NET­FLIX TURNS TO ASIA With ‘Pa­cific Rim’ Anime, New Orig­i­nals

Financial Chronicle - - PLAN, POLICY - LUCAS SHAW

The stream­ing com­pany an­nounced a slate of 17 new Asian orig­i­nal se­ries dur­ing an event in Sin­ga­pore on Thurs­day, part of a pipe­line of more than 100 projects be­ing pro­duced in the re­gion. The new shows will in­clude nine In­dian pro­grams, its first Thai orig­i­nal and the com­pany’s first Man­darin-lan­guage se­ries.

Net­flix has much rid­ing on the suc­cess of those ti­tles in the re­gion, home to more than half of the world’s peo­ple. While Net­flix boasts more than 130 mil­lion cus­tomers, the vast ma­jor­ity of them live in the US, Latin Amer­ica and Europe.

Though Net­flix doesn’t break out sub­scribers by re­gion out­side the US, re­searcher Me­dia Part­ners Asia es­ti­mates the ser­vice has yet to sur­pass two mil­lion cus­tomers in any Asian mar­ket. The com­pany ac­knowl­edged it has a long way to go.

“When you think about the en­tire world, we’re still quite small,’’ Chief Ex­ec­u­tive Of­fi­cer Reed Hast­ings said. Hast­ings, who co-founded the com­pany 21 years ago, kicked off a two­day press event in Sin­ga­pore with a brief syn­op­sis of the his­tory of en­ter­tain­ment, as he has done at many events in re­cent years. (Spoiler: First came film, then came TV and now we live in the age of on­line en­ter­tain­ment.)

‘Pa­cific Rim’ Re­make

The new ti­tles in­clude a se­ries that is a pre­quel to “Baahubali,” the high­est-gross­ing fran­chise in In­dian his­tory, and will in­volve S.S. Ra­jamouli, who di­rected the films. The com­pany is also mak­ing an anime ver­sion of the pop­u­lar “Pa­cific Rim” mon­ster movies, and bring­ing in Tai­wanese stars Eu­ge­nie Liu and Jasper Liu to ap­pear in Net­flix’s first Chi­nese-lan­guage se­ries, “Triad Princess.”

The Asia pro­duc­tion boom fol­lows a fa­mil­iar pat­tern for Net­flix, which spends more cash than it gen­er­ates by plow­ing its grow­ing sales into new pro­gram­ming. The com­pany plans to spend $8 bil­lion on con­tent this year -- and more in the years to come -- to build its on­line video li­brary, though it’s un­clear how much of the bud­get will go to Asia.

In­vestors have ac­cepted the com­pany’s cash burn be­cause of their con­fi­dence in its abil­ity to sign up as many as 400 mil­lion cus­tomers world­wide. Net­flix shares have climbed more than 70 per­cent this year, boost­ing its mar­ket cap­i­tal­iza­tion past $140 bil­lion and ap­proach­ing lev­els that would ri­val en­ter­tain­ment gi­ant Walt Dis­ney Co.

Yet in­vestors are bound to be dis­ap­pointed un­less the com­pany has a strong show­ing in Asia, which is lit­tered with Net­flix-like com­pa­nies al­ready of­fer­ing vast trove of pro­grams in lo­cal lan­guages. Net­flix first ex­panded to Asia in 2015, open­ing up an of­fice in Ja­pan un­der the stew­ard­ship of Greg Peters, one of Hast­ings’ top lieu­tenants. The com­pany then ex­panded to the rest of the re­gion in early 2016.

In­dian Fo­cus

But one big hole is China, the world’s most pop­u­lous coun­try. The com­pany can’t op­er­ate its ser­vice there with­out a lo­cal part­ner, and Hast­ings has said Net­flix has no plans to en­ter China any time soon.

Ja­pan, which was Net­flix’s first Asian foray, no longer ap­pears to be the com­pany’s largest mar­ket in the re­gion. Growth has been slow, prompt­ing ex­ec­u­tives to la­bel the coun­try a “slow burn.’’ Net­flix didn’t an­nounce any Ja­panese orig­i­nal se­ries at the event. In­stead, the com­pany un­veiled five se­ries in anime, a genre pi­o­neered in Ja­pan that’s been catch­ing on all over the world.

In­dia has emerged as the com­pany’s big­gest mar­ket in the re­gion, ac­cord­ing to some es­ti­mates, as has be­come the case for US me­dia com­pa­nies such as 21st Cen­tury Fox Inc. and Vi­a­com Inc. Net­flix re­leased its first In­dian orig­i­nal, “Sa­cred Games,” ear­lier this year and plans to an­nounce nine more pro­grams on Fri­day.

High­light­ing the coun­try’s im­por­tance, Net­flix’s Sin­ga­pore event was dubbed “See What’s Next Asia” but more than half of the shows an­nounced hail from In­dia.

Still, Net­flix will need to lower prices if it wants to be­come more pop­u­lar there. Take Al­pha­bet Inc.’s YouTube, the most pop­u­lar video site in the world, which has a com­pet­i­tive ad­van­tage in Asia be­cause it is free. YouTube ac­counts for seven times as much view­ing time as Net­flix, Hast­ings said. Ear­lier this month, Net­flix sug­gested it may be­gin to of­fer low­er­priced pack­ages. “In­dia is the mo­men­tum mar­ket,’’ said Vivek Couto, ex­ec­u­tive di­rec­tor of Me­dia Part­ners Asia.

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