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#mavericksindigital: Why Netflix in Asia makes sense

Recently it was announced that Netflix, a leader in on-demand Internet streaming of entertainment content will finally be making its foray into Asia. In August it entered into a deal with Japan-based SoftBank to offer its fully integrated Netflix experience in that market, after a long to and fro between both companies.

The countries that were announced in their ‘global rollout’ were South Korea, Singapore, Hong Kong and Taiwan. They were a bit hush hush in terms of pricing and exact launch dates at this point, but most people close to the industry are pegging an end of year or quarter one launch in 2016.

This launch comes at a time in Asia when most consumers have grown more accustomed to paying for online subscription services. The music industry is a case in point. Over the past four years we have seen a proliferation of music streaming services enter the region, the likes of iTunes, Deezer, Spotify and more recently Guvera and Apple Music. And of those that are considered medium to heavy users, classified as people who spend more than 20 minutes a day listening to music, they are more than twice as likely to pay for streaming music, according to a research piece from Effective Measure.

The closest competitors to Netflix within the region who currently seem to be doing well are services like iFlix in Malaysia, Hooq in Singapore and TBO in China, which Alibaba just recently launched. However, all three of these companies just launched their service in 2015, so none of them doesn’t really have a major first-mover advantage over Netflix. Plus, the brand cache Netflix has alone should be enough to woo users into their camp.

I suppose the real competition for Netflix here would be Linear TV, as it is still the dominant method for how people consume their TV content, particularly local content. And Netflix most likely would not have access to truly local content, putting it at a slight disadvantage at least within the higher age groups within Asia.

However, Netflix will do well particularly among the younger generations who didn’t really even grow up with Linear TV in the first place. This group of digital natives never felt the need to rush home on Wednesday’s at 9 pm to watch their favorite TV show. It was always accessible to them in everyway – across screen, at any time of day, and in any location they are in, like commuting to and from work. These groups of consumers have embraced the Netflix model and love the concept of “original programming”. Particularly the world-class programming Netflix has become famous from, like House of Cards, Orange is the New Black, and Daredevil.

Probably one of biggest areas under threat would be advertising as traditional TV advertising will most likely start to loose its importance while we see the growth of content marketing and other forms of branded and sponsored content initiatives take shape. These will become more critical especially in platforms that allow audiences to skips ads. But we will certainly see a big shift in advertising spend towards areas like online video networks which will clearly be a more effective way to reach Netflix watchers than traditional TV.

I believe the emergence of Netflix in our region is a good move. Good for me personally, as I’ll now have access to all this great content (finally). But good for the industry as well, as it fits nicely with the digital, mobile and youth-centric ecosystem that is Asia.

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