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Global Streaming Giant Netflix Plays Catch-up in Asia

Variety logo Variety 4/27/2017 Patrick Frater
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Global streaming giant, Netflix this week signed a deal to acquire some 600 hours of scripted and unscripted TV shows from South Korea’s JTBC.

The agreement was unveiled at the Asia-Pacific Video Operators Summit (APOS) where the streaming giant was a constant topic of conversation. But the high-powered convention also made it clear that Netflix must come from behind in several parts of Asia, where it has numerous regional competitors armed with larger local content rosters.

APOS was also the venue for the dramatic announcement that Netflix had finally gained a toehold in China, the massive market where regulatory issues have until now kept Netflix out. The company said that it had struck a content deal with iQIYI, a local VoD leader owned by search engine giant Baidu. Conference delegates then spent the rest of the week debating the significance of what appeared to some to be little more than a licensing agreement.

For its part, iQIYI said: “By providing copyrighted content to Chinese users in HD format, it will help combat the illegal distribution of American dramas and other overseas content in China. Shows including “Black Mirror,” “Stranger Things” and “Mindhunter,” animated series “BoJack Horseman” and reality show “Ultimate Beastmaster” are among the first batch of Netflix content available to mainland Chinese audiences.

The Chinese company also hinted at more. “Netflix and iQiyi will together focus on the global trend of original content creation and the development of quality content,” said Yang Xianghua, senior VP of iQiyi, before more ominously adding: “iQIYI and all of our overseas partners will strictly observe the regulations governing the import of overseas content.”

The Netflix service roared out of the gate in Australia, where a localized service was launched some 18 months ago, a few months ahead of Netflix’s full global rollout in January 2016. With the suspicion that many Australian households were already subscribing to the U.S. service for its Hollywood content, Netflix quickly became the market leader Down Under.

Its arrival quickly put two local players in jeopardy. Quickflix was sold and Presto closed. But at APOS, Mike Sneesby, CEO of holdout Stan Entertainment, described the Australian video streaming market as now “flying along.” He said that Stan had roughly doubled its subscriber base in the past year to some 700,000 households. (Netflix does not give detailed metrics on viewership or subscribers, but claimed over 100 million subs worldwide.)

But Australia is clearly an outlier within the Asia-Pacific region. Local content is going to be key if Netflix is to flourish elsewhere. And local content strategies have been deployed by Netflix in Japan and India. Significant numbers of new shows have been announced in India, where the company this month announced the opening of a Mumbai local office, though none have yet been aired. In India, Netflix competes against Hotstar, a sensationally popular ad-supported app boasting channels, fiction and sports, and against Amazon Prime Video. While Amazon Prime is largely absent from most of Asia, it operates strongly as an e-commerce business in India.

The Korean market offers potential for different reasons. Not only are Internet connection speeds the world’s fastest, Korea is currently Asia’s creative capital. Local content will be needed for Netflix to make inroads with audiences against Korean players, but licensing or producing Korean content puts Netflix in the position of being able to distribute cutting-edge films and TV shows across the planet.

The deal with JTBC includes “Chef & My Fridge” and “Abnormal Summit,” both of which will stream on the Netflix Korean service the day after they air on JTBC. In addition, popular shows including “Beating Again” and “Can We Get Married” will also be globally available on Netflix starting from the third quarter of 2017.

Previously, Netflix has announced two original Korean productions “Love Alarm” and “Kingdom,” both of which will premier in 2018. The Netflix-backed feature film “Okja” directed by Bong Joon-ho, will play in competition in Cannes next month.

Earlier this month, Netflix also signed an exclusive international licensing agreement with JTBC for its Friday/Saturday TV series “MAN x MAN,” which started streaming globally last week.

But in the vast area between India and Australia in the South, and Japan and Korea in the North – a region which includes wealthy Hong Kong, Taiwan and Singapore, as well as still developing parts of South East Asia – other OTT streaming services have already grabbed the initiative.

Taiwan’s Catchplay, Malaysia’s Iflix, Singapore-based HOOQ and Hong Kong’s Viu have each developed multi-territory strategies. And they are facing down Netflix with content offerings that are far more localized. HOOQ and Viu used APOS to unveil original production developments, while Iflix announced a big leap into the Middle East and North Africa. With backing from Liberty International and Europe’s Sky pay-TV leader, Iflix boldly describes itself as “the world’s leading subscription video on demand service for emerging markets.”

Netflix now stands to increase its numbers with an imminent return to another Asian market. Earlier this month, Indonesia’s dominant telco firm Telkomsel said that it has lifted a ban on carriage of Netflix, which it had imposed last year due to concerns about regulatory issues. Netflix executives had no date for the restart of operations.

The country is obviously an attractive one. Aside from a massive population of 260 million, pay-TV penetration is still relatively weak. And, playing into the hands of Netflix, the local film industry shows signs of sparking into creative life, but is hampered by a hugely under-developed theatrical circuit.

Netflix VP of content acquisition, Robert Roy is an Indonesian movie aficionado. It would not be surprising if he spearheaded a drive to acquire and produce local content from the archipelago.

  • Vivienne Chow in Hong Kong also contributed to this story.

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