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As subscription revenue grows, Netflix has ‘lot more to learn’ in Asia

Netflix made most of its new subscribers in the Q2 2017 from outside the US, with over 4 million net subscriber additions (a little over 1 million subscribers were added in the US). The company’s chief content officer Ted Sarandos credited the quarter’s lineup of titles for the result. In an earnings call with an analyst, he said, “13 Reasons Why started right at the end of the quarter, rolled into some of our biggest content brands; new seasons of House of Cards, Orange Is the New Black; ending the quarter with Okja.”

Amazon does ‘not take away from us’

Asked about Amazon Prime Video in Germany, where the online marketplace giant is making significant investments, Netflix CEO Reed Hastings said that both players can comfortably coexist. “I wouldn’t characterize it as us versus Amazon in Germany. I would really characterize it as can we have a service that’s so great that Germans find it worthwhile paying for. And clearly we’re succeeding at that,” he said.

Amazon Prime Video has been making significant investments in India, with over 14 planned original titles, and a line-up of stand-up comedy specials. The service’s first original series in the country, Inside Edge, released earlier this month.

Adapting to Asian tastes

Netflix is starting to adapt to Asian markets’ different tastes for content. “With Asia, we’ve got a lot more to learn. We’re really expanding a lot in India, Japan. We’re figuring it out market by market,” Hastings said. Ted Sarandos said, “As we look to Asia, we have to get better and better matching those tastes. And those tastes are not as easily aligned with Western tastes.”

In India, the company has been stepping up localization — original films like Okja and War Machine have started coming out dubbed in Hindi as well. More regional cinema is also being added, in languages like Tamil, Bengali, Malayalam, Marathi and Telugu.

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How Netflix prioritizes in Asia

Asked how Netflix prioritizes its investments in Asia, Hastings said, “We look at market size, we look at growth of Internet, kind of all the factors that we’ve always looked at around the world. And so then we’re able to prioritize in what we’re doing.”

By both metrics, it doesn’t seem that India ranks high in Netflix’s priorities for Asia. Internet growth is still fledgling, with broadband accessible to less than a sixth of the population. We reported that Netflix had less than 3 lakh subscribers in India this January. Nakono, a market research portal whose estimate for India was closest to our findings, estimates that South Korea has more than 8 lakh Netflix subscribers. Keep in mind that Netflix released in South Korea at the same time it came out in India, and that India’s population is over 24 times that of South Korea.

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I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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