The con­tent stream­ing ser­vice eyes up the MENA mar­ket.

Campaign Middle East - - FRONT PAGE -

N et­flix, the on­line stream­ing ser­vice, is look­ing to pro­duce an Ara­bic TV se­ries, ac­cord­ing to the com­pany’s chief ex­ec­u­tive, Reed Hast­ings.

Speak­ing to Cam­paign at the com­pany’s head­quar­ters in Los Gatos, Cal­i­for­nia, Hast­ings de­scribed the Mid­dle East as a “great mar­ket” for Net­flix as “there is strong in­ter­est in in­ter­net video of all sorts”.

To date, Net­flix has pro­duced a hand­ful of doc­u­men­taries in the Mid­dle East, the lat­est of which, The White Hel­mets, won the com­pany’s first Os­car, for best doc­u­men­tary.

“Hope­fully there will be less doc­u­men­taries about Syria,” says Hast­ings. “We’re also do­ing fea­ture films and more of our work is on the TV se­ries side.”

Net­flix has al­ready used Abu Dhabi and Ras Al Khaimah to shoot scenes for War Ma­chine, a drama star­ring Brad Pitt, with more films set to choose the UAE as a shoot­ing lo­ca­tion ac­cord­ing to a com­pany spokesman.

But it is the re­gional in­ter­est in TV shows, par­tic­u­larly dur­ing Ra­madan, that Net­flix is try­ing to tap into. With a $6bn bud­get for con­tent pro­duc­tion alone, the com­pany is ac­tively seek­ing to ex­pand its au­di­ence base around the world.

Net­flix launched in more than 50 coun­tries and ter­ri­to­ries be­tween 2011 and 2015, be­fore its global roll­out to the re­main­ing 130 coun­tries in Jan­uary last year.

It has 94 mil­lion sub­scribers around the world, of which 49 mil­lion are in the US and 44 mil­lion are in the rest of the world. The com­pany re­fuses to break down its num­bers by coun­try, but ac­cord­ing to UK-based an­a­lyt­ics firm IHS Markit the re­main­ing 130 coun­tries ac­count for about 5 per cent of its to­tal sub­scribers.

“Coun­tries with­out lo­cal­i­sa­tion have strug­gled to achieve the same level of suc­cess as ones with more ter­ri­tory-spe­cific of­fer­ings. Lo­cal con­tent is key to Net­flix’s suc­cess,” says Irina Kornilova, se­nior an­a­lyst at IHS.

Net­flix has lo­calised its ser­vice for the Mid­dle East by pro­vid­ing Ara­bic sub­ti­tles for its orig­i­nal con­tent, but dub­bing is not yet avail­able.

Growth in in­ter­na­tional sub­scribers is set to out­pace growth in the US this year. By 2021, IHS be­lieves, 60 per cent of all Net­flix sub­scribers will be out­side the US. The coun­tries that launched in 2016 will con­trib­ute more than 15 per cent of sub­scribers for Net­flix, says Kornilova, and the Mid­dle East is one re­gion where Net­flix hopes to see strong growth.

“For us [the Mid­dle East] is a big area of in­vest­ment be­cause state TV is highly reg­u­lated and so it doesn’t please that many peo­ple,” says Hast­ings.” So the in­ter­net – whether that’s YouTube or Net­flix or Starz Play or Starz Ara­bia, any of those – has a real ex­cite­ment be­cause you can get rel­a­tively un­cen­sored and in­ter­est­ing sto­ries.” Shows such as Or­ange is the New Black and House of Cards are cur­rently fully avail­able and un­cen­sored on Net­flix, which has evaded the eyes of the cen­sor boards in the re­gion due to its small mar­ket share.

Whether that can con­tinue re­mains to be seen. For many, sub­scrip­tion TV is still the most pop­u­lar way to view un­cut films and TV shows.

“There is a strong pref­er­ence for fam­ily-friendly TV, as well as lo­cal con­tent and news, among the less wealthy seg­ments, which also tend to be more con­ser­va­tive, in the re­gion,” says Medea No­cen­tini, se­nior vice-pres­i­dent of strat­egy at sub­scrip­tion broad­caster OSN. “By con­trast, the more wealthy seg­ments tend to have a slightly higher pref­er­ence for Western con­tent and sports.”

One ma­jor hur­dle fac­ing Net­flix is its lim­ited li­brary in the re­gion, due to con­tent li­cens­ing is­sues. Prior to its launch in the Mid­dle East, it li­censed its own shows to Starz Play and OSN.

“We’ve got this mixed rights sit­u­a­tion, and what fixes that is money,” says Hast­ings. “We’d like to be able to get global rights so ev­ery­body gets the same great ex­pe­ri­ence. But it’s go­ing to take a lot more money than we have now.”

He also ad­mits there are “lots of lo­cal com­peti­tors and we’re a tiny frac­tion” in the re­gion. The com­pany is ad­ver­tis­ing on YouTube to try to build brand aware­ness, but the tele­vi­sion and on- de­mand stream­ing mar­ket is es­pe­cially com­pet­i­tive in the Mid­dle East.

Most re­cently, Malaysia’s Iflix raised $90 mil­lion to ex­pand its pres­ence in the Mid­dle East and has signed up with tele­coms op­er­a­tor Zain to of­fer the on­line stream­ing ser­vice to its cus­tomers.

“In or­der to com­pete with close to a thou­sand satel­lite chan­nels avail­able for free, video-on-de­mand plat­forms need to in­vest heav­ily in ac­quir­ing pre­mium con­tent rights, brand­ing and mar­ket­ing roy­al­ties to be able to cap­ture a big­ger chunk of the view­er­ship mar­ket,” says Bog­dan-Alexan­dru Zoicas, man­ag­ing part­ner at On­line Video Net­work (OVN). “The Mid­dle East has a very di­verse pop­u­la­tion and a one-size-fits-all ap­proach will limit mar­ket reach.”

“Coun­tries with­out lo­cal­i­sa­tion have strug­gled to achieve the same level of suc­cess as ones with more ter­ri­tory-spe­cific of­fer­ings. Lo­cal con­tent is key to Net­flix’s suc­cess.”

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