Written by Yu-peng Lin and Chang-de Liu.
Image credit: Netflix by Diverse Stock Photos/ Flickr, license: CC BY-NC 2.0.
The development of over-the-top (OTT) media services is currently the main concern of Taiwan’s audiovisual industries. An OTT media service is an audiovisual streaming service provided directly to the audience by the Internet. The Taiwanese government wishes to strengthen this industry while also seeking balanced growth for international and local operators. For the latter, how to accelerate the production of their content in the face of global competition is the biggest concern. Furthermore, given the recent success of the Asian market, international operators are interested in co-producing content with Taiwanese companies. This article discusses this particular development in the industry, focusing on the interactions and contentions between OTT service companies and the government and its policies.
2016 has been referred to as the “OTT First Year” as numerous local and international OTT players have entered the market. In that year, the US-based streaming platform Netflix launched on the Taiwanese market, thus accelerating the competition among audiovisual streaming services. In 2020, there will be at least 25 local and international OTT platforms. The industry trend can be observed in two statistics from the National Communications Commission (NCC, 國家通訊傳播委會員). According to Table 1, since 2017, the penetration rate of cable TV subscribers has fallen by nearly 6%, which may indicate that more people are shifting to online streaming. Table 2 shows that international OTT operators, Netflix and iQyi (愛奇藝), have dominated the market since 2018. Since 2019, possibly due to the Covid-19 pandemic, Netflix and iQyi reached percentages of more than 50. In 2020, Netflix reached a 61.9% market share, significantly higher than any local OTT operator.
Table 1: Number of cable TV subscribers and penetration rate in Taiwan (2016–2020)
| Year | Subscribers | Penetration rate |
| 2016 | 5,205,562 | 60.80% |
| 2017 | 5,225,255 | 60.41% |
| 2018 | 5,077,382 | 58.13% |
| 2019 | 4,974,839 | 56.32% |
| 2020 | 4,867,591 | 54.49% |
Table 2: Proportion of Taiwanese people subscribing to paid streaming video services (2017–2020)
| Netflix | iQiyi | KKTV | friDay影音 | FOX+ | Line TV | Hami Video | PTS+ | my Video | |
| 2017 | 19.4% | 64.9% | 19.6% | ||||||
| 2018 | 27.1% | 47.4% | 7.8% | ||||||
| 2019 | 50.2% | 54.8% | 6.1% | 4.5% | 10.1% | 7.7% | 3.3% | 5.3% | 9.2% |
| 2020 | 61.9% | 42.4% | 5.8% | 4.1% | 3.8% | 3.3% | 2.8% | 2.5% | 2.2% |
The government plays a key role in such a competitive technological market. Developing an effective policy for this environment is not an easy question. For example, as shown above, iQiyi is the second biggest international OTT player in Taiwan. However, the company cannot operate streaming services in the country because it is based in China. This has led to legal controversies and political debates. Chinese OTT platforms may influence Taiwanese culture and censor sensitive content for the government. On September 3, 2020, Taiwan’s Ministry of Economic Affairs published a “List of Prohibited Commercial Engagement Practices in Taiwan,” which prohibits Taiwanese companies from acting as agents for Chinese OTTs because, according to this legislation, OTTs are not open to Chinese investment. On October 15, iQiyi stopped serving Taiwanese audiences and planned to lay off its employees. Since then, iQiyi has been regarded as a cross-border OTT platform rather than as a legally recognised Taiwanese platform. At the end of 2021, iQiyi also decided to halt the contract with the Taiwanese agent OTT Entertainment due to the government’s position. This law enforcement problem shows that the government’s management of cross-border streaming online services, especially in the face of China-related issues, the national security, cultural and economic capital issues involved need to be handled more carefully.
The biggest international OTT service in Taiwan, Netflix, has continued to expand in the Asian market, especially thanks to the global success of the Korean drama Squid Games. From early on, Netflix provided a platform for quality Taiwanese drama. In 2019, it launched the Netflix-original Taiwanese series Nowhere Man (Zui meng zhe 罪夢者), Triad Princess (Ji da qianjin 極道千金), and The Ghost Bride (Bi an zhi jia 彼岸之嫁). Although these series received mixed reviews, Netflix still chose to invest in Taiwanese drama with a strong emphasis on the Asian market. This year, Light the Night (華燈初上) achieved great success. Given the increasing importance of Netflix, the Taiwan Creative Content Agency (文化內容促進院), a government agency that funds content production and promotion, has recently signed a memorandum of understanding with the US-based streaming service to promote Taiwanese content internationally. This seems a fast and convenient way for the government to distribute Taiwanese content. Still, it remains to be observed whether this may also cause content production to lean too much towards the principles of international platforms.
It is worth mentioning that, in 2021, the Taiwanese government-funded NT$775 million (US$28 million) to launch the TaiwanPlus, an English-language streaming platform. The platform aims to promote Taiwan abroad by offering daily news and exclusive content on food, travel, and music. For example, TaiwanPlus launched a music docuseries “Road to Legacy,” displaying Taiwanese indie bands and singers in Feb 2022 to showcase the diversity of music culture in Taiwan. In other words, the main international strategy of promoting Taiwanese content from the Taiwanese government is, on the one hand, collaborating with a foreign technology giant but, on the other, making use of this streaming technology.
In response to the dramatic changes in the OTT service environment, two Taiwanese associations were established in 2017. These were formed by local OTT TV platform operators and new media production companies to consult with the government on relevant policies and regulations. One organisation is called the Taiwan OTT Association (台灣OTT協會), which comprises local platform operators. The other is the New Media Entertainment Association (台灣新媒體暨影視音新媒體發展協會), whose members consist of domestic and foreign production companies, platform operators (including Google Taiwan and Netflix) and new media enterprises. Both associations hope that the Taiwanese government can develop a more complete and definitive audiovisual policy and properly target it. For example, in 2020, the NCC drafted a new piece of legislation called the Internet Audiovisual Service Management Act (網際網路視聽服務管理法). The local operators argued that the proposed legislation punished them instead of tackling their problems, including online piracy. They also claimed that the act was an example of overregulation. This draft was currently on hold and had no further discussion, suggesting the regulator’s ambiguous attitude. That is to say, this episode shows the gap between the government and the local operators when it comes to the development of OTT media services in Taiwan.
To conclude, it is obvious that OTT has become a new battlefield for the government, local operators, and international companies since 2016. This tension should have been foreseen. The competition between local and international platforms is expected to continue, and Taiwanese audiovisual content will be influenced by its development. It is also noteworthy that the US-based trinational platform, Netflix, has expanded significantly in the Taiwanese market during the Covid era. Furthermore, the development of its Chinese competitor, iQiyi, had been limited by a local regulator as the rise of “cognitive warfare” between the Taiwan Straits. The Taiwanese government should pay significant attention to this issue, especially to successfully juggle the support for local operators and the collaboration with international companies. How to strengthen content production instead of placing too much emphasis on global visibility may be the first lesson that the government has to learn.
Yu-Peng Lin, Assistant Professor, Department of Taiwan Languages and Communication, National United University. His research interests are platform studies, new media, and media policy.
Chang-de Liu, Professor in the Department of Journalism at National Chengchi University, Taiwan. His research interests include (but are not limited to) media, sports, the globalisation of sports, the political economy of communication, and media policy.
This article is published as part of a special issue on Taiwan’s Media Landscape.
Taiwan Insight 