooq realised that their audiences wanted to watch youthful and local content instead of western content. So they shifted into local acquisition, co-production and commissioning of original local content.
Iflix learned to integrate fast with larger companies (telcos, local cable firms, payment gateways, and super apps) which had a huge consumer base.
On the other hand, Hooq seemed to pivot slower and struggled to monetise its audience. For example, Hooq was a white-label repackager of western content in India, but its presence seemed to be irrelevant given the competitive TV market in India.
Mistake 2: Short-term investor commitment
Execution of multi-market OTT video is a capital-intensive business and requires long-term investor commitment as the path to profitability is fraught with challenges and needs considerable resources.
I tend to agree with what Vivek shared. Even though Hooq was a joint venture of Singtel, Sony and Warner, they kind of underestimated the challenges and capital required to scale successfully (and profitably) in Southeast Asia.
While Hooq had the first-mover advantage, it failed to capitalise on this and eventually got outcompeted by global players (Netflix, Amazon Prime Video) and regional players (Iflix, Viu).
📺 Would Hooq become the Netflix for Southeast Asia if Singtel continued pumping in more money? I don’t know. Maybe yes, maybe no.
But one thing is for sure — It takes tons of resources to win the video streaming market. Having aligned, strategic, and long-term investors is crucial.
Everyone wants to go to heaven, but nobody wants to die.
🧠 3 Lessons Learned
Lesson 1: Listen to customers & move fast
🌏 This is especially true in the Southeast Asia market. Many tech startups tend to copy what works in Western countries and paste the same model in the SEA market — which tends to fail.
This is because the SEA market is very fragmented with unique demographics, languages, audience preferences, and ways of doing business. Therefore, it’s important to always listen to SEA customers, learn from their feedback, and move fast.
🌟 Key Takeaways:
⚡️ Agile adaptation to market needs
Go on the ground, talk to your customers, understand their challenges, and iterate product strategies and business models quickly.
Unlike incumbents, your biggest advantage as a startup is that you can move fast and stay nimble.
Most importantly, gauge whether your audience is willing to pay for your products or services.
If your audience is not willing to pay or can’t afford it, the revenue must come from somewhere else (i.e. ads) or you find another target audience to sell to.
Lesson 2: Find strategic & long-term investors as partners
Getting investors on board is not just taking their money, but it’s also a long-term marriage between you and the investors as partners together to build a successful business in the long term.
🌟 Key Takeaways:
🤝🏻 Investors = Partners
If you’re fundraising now, prioritise investors who understand the long-term nature of your business and are willing to commit resources over an extended period.
Develop a clear roadmap to profitability and communicate this effectively to potential investors to secure their long-term support.
For example, you can send monthly investor updates to regularly engage with investors and keep them aligned with your strategic goals and progress.
Here’s how to create effective investor updates using email newsletters shared by Beehiiv (I’m a big fan of their investor updates by the way).
Lesson 3: Corporate ventures don’t always win
Most people thought that Hooq was going to win because it was backed by Singtel, Sony and Warner. Despite the powerhouse backing, Hooq still failed to dominate the Southeast Asia streaming market.
🌟 Key Takeaways:
🙌🏻 PMF > Corporate Backing
If you couldn’t achieve product-market fit (PMF), you’ll die.
While corporate ventures benefit from substantial initial funding and resources, if you don’t execute well and build something people truly want, no corporate backing can save you from dying.
🏃🏻♂️ Focus on agility and innovation
Corporate ventures may suffer from bureaucratic inertia with a top-down management approach, hence slowing down crucial strategic shifts.
Instead, empower small teams within the corporate structure to drive innovation and respond to market feedback swiftly.
🔗 The Runway Insights
21 lessons from building a VC-backed startup (Link)
How Airbnb solved the chicken and egg problem (Link)
10 questions every SaaS founder needs to ask their customers (Link)
Founder-Market Fit and how it impacts startup success (Link)
Why large organisations struggle with disruption (Link)
How to open communication (Link)
💰 Southeast Asia Funding Radar
Indonesia’s AwanTunai secures $18.5M for MSMEs from HSBC’s $1B Growth Fund (Link)
Bitlayer, the SG-based crypto startup, raises $11M in a Series A round co-led by Franklin Templeton (Link)
Beep raises $3.3M Pre-Series A to expand its Voltality platform in Southeast Asia (Link)
APX Logistics Solutions raises funding from SBI Ven Capital (Link)
💃 Rate Today’s Edition
What'd you think of today's edition?Your feedback helps me create better content for you! |
🌟 Top Review of the Week
That’s all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
🤝🏻 Join our founders community on Discord:
Building a startup is one of the toughest things you can do. Why struggle alone when you have our community to help and support you.
This is the founders community I wished I had when I first started.
Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
Reply