This story was delivered to BI Intelligence "Digital Media Briefing" subscribers. To learn more and subscribe, please click here.
Amazon is readying its video streaming service for a huge international expansion, The Wall Street Journal reports, in a move that will put the service in closer contention with Netflix overseas.
In January 2016, Netflix launched in 130 new markets, extending its reach to more than 190 countries. Before this great leap, Netflix’s service was active in 60 countries in the Americas, Europe, Oceania and Japan.
The two companies’ once-divergent approaches for penetrating new markets seem to be converging:
- Netflix is supranational. The company focuses mainly on releasing big, spectacular content that resonates across borders and cultures. However, Netflix CEO Reed Hastings indicated in the company’s most recent earnings that they would take a more homegrown approach in markets like Japan and India where tastes run more local, by licensing and producing more local language content.
- Amazon is homegrown. The company traditionally has taken a localization-first approach thus far, hiring local staff and investing in regionalized original content in its international markets. However, it’s no accident that Amazon Video’s international rollout coincides with the premiere of “The Grand Tour.” The show is an unofficial successor to BBC’s “Top Gear” – the world’s most-watched factual show, with more than 350 million viewers across 212 territories in 2015.
Amazon’s pricing could give it an upper hand against Netflix in developing markets. In India, Amazon will charge about $15 a year for Prime memberships, which gives subscribers full access to Amazon’s streaming catalog. Meanwhile, at $8 a month, Netflix’s starting price for a month’s worth of access is nearly half what Amazon charges for a full year.
This will put Amazon in a much better position to attract India’s mass market. The country is made up of 18 million broadband homes and 149 million broadband subscribers. It’s also forecasted to reach 730 million internet users by 2020, according to a report by India's IT trade association Nasscom and Akamai Technologies. That said, Hastings states that Netflix is purposely targeting for “iPhone owners” and “Western-oriented elites” who can afford higher prices, according to The Wall Street Journal.
Growth of subscription-video-on-demand (SVOD) services in the US has slowed considerably over the last year as competition in the online video streaming space intensifies. Heavy hitters like Netflix, Hulu, and Amazon Prime are increasingly squeezed by new competitors with exclusive content and niche video offerings.
International markets, and specifically, the Asia-Pacific (APAC) region will be paramount for both established SVOD players and new entrants looking to establish themselves in the successful video space.
The SVOD market in the APAC region is poised for explosive growth over the next five years due to increased mobile adoption, amplified broadband expansion, and enhanced purchasing power.
Dylan Mortensen, senior research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on subscription video on-demand that explores how slowing SVOD growth in the US will lead to a surge in the APAC region.
Here are some of the key takeaways from the report:
- While SVOD services are increasingly rooted among US households, growth is beginning slow. Growth in North American SVOD subscriptions is set to fall from 30% in 2014 to 4% by 2018.
- The best opportunity for continued growth lies in the Asia-Pacific (APAC) region. The region had nearly 42 million SVOD subscribers in 2015, but could have up to 158 million by 2021.
- The increasing adoption of smartphones and mobile data is propelling growth in mobile video viewing across APAC, which is poised to outpace the rest of the world.
- Rising purchasing power in APAC underlines the opportunity for online video services. China and emerging Asian economies represent nearly two-thirds (63%) of global economic growth.
- Content creators and marketers stand to gain from SVOD’s push into the APAC region. Content creators can benefit from the surge in short-form video, while marketers can capitalize on advanced product placements.
In full, the report:
- Forecasts SVOD subscribers in the APAC region.
- Explores the factors behind SVOD’s slowing growth in the US.
- Breaks down reasons why APAC is ripe for massive online video growth.
- Discusses who will benefit from SVOD growth in APAC.
Interested in getting the full report? Here are two ways to access it:
- Subscribe to an All-Accesspass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. » START A MEMBERSHIP
- Purchase & download the full report from our research store. » BUY THE REPORT