Netflix is ​​doubling down on Asia with K-dramas and mobile-only deals. But China is still incompetent

by

The entertainment giant increased 9.3 million paid subscribers in Asia Pacific last year, a 65% jump compared to 2019. Revenue in the region rose nearly 62%, compared to 40% in Europe, the Middle East and Africa.

That move has prompted Netflix to direct more firepower to Asia. Its budget for original content in the region is expected to double this year in hopes of signing more new customers in India, South Korea, Japan and elsewhere. At present, however, mainland China remains borderless. (The company declined to specify what it would cost.)

“We are excited – I would say – excited about the potential in Asia,” Greg Peters, the company’s chief operating officer and chief production officer, told CNN Business. “There are literally hundreds and hundreds of millions of people who we are still trying to find a good way to connect with it and entertain. ”

Netflix (NFLX) they moved into Asia Pacific five years ago with a launch in Japan. At the time, the California-based company was largely “a startup” in the sector, Peters said, adding that they did not have local employees or even office space.
Times have changed. Three years ago, CEO Reed Hastings predicted that the next “next 100 million” customers would come from India alone, and since then the company has “ “big growth” to be seen there. Netflix spent around $ 2 billion from 2018 to 2020 to license or release content in Asia, and has now amassed a library of more than 200 original Asian titles. It also employs around 600 staff across the region and maintains its APAC headquarters in Singapore.

The winning formula relies in part on bringing attractive Western shows and marketing or adapting them for other audiences. In 2019, they released a special season of “Queer Eye,” where the team did a remake in Japan. In In December, he released the South Korean version of “Money Heist,” a Spanish crime drama that won great acclaim and audience.

Material from the set of "Heist money." Netflix announced last year that it would release a Korean variant of the Spanish series.

But the company has found that Asian audiences just don’t want to watch changes of Western shows.

When Minyoung Kim merged with Netflix in 2016 as the first Asian-based agency, the company knew that “local content was going to be a key factor in growing our business in Asia. , “she said.

“We didn’t have … proof,” said Kim, who is vice president of content for Netflix in South Korea, Southeast Asia, Australia and New Zealand.

Netflix, Disney + and other streaming sites offer more diverse shows than cable, a study found

Today, that is no longer true. Just as Netflix International shows have been operating in different markets, the company has found that their Asian shows are attractive all over the world. Japan’s “Alice in Borderland”, South Korea’s “Kingdom” and “Indian Matchmaking,” shot between India and the United States, have all been successful worldwide.

Two other factors have been driving Netflix’s growth in Asia. Last year, Korean dramas, or “K-dramas,” took control of the top 10 listings in Southeast Asia. The regional audience for Korean content quadrupled last year compared to 2019. At the same time, regional viewership of Japanese anime, was doubling year over year.

View from “Kingdom.” The South Korean thrush was a recent hit for Netflix across countries. Credit: Netflix

Audience building in Asia also means that Netflix needs to expand the number of languages ​​it supports. The service is now available in 35 languages, including Hindi, Chinese, Vietnamese and Malay. It continues to add more, including subtitling and blacklisting options.

Netflix tries to end its membership problem with $ 3 mobile plan for India
The company has also unveiled a cheaper-only mobile plan to cater to Asian listeners who watch a lot of TV on their phones, even at home. The offer started in India in 2019, and since then it has expanded to other countries, such as Indonesia, Philippines and Thailand. (Amazon (AMZN) has built on the trend as well, launching mobile-only membership for Prime Video in India last month.)

Peters said Asian audiences have also helped the company develop new technology that it has rolled out across the globe. Someone trying to learn a foreign language, for example, may want to see a presentation in a slower motion. That led Netflix to introduce the ability to build the speed of video playback, which is now available worldwide.

The problems of going global

As competition continues to grow, new content is only needed to become stronger. In the last few years, Netflix has lost parts of its catalog to studios that have launched their own streaming services (including HBO Max, which is owned by CNN’s parent, WarnerMedia) . By maintaining original content, the company can hedge against the risk of losing subscribers to competitors.

In a letter to shareholders last month, the company recognized so much, saying it expected more global competition for years. “This is, in part, why we have been moving so fast to further grow and strengthen our original content library across a wide range of genres and nations,” he wrote.

Sima Taparia, star of "Indian Match." The reality show, which followed the love life of people in India and the United States, became an international sensation.

That line of thinking has allowed Netflix to build a new arsenal of movies, series and documentaries, with over 500 titles almost ready for launch. They even plan to release a new original film every week in 2021.

The company faces major challenges in international markets, however. In India, for example, Disney (DIS) has partnered with local player Hotstar to offer live cricket matches.

“It’s one of the things Disney / Hotstar has in India [Netflix] sports are not live, “said Neil Macker, senior equality analyst at Morningstar.” Their competitors use other things [to hook viewers]. ”

Disney already has a successful streaming service. It's called Hotstar

To stand out, Netflix could partner with a wider range of players to “somehow create more value than just the [streaming] own service, “Macker said.

Netflix also has to contend with political headlines.

In 2019, he suspended a program of the comedy show, “Patriot Act,” in Saudi Arabia that criticized Crown Prince Mohammed bin Salman. The decision – made in response to a legal request from officials – was a “difficult compromise,” Hastings told CNN.
Last November, Netflix found itself in hot water in India. It became the subject of boycott calls and even police complaints after some politicians opposed the “A Suitable Boy” series, which featured a kissing scene between Hindu and Muslim characters at a Hindu temple. (The production was a BBC title that Netflix received.)
Netflix addresses boycott calls in India over 'A Suitable Boy' kiss scene

Asked how the company handled requests for censorship, Peters pledged to support “creative freedom. “

“We don’t have a specific agenda that we’re trying to push,” he said. “We are not looking to harm or insult any group of people, but we are working with a diverse set of creators. And those diverse sets of people have a wide range of perspectives. -creation. “

There is still one big Asian market that the company could not crack: mainland China. Netflix has tried to enter the country before, with disappointing results.
In 2016, the company told shareholders that the local “regulatory environment” had become an issue, although they were still hoping to launch there “eventually. “The next year, they began a largely fruitless licensing partnership with iQiyi, a Chinese streaming giant. (Netflix’s own service was never available on mainland China.)
Netflix is ​​raising prices for its standard and premium plans
“The impact wasn’t as good, so we didn’t stick to the partnership anymore,” iQiyi CEO Gong Yu told CNBC in an interview.

“We have no plans [to launch there] for the future, “Peters said.” In fact, we look at the opportunity outside of China. “

Even describing the company’s success elsewhere in Asia, however, Peters said he can’t be complacent.

“There’s nothing I can say that I’m happy with. We need to keep improving,” he said. “We’re connected to a lot of people around the world. But not everyone is, right? So we have more work to do.”

.Source