JOHN DALY: Bullish Netflix flexing its global muscle

It’s not just China and India in the sights of Netflix, but also European domination with almost 100 original productions in various stages of development, writes John Daly

As a brand with ever increasing global recognition, Netflix continues to embed itself into a growing list of territories around the world.

With the company’s international membership having jumped from 35m subscribers in 2016 to almost 48m by the first quarter of 2017, it will soon begin the colonisation of the potentially biggest jewel in its crown — China.

Currently available in 200 countries around the world, Netflix has long eyed China’s 1.3bn population — and last week announced it had finally begun the process of making commercial inroads there.

However, it will not operate in its usual subscription form, but through a licensing deal with iQiyi, a streaming service with 500m members controlled by Baidu, China’s largest search engine.

In a country where Government censorship limits the variety of content, the deal includes television dramas, animated series and documentaries, as well as popular shows like Black Mirror, Stranger Things, Mindhunter and BoJack Horseman.

Yang Xianghuang, iQiyi senior vice president, said: “All of iQiyi’s overseas partnerships will strictly adhere to Chinese regulations on film and TV imports.”

iQiyi, which operates in a market shared with competing companies like Alibaba and Tencent, has already signed deals Warner Bros and Lions Gate Entertainment to distribute films online. iQiyi also intends spending up to $1.5bn (€1.38bn) over the next year to produce “super internet TV shows.”

While it may not follow the usual Netflix template, the entry to China does take the home entertainment company in a direction it has courted for a long period.

“China is an important market for obvious reasons, but is also a challenging market for obvious reasons,” said vice president of content acquisition Robert Roy.

“For us, it does a couple of things. It gets our content distribution into the territory and builds awareness of the Netflix brand and Netflix content.”

The Chinese market has been growing at a very rapid pace, with 75m people signing up for online video subscriptions in 2016, up from 22m in 2015.

India is another important market for Netflix in the long term, due in part to being one of the strongest internet markets in the world. A critical market given its 300m mobile broadband users — each one a potential subscriber — is one of the top three markets for Netflix.

Asked who was Netflix’ biggest competitor, CEO Reed Hastings said: “Sleep. Think about it, when you watch a show from Netflix and get addicted to it, you stay up late at night. We’re competing with sleep, on the margin.”

Yet, while it has changed the way millions consume entertainment content in shows like House of Cards, Narcos and Better Call Saul, the company is already looking to different horizons for the future.

With over 30 original scripted series in development, programming for 2017 will grow to 1,000 hours, doubling from 2016.

The company plans to spend over $6bn on content this year, up from $5bn in 2016. Netflix are also moving into the unscripted reality arena, led by global competition series Ultimate Beastmaster, produced by Sylvester Stallone and Dave Broome.

“Unscripted television is a very interesting business, and we are focusing on shows that are more likely to travel internationally,” said chief content officer Ted Sarandos at the recent UBS Global Media and Communications Conference in New York.

In a format designed to appeal across international boundaries, Ultimate Beastmaster features athletes from six different countries — the US, Brazil, South Korea, Mexico, Germany and Japan.

Each hour-long episode features 12 competitors, two from each country, running through physically demanding obstacle courses. At the end of each episode, a Beastmaster will be crowned and in the final episode of the season, the nine individual winners will compete against each other to become the Ultimate Beastmaster.

“When Beastmaster hits in Korea, they’ll never have seen anything like it,” Mr Sarandos said.

Mr Hastings predicts that all video in the next 10 to 20 years will be on the internet.

“We have seen YouTube, Amazon and even BBC open up globally, and there are now lots of TV networks bring content on the internet. Rather than getting run over by this, we are excited to be — and continue to be — at the forefront.”

The challenge is ensuring that its subscribers around the world are able to access the same quality of Netflix experience simultaneously, which is dependent on the internet and mobile networks.

“Some people are old enough to remember dial up internet, and now that seems like such a relic,” he said.

“We want to do that to buffering across the world. Many still know what a buffering looks like — our job is to eliminate that. We want to make buffering a historic relic where your kids say to you, ‘what’s buffer?’ We are going to see that someday the Netflix experience on mobile, laptop and TV is instant.”

Since 2012, Netflix has committed over $1.75bn to European productions, including more than 90 original productions in various stages of development.

The content — which spans series, films, documentaries, kids shows and stand-up specials — includes upcoming titles like Dark, Netflix’s first original series from Germany, a crime thriller series from Italy called Suburra, and Las Chicas Del Cable, a romantic 1920s inspired drama from Spain.

The company is also co-producing Troy: Fall of a City, Black Earth Rising and The Spy, in association with BBC One, BBC Two and Canal Plus respectively.

“After four years of original programming and filming in 18 countries, we know compelling stories can come from anywhere and no matter their origin, can resonate with audiences around the world. In fact, of the European shows available on Netflix last year, more than half of watchers came from outside of Europe, which is why we are confident our upcoming slate of international shows will be enjoyed by viewers in their home countries and beyond,” Mr Hastings said.


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