Newsletter
Netflix, proudly sporting a new “N” logo, is in an interesting position. Its video streaming service has effectively gone viral and the term “Netflix” has entered many local languages as a generic terms for watching a streaming video service, much in the same way that “iPad” is often used as the term for a tablet and “Google” for “searching the world wide web.” There are a number of reasons why Netflix has been a success, such as giving consumers access to a reliable and fast enough Internet connection and because local ISPs, Internet Service Providers, are buying local storage solutions to ease the load over the Internet. Netflix has invested significant sums into both new technologies and into new productions: it harbors ambitions to become one of the world’s largest and / or most significant content creators rather than just a rebroadcasting machine for other media companies.
However, whilst the company is still performing reasonably well in many western countries, overall growth in these markets is starting to slow. Netflix is seeking to counter a slowdown in its domestic North American market by an aggressive expansion elsewhere into the world and of course has set its sights on the largest country by population count, China, and neighboring Asian countries. Unfortunately, it is yet to conquer these markets. In the case of China, Netflix currently has no exposure to the country. The main reason for this is that broadcasters in China are subject to very real censorship and regulation requirements. Netflix has been unable make sufficient headway with Chinese regulators to be able to offer its service.
Netflix has also struggled to make headway in other significant Asian countries, with South Korea and Indonesia given as examples. Here, the reason is largely because it does not (yet) have sufficient local content and again there are regulatory issues. Netflix has learnt that it cannot simply export western material into other parts of the world and so easily persuade customers to join its service. The company announced at a recent conference that it is looking at “various investment opportunities” in order to improve its Asian offerings, but has not clarified what, exactly, this means. It is likely to involve licensing and producing content that is better suited to the local market, but so far we have no word on how well negotiations are going with the Chinese broadcast regulators other than Ted Sarandos, Netflix’s Chief Content Officer, stating: “Since China is a great opportunity, we continue to look into China.”