Netflix looks abroad for continued growth as more competitors emerge
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Efforts to dethrone Netflix abroad are underway, as more money pours into upstarts looking to compete locally against the streaming giant.
Why it matters: Netflix's user base is nearing saturation in the U.S., so it needs to continue growing abroad if it ever wants a chance at profitability.
The big picture: Around the world, companies are teaming up to create rival streaming services to compete with Netflix, and are withholding their top content for their own efforts.
- Iflix, a Malaysia-based streaming video subscription service focused on Southeast Asia and the Middle East, raised over $50 million in what it refers to as pre-IPO funding, Axios' Dan Primack reports.
- BritBox — a streaming service from British broadcasters BBC, ITV and Channel 4 — is finally arriving in the U.K. for £5.99 ($7.50) a month, after first launching in North America.
- Salto, a streaming service from French broadcasters France Télévisions, M6 and TF1, launched last year to prevent French content from being at the mercy of a U.S. tech company. The broadcasters began yanking their content away from Netflix in favor of their own service in January.
Yes, but: Analysts mostly agree that the streaming giant is so far ahead of the competition that it will be tough to stop it from continuing to add subscribers overseas — even though its earnings report last week suggestedotherwise.
- Domestic competitors that will eventually look to launch overseas — like Disney+ — aren't set to launch globally for at least another year.
- In some markets, like Japan, Netflix's investments in localized content are paying off, and are beginning to eat market share.
- As The Hollywood reporter notes, several markets have seen would-be competitors try and ultimately fail to compete with Netflix.
Between the lines: Analysts don't foresee Netflix's footprint growing that much bigger in some of its biggest international markets.
- The streamer currently has roughly 150 million subscribers, with about 90 million coming from about 190 markets overseas.
- Most of its overseas subscribers are likely consolidated into a handful of bigger markets — Canada, the UK, Brazil, Japan, and Australia — and those markets aren't poised to grow that much more, says Michael Pachter, a research analyst at Wedbush Securities.
What's next: The next big battleground for Netflix is India, one of the fastest-growing streaming markets.
- The big question for Netflix will be whether it's able to capture Indian users, with a cheap, "lite" mobile versions of its app.
- "Netflix 'lite' is a land grab, pure and simple," says Pachter. "I cannot conceive that they will be profitable at $3 per month in India, but it gives them a giant head start."
- Netflix is also hoping that reduced pricing options, along with a heavier investment in localized Indian content, will lure subscribers from Amazon and Disney-owned HotStar.
The bottom line: "These localized players reflect modest and isolated competition and almost always ends up being a partner outside their home market (or core content window), says Matthew Ball, former head of strategy at Amazon Studios.
Go deeper: Netflix's reliance on big hits will be a hurdle for future growth
