What Happened: After entering the streaming business more than a decade ago, Netflix’s growth in the US market is stalling. Now, the company is looking to expand beyond its home turf by unveiling plans to double spending on original content in Asia starting in 2021, Bloomberg reported on December 2.
Although Netflix has not disclosed its exact budget, the research firm Media Partners Asia estimates that it will come to a minimum of $1 billion. By ramping up its investment, the streaming platform will position itself to challenge US rivals Disney+ and Amazon Prime Video as well as regional entities like Tencent’s WeTV.
Jing Take: What can luxury companies learn from Netflix’s latest move? First, that the Asia-Pacific region offers a massive potential consumer base that goes beyond China. While companies — for good reasons — tend to prioritize the Middle Kingdom, the area as a whole is home to 2.9 billion people, which is a third of the world’s population. As of now, Netflix only has 23.5 million subscribers in this market, meaning much of it remains untapped.
Second, this consumer base is hungry for content. Asia was the only market where Netflix added more than 1 million paid subscribers during the most recent quarter. That represents nearly half its paid membership growth. Media Partners told Bloomberg it estimates streaming revenue in this region, excluding China, should double to $15 billion by 2025.
Third, Asia’s soft power is growing. So there is not only more interest in localized content but also a global appeal for Asian content, especially from South Korea. As such, Netflix has already produced a slew of hit Korean dramas and has five new anime projects in the pipeline.
And lastly, Asia has a mobile-first market. Given the region’s growing smartphone penetration and lowering costs for internet connections, Netflix has begun pushing mobile-only plans in places like India, Malaysia, and other parts of Southeast Asia. These subscription plans cost under $5 a month — a much lower price than in the US ($14) — which helps to widen the company’s userbase in these emerging markets.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.