The Next Wave of Business Models in Asia
There’s a new generation of sophisticated entrepreneurial growth companies in Asia — and they’re competing by reconfiguring business models.
The South Korean television drama “My Love From the Star” features a dashing, 400-year-old alien who falls in love with an actress. The plot isn’t difficult to grasp. It’s essentially a boy-meets-girl story with an interstellar twist. The global appetite for such Korean entertainment — movies, TV shows, and music videos — has exploded in recent years. For non-Korean-speaking viewers, subtitles are crucial to the experience. Enter Viki Inc., a company that hosts content for streaming and provides subtitles and closed captions. Viki both eliminates language barriers and introduces the content to an otherwise unserved audience.
Traditionally, subtitles are created by a bilingual translator hired by the producer or broadcaster. But the process is expensive and slow to scale. To overcome these challenges, Viki developed a business model leveraging a community of more than 150,000 volunteers. This model allows Viki to crowdsource subtitles for Asian content in numerous languages.1 Viki rewards volunteers with gamified badges, the ability to view videos not otherwise available in their region, early access to new shows, and an advertising-free, high-definition experience of the content.
As it happens, the market is ripe for services like Viki’s. In fact, the combination of rapidly increasing internet video adoption rates and a greater appetite for foreign content — both in Asia and globally — has become a big opportunity for Viki, which was acquired by Tokyo-based Rakuten Inc. for a reported price of $200 million in 2013.2
Two Business Model Waves
From our perspective, as a consultancy that analyzes business model innovation across the globe, Viki’s story exemplifies a larger trend playing out in Asia. We see Viki as an archetype of a new generation of companies emerging in Asia and leveraging business model innovation to drive growth in the region. But to understand this type of business model innovation in its proper context, it’s important to understand Viki’s forerunners. Our research into business model innovation in Asia uncovered two distinct, yet overlapping, waves of innovation: one decades old and still going, and one that includes Viki and is evolving now. (See “About the Research.”)
1. Viki Inc., www.viki.com.
2. J. Wagstaff, “Singapore Startup Viki Aims to Take Local TV Global,” Reuters, May 24, 2012, www.reuters.com; and C. Shu, “Japanese E-Commerce Giant Rakuten Confirms Acquisition of Video Site Viki,” TechCrunch, Sept. 1, 2013, techcrunch.com.
3. W. Wee, “Razmig Hovaghimian: From Failed Pizza Maker to Founder of Viki,” Tech in Asia, April 20, 2014, www.techinasia.com.
4. C.K. Prahalad and S.L. Hart, “The Fortune at the Bottom of the Pyramid,” Strategy+Business 26 (January 2002): 54-67.
5. J.S. Brown and J. Hagel III, “Innovation Blowback: Disruptive Management Practices From Asia,” McKinsey Quarterly (February 2005): 35-45.
6. V. Govindarajan and C. Trimble, “Reverse Innovation: Create Far From Home, Win Everywhere” (Boston, Massachusetts: Harvard Business Review Press, 2012).
7. S.-C.J. Chen, “How China’s Biggest Biotech Company Cracked the U.S. Market,” Forbes, Sept. 13, 2013, www.forbes.com.
8. T.M. Powledge, “Disruptive Genomics: Is China’s BGI the Epicenter of the World’s Biotech Revolution?” Genetic Literacy Project, Jan. 7, 2014, www.geneticliteracyproject.org.
9. D. Shukman, “China Cloning on an ’Industrial Scale,’” BBC, Jan. 14, 2014, www.bbc.com.
10. A. Jain, “How OYO Plans to Provide Skill Training to Lakhs of Workers,” OYO Rooms, Feb. 22, 2016, www.oyorooms.com; and “OYO Rooms to Sign MoU With Tourism & Hospitality Skill Council (THSC),” The Economic Times, Nov. 24, 2015, http://articleseconomictimes.indiatimes.com.
11. J. Russell, “SoftBank Leads $100M Investment in India-Based Budget Hotel Network OYO Rooms,” TechCrunch, Aug. 3, 2015, https://techcrunch.com.
12. D. Sathyanarayanan,“Hotels Check Out of Aggregators Oyo, Zo Post Unhappy Stay,” Brand Equity, The Economic Times, March 11, 2016, http://brandequity.economictimes.indiatimes.com.
13. V. Dandekar, “Medical Devices Firm Medtronic to Provide Relief to US Patients,” The Economic Times, Sept. 15, 2015, http://articles.economictimes.indiatimes.com.