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Netflix Pours Huge Investments In Asia-Pacific Region Due To Great Potential

According to recent reports, a Netflix executive has revealed that Netflix is ​​trying to aggressively enter the Asia-Pacific region, investing heavily in original and licensed content in many major markets, including India. 

Last month, when Netflix announced its third-quarter earnings report, the company said that the Asia-Pacific region contributed nearly half of the growth of paid memberships, which is a higher share than any other region. In recent years, Netflix has been committed to international expansion. Especially since 2016, the Asia-Pacific market has become a key development target for Netflix.

Tony Zameczkowski, vice president of business development for the Asia-Pacific region of Netflix, said in an interview in late October that Netflix pays special attention to localization services in the region. This includes adding subtitles and dubbing in local languages ​​such as Hindi, Malay, Korean, Japanese, Thai, and Indonesian. The company also provides a local language application interface.

“In the past four years, we have also realized that in this region, people’s first choice is mobile, which is very different from other places in the world,” Zameczkowski said.

The company has launched mobile-only packages in India, Malaysia, Indonesia, the Philippines, and Thailand, with monthly subscription fees as low as $5. This is very different from Netflix’s pricing in the US market. In the US, the subscription price for the Standard Edition is $14 per month.

For example, in India, you can pay a monthly 199 Indian rupees (about $ 2.68), the smartphone to watch Netflix standard definition video at any time on or tablet, and ad-free. Netflix launched the subscription package in 2019. Prior to this, Netflix had provided three subscription packages in India, with prices ranging from 499 rupees to 799 rupees per month.

Optimistic about markets such as India

Zameczkowski said that Netflix is ​​very optimistic about the “opportunities brought by the Asian market.” He added: “We undoubtedly see huge potential in markets such as Japan, South Korea, India, and Indonesia, and we will continue to invest in these markets.”

Considering the popularity of smartphones and the cheaper Internet access prices, more and more people have the opportunity to go online for the first time in their lives. For technology companies, this means that the region has a huge potential user base.

Still take India as an example. The number of Internet users in India is second only to China, ranking second in the world. According to Ernst & Young’s data, India has approximately 570 million Internet users and is growing at a rate of 13% per year.

Ernst & Young also added that localization and “differentiated content” are essential for the company to attract a wider range of Indian consumers (especially consumers outside major cities).

Between 2019 and 2020, Netflix has invested 400 million US dollars to develop original content and purchase other content for the Indian market. The company has produced more than 40 original works in India, including the Hindi drama “Sacred Game”, starring the famous Bollywood actor Saif Ali Khan.

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“In the past four years, the Indian market has undergone amazing changes. First, more and more people have access to the Internet, and secondly, Reliance Jio also provides cheaper data usage prices,” Zameczkowski said. The cheap mobile data package provided by Indian telecommunications giant Reliance Jio gave millions of Indians the first opportunity to access the Internet. “This is naturally a good thing for us because we do benefit from such a solid infrastructure. With this infrastructure, people can access Netflix,” Zameczkowski added.

According to reports, Netflix has worked with Jio to provide free mobile subscriptions for post-paid packages starting at $399 per month, as well as free subscriptions to the basic package of Jio’s fixed broadband service. It is expected that by the end of 2020, with these cooperations, Netflix’s subscribers in India can reach 4.6 million.

Rest of Asia

Although Netflix is ​​still unavailable in China, the company has invested heavily in developing local content for other parts of Asia. The company has produced more than 200 original drama series, including more than 70 Korean dramas. Since 2015, the company has also invested more than US$700 million in cooperation and co-production in South Korea. As of September 30, Netflix has 3.3 million subscribers in South Korea.

Netflix said that since 2016, the company’s content catalog in Southeast Asia has doubled every year, and the company also plans to add 500 titles to Southeast Asia in 2020. Similar to India, Southeast Asia is also a lucrative market because the region has a large population and many people have just had the opportunity to go online.

An industry report by Google, Temasek Holdings, and Bain & Company of Singapore predicted that the Internet economy in Southeast Asia will grow to US$300 billion by 2025. Streaming video and music subscription services are especially popular among young users.

However, in this region, Netflix is ​​also facing intense competitive pressure from local, regional and international players. These competitors are either well-funded or have big companies backing them. For example, Amazon Prime Video, Disney+ Hotstar, HBO Max, and regional competitors like iflix, which has been acquired by Tencent.

Zameczkowski said that Netflix now competes across the entire entertainment industry, including video games and other user-generated content. “In essence, anything that can attract users’ attention is an area where Netflix is ​​worthy of competition,” he said. In addition, he also said that competition is a good thing because competition allows end-users to understand the “value of paid entertainment.”

“If you pay attention to the Asia-Pacific region, you will see that we are still in the early stages of development, and we believe that there will be huge opportunities here,” he said. However, as of the third quarter, the net growth of Netflix’s global paid subscription users was only 2.2 million, which did not meet analyst expectations. 

Technology investor Gene Munster believes that the streaming media giant needs to develop its own business to continue to provide investors with stable and substantial returns. Munster said that although Netflix is ​​a pioneer in the field of streaming media, he is concerned that the company may not have a clear path to continue to expand its streaming business, so as to continue to provide shareholders with generous returns as always.