Netflix, Inc. (NASDAQ:NFLX) CEO – Reed Hastings – in a keynote speech in Las Vegas in January dramatically revealed that the firm made it services live in 130 new markets in a single day, thus, expanding its presence in more than 190 countries. The streaming firm is now present in all the major markets except China, but all its markets are not performing equally for it.
‘Skim’ markets. What are they?
Fact is, many of the 130 new countries are ‘skim’ markets in firms language i.e. markets where Netflix does not provide its full suite of services as yet including “local language customer service, local language content dubbing/subtitles, pricing and subscription execution in local currency,” noted a UBS analyst, in a recent report.
Analysts believe that whether or not Netflix will enhance its services in such regions will depend on the traction it gets in these countries. So far, there are huge variations in the response that Netflix has received from populations so far.
UBS made use of app downloads as a proxy for new subscribers, and tracked at Netflix’s performance in these markets. App downloads track just one segment of users, and for this reason, it is important to note that they could be an imperfect proxy for the subscriber growth.
Places where Netflix is a hit and a flop
Places like South Africa, India, and Singapore have significant English-speaking populations, so the analysts observed strong adoption in these places. India is a huge market, and therefore, the fact that the service is doing well there is good news in particular for the US firm.
However, there are other big markets as well that are not performing well, and as UBS points out these are Russia, Thailand, and Turkey. Downloads for the app have fallen off since launch in these region. The size of Netflix’s catalog could be one deficiency in these skim markets.
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Netflix, Inc. (NASDAQ:NFLX) still has a long way to go in making its catalog the same across the board. The US subscribers are at the top with 5,684 titles to choose from, but skim markets such as Russia GV have much fewer to choose from – only 1025 in Russia’s case, as per the research conducted by the website Unogs.
Talking of catalog, Netflix’s overall catalog has dropped by nearly 32% since January 2014, reveals the data tracked by AllFlicks. The massive decline could be due to several reasons including acceleration in high-priced exclusives.
Why fewer titles?
The OTT or Over-the-top viewing market is growing at a fast pace, and players like Hulu and Amazon video are becoming tough rivals for Netflix in an attempt to secure rights for exclusive shows. A common question that concerns television, films and music alike is – Whether it is healthy for the long-term growth of digital platforms?
A rise in the exclusive deals in addition to flat-out licensing refusals have resulted in a lot of missing content for the paying fans. If we leave exclusives behind then an important question is whether overall catalog size really matters.
Undoubtedly, Netflix has been incredibly aggressive and successful in its homegrown content with smashing hit shows like ‘House of Cards.’ The same is happening across a number of other channels and platforms including Amazon Video. Though originals are the driving force, but other old TV shows are surely attractive, and Netflix is a good example of that.
Netflix, Inc. (NASDAQ:NFLX), which has been dominating the streaming scene for years now, started focusing on the originals only recently, but before that its catalog was largely based on the acquired shows.
At 12.35 pm EDT, Netflix shares were down 0.25% at $1041.72. Year to date, the stock is down over 10% while in the last one-year, it is up over 73%.