Why Asia is now Netflix’s hottest market

The streaming giant is trying to establish a new kingdom.
The streaming giant is trying to establish a new kingdom.
Image: Netflix
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As its growth in the US stalls, Netflix is setting its sights on another part of the world: Asia.

The streaming company will double its investment in Asia in 2021, Bloomberg reported yesterday. It has spent about $2 billion on content in the region since 2018. Prior to the pandemic, Netflix was on track to spend more than $17 billion globally this year—much of that in the US, where it has the most subscribers.

But the US market, where Netflix entered as a streaming business more than a decade ago, is nearing saturation. Of Netflix’s four main regions (US, Europe, and Africa, Latin America, and Asia-Pacific), the US is growing the slowest, which the company blames in part on the launch of competitive services like Disney+. Netflix’s presence in Asia, meanwhile, is expanding the fastest, and it still has a lot more room to grow.

Asia was the only market where Netflix added more than 1 million paid subscribers in the most recent quarter. Even as lockdowns end and consumers in the region spend more time outside of their homes, Netflix continues to strengthen its position there, relative to other markets.

The growth is being driven by an increase in broadband penetration and smartphone use in countries like India, where Netflix has a partnership with the telecommunications giant Reliance Jio to offer streaming subscriptions to members of certain phone plans. A subscription to Netflix in several Asian countries often costs less than $5 per month (its most popular plan in the US is $14). That’s helped boost the company’s growth in the region, but it also means it makes less revenue per user in Asia than it does in other locations.

Further enticing Netflix to invest in Asia is the growing global appeal of content produced on the continent—particularly in South Korea. The streaming service recently bought three Korean films originally bound for theaters, and it continues to spend on local content it hopes not only drives subscription growth in the country, but also might help to attract users everywhere else.

The streaming giant’s investment in Asia is something of a preemptive strike against its new streaming competition, including Disney+. Disney’s year-old streaming service has launched versions in India, Japan, and Indonesia, but is not yet available in the Philippines, Vietnam, Thailand, or South Korea. Neither Netflix nor Disney+ can be accessed (legally) in mainland China.

And as much as Netflix has already spent in Asia, it’s not remotely close to reaching its potential there. It only has 23.5 million subscribers in the region—roughly a third of its US footprint. (Even excluding China, the region has 2.9 billion people—more than a third of the world’s total population.) Netflix has 36 million subscribers in Latin America and 62 million across Europe, the Middle East, and Africa.

“If you look at APAC, we are still at the beginning of our journey,” Tony Zameczkowski, Netflix’s vice president for business development in APAC, told CNBC last month.