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The selection process for the market's third operator was a spectacle to behold
One of the biggest announcements at this year’s CES – apart from all the virtual reality gubbins – was Netflix’s launch of a new global player that effectively makes the service available in every country on Earth except China, North Korea, Syria, and Crimea. (Netflix is working on China separately to deal with regulatory issues. It’s currently illegal under US law for US-based companies to do business with the other three.)
From the press release:
“Today you are witnessing the birth of a new global Internet TV network,” said [Netflix co-founder and CEO Reed] Hastings. “With this launch, consumers around the world – from Singapore to St. Petersburg, from San Francisco to Sao Paulo – will be able to enjoy TV shows and movies simultaneously – no more waiting. With the help of the Internet, we are putting power in consumers’ hands to watch whenever, wherever and on whatever device.”
The announcement not only means Netflix achieved its goal of global expansion a year ahead of schedule, it also means almost every pay-TV operator on the planet now has Netflix as a competitor.
That's not necessarly a bad thing. For markets where OTT video is already part of the competitive pay-TV landscape (in Asia, see: HOOQ, iflix, Viu, Presto, etc), adding Netflix to the mix won’t add much more pressure than is already there.
More to the point, as Colin Dixon of nScreenMedia notes, Netflix had to cut some corners to go global that could put it at a disadvantage to the incumbents:
Much of the content in the global service is available only in English, and it only supports 20 languages (after just adding Korean, Arabic and Simplified and Traditional Chinese.) According to the press release the service is available for “one low price,” which certainly doesn’t reflect the differences in wages around the world. For example, the ability of people in the Congo to pay (where per capita GDP is $394) is vastly different to Qatar (where per capita GDP is $105,000.)
When questioned about producing different versions of movies and shows to suit different markets, neither executive appeared to have thought very deeply about it, with Mr. Hastings responding “we’ll have to see and we’ll have to learn.” This seems naïve as it is virtually certain that censors in China will demand edited version of marquee shows. […] This issue will quickly emerge as a critical one for the company, as countries react to the uncensored content by blocking the service.
There’s also the issue of marketing, Dixon adds:
... as the company found in the UK, and is seeing again in Germany, real growth is hard work and requires local knowledge to execute well. The billing issue was also glossed over with a peremptory “we learned a lot in Latin America.”
How much Netflix has learned, and how they will manage that aspect across 194 countries remains to be seen. Meanwhile, that lack of local presence is a detail that incumbent players would be wise to exploit early.