Netflix’s plan to fix its subscription crisis starts in Asia: Report
Netflix is looking to Asia after its shock first-quarter slowdown, seeking to both maintain growth in the one region where it’s still adding subscribers and replicate its success there in other parts of the world.
Despite plans to curb overall spending, investment in Asia will keep growing, including financing for the production of local films and series, Tony Zameczkowski, vice president of business development for Asia Pacific, said in an interview.
While Netflix will continue to offer low-price, mobile-only membership across Asia, it’s also seeking more partnerships with wireless operators and digital payment companies to reach more potential customers in a region where credit card use is less common, he said. The company’s Asia strategy is informing moves in other emerging markets, where the platform must also grow to balance out saturation in North America and Europe.
“Asia is a great proxy for other markets in the world,” said Zameczkowski. “There are similarities between emerging Asia and other emerging markets like Africa and Latin America. Learnings here can be easily replicated or leveraged by those regions.”
The world’s biggest streaming platform is at a critical juncture. Shares surged in recent years as subscriber counts boomed, but the company reported its first loss of customers in more than a decade in April and forecasts another contraction this quarter amid fierce competition from rivals. With more than 70 per cent of its market value wiped out since mid-November, Netflix is under pressure to renew a content pipeline that’s lost shine, while cutting costs.
The Asia Pacific region accounts for 15 per cent of Netflix’s 221.6 million global subscribers and is forecast to be the biggest driver of further expansion. After a disappointing start to the year, analysts expect a rebound in the second half will see the company add about 6.8 million members for the whole year, with 79 per cent coming from the Asia Pacific.
Still, the region’s widely differing audiences, preferences and operating environments pose risks. New users in the Asia Pacific totaled 1.1 million in the first quarter, down 20 per cent from a year earlier, and the firm has faced cultural and political challenges in penetrating some markets. The series “A Suitable Boy” triggered controversy in India in 2020 over a scene showing its Hindu female protagonist kissing a Muslim man, while the company removed a show for Vietnamese audiences after the government said a map in it violated sovereignty laws.
Netflix’s customers in Asia are also some of its lowest-value ones, which means many more subscriptions are required to juice revenue. The pace of revenue growth is already the slowest since records began in 2017 after low-priced mobile-only plans were introduced across Asia and prices slashed in India. Average revenue per membership fell 5 per cent to $9.21 per month in the Asia Pacific, compared with a 5 per cent increase to $14.91 in the US and Canada.