By Neha Gupta
© InvestCorrectly.com
Netflix, Inc. (NASDAQ:NFLX) may be seeking to dominate the global Internet video streaming market, but the company is expected to face a different ball game as it launches in more Asian markets. Analysts say that it will be almost impossible for Netflix to replicate the kind of success it has witnessed in the U.S. in Asia. That is primarily because the company is expected to face far greater competition from local Internet video providers in Asia.
It’s been mostly a smooth ride for Netflix, Inc. (NASDAQ:NFLX) in the U.S., Europe and Australia. While there is money to be made in Asia’s Internet video market, Netflix will have to exercise greater patience in the region. Among the things that are expected to hold Netflix back in Asia are the cost of its streaming service, prevalent piracy in Asia and love of local content.
Premium pricing
According to media consulting firm Media Partners Asia, the price that Netflix charges for its service may appear cheap in the West, but not in Asia. For example, the company subjects Indian consumers to a price of $7.50 (500 rupees) per month for single-screen streaming. Double-screen streaming of Netflix sets Indians back $9.80 (650 rupees). As modest as the prices may be, Indians have multiple low-cost options to Netflix. That suggests that premium pricing could limit Netflix’s penetration in low-cost Asian markets.
Piracy threat
According to Media Partners Asia, piracy is a widespread problem in Hong Kong and Singapore. As such, Netflix must be ready to deal with content theft as it expands in Asia. But, battling piracy can be a costly affair.
Competition
The barriers to entry in Internet video service are low, which explains why the space continues to witness an influx of new players. There are numerous online video providers in Asia playing at various levels. The love for local content would also mean that Netflix, Inc. (NASDAQ:NFLX) will have to invest more in original and local programming to steal share from small and local rivals in Asia.