Focus on top 3 Asian countries
Netflix (NFLX) continues to strengthen its foothold in Asian markets with local as well as existing popular content. The company is currently targeting Japan (EWJ), Korea, and India (EPI) where the telecommunications industry and income levels are growing.
Challenges in Asian markets
From the chart above, you can see that net international Netflix subscribers have increased, driven by Asian growth. However, to be successful in Asia, Netflix will most likely have to overcome numerous hurdles. First, Asian markets have huge populations, mostly non-English speaking with varied tastes and habits. Second, most countries still lack fast Internet speeds and proper infrastructures. Third, a lot of people in these regions prefer watching videos on their smartphones or tablets. Finally, many Asian populations are price-sensitive with lower income levels.
The success of Netflix’s Korean movie Okja gave the company a platform in South Korea. That encouraged the company to ink a deal with South Korea’s cable TV network JTBC to obtain 600 hours of scripted and unscripted TV shows.
Although China is highly regulated, Netflix was able to sign an agreement with iQiyi, a local VoD (video-on-demand) leader owned by search engine giant Baidu (BIDU). Netflix will deliver its content to iQiyi.
In 2015, Netflix entered the Japanese market with about 40% local shows, which helped the company cement its place in the country. Hibana, a Japanese TV show, is quite popular outside of Japan and has been subtitled in 19 languages.
In India, Netflix will launch two original local shows, Again and Selection Day, which could help the company compete with Amazon (AMZN) and Hotstar. Amazon has a strong e-commerce presence in India compared to other Asian countries and charges 500 rupees for an annual subscription, which compares to the monthly rate charged by Netflix. Netflix has already made it clear that it won’t compromise on price in order to gain market share in Asia.