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Even in countries with cheaper local competitors, Amazon and Netflix are succeeding

Reed hastings, netflix
Reuters/Mike Cassese
What barrier to entry?
  • Ashley Rodriguez
By Ashley Rodriguez


Published This article is more than 2 years old.

There are local, country-specific versions of every startup from Amazon to Uber to Warby Parker, many of which are more successful than their US peers. But in the streaming world, Netflix and Amazon’s Prime Video seem to dominate globally.

New research from Jefferies suggests that Amazon and Netflix are devouring the market share for subscription video-on-demand services in the key countries of Germany and India, even with local competitors vying for eye balls.

The investment-banking firm surveyed 1,000 people in Germany and 600 in India, of various ages, genders, and household incomes, during the first week of March 2017. About 34% of the respondents in Germany and 55% of those in India said they lived in households that paid for subscriptions to digital streaming-video services.

Of those in India with subscriptions, Amazon Prime Video was by far the most popular, followed closely by Netflix.

The same was true in Germany.

And a good chunk of those respondents subscribed to both services. Around 41% of those surveyed in India said they lived in households that paid for Amazon Prime Video and Netflix, as did 21% of respondents in Germany.

Both services have been battling for market share abroad. Netflix moved into 130 more countries last January, including India, and about 47% of its 94 million members are now outside the US. Amazon, which doesn’t share specific subscriber figures, also began rolling out Prime Video to most of the world last December.

Investors have wondered how those efforts would stack up in the long run against local competition that was more attuned to local realities, with more attractive price points and familiar, local content. But that didn’t seem to be a problem for the target audience of early streaming adopters surveyed. The majority of respondents said they were drawn to Netflix originals like The Crown, Narcos, Luke Cage, and 3%, as well as the service’s library of licensed movies and TV shows.

“Originally, we thought that Netflix’s lack of locally produced content could be a key headwind in international markets, particularly those with large non-English speaking populations,” said Jefferies, in a March research note on Netflix. “However, more than a year after Netflix’s service went fully global it appears that much of its key original content is performing well across a variety of markets… The content is traveling well across territories despite language differences.”

The price points also haven’t been as much of an issue as expected. In India, Amazon Prime Video is offered as part of Amazon’s Prime shipping subscription for Rs. 999 ($15.27) a year. Netflix ranges from Rs. 500–800 per month (or $7.50- 11.99). The local service Hotstar, meanwhile, has subscriptions for Rs. 199 a month. But that hasn’t stopped people from signing up.

The report noted that the online survey was offered in the local language in Germany but in English in India, which may have tipped the scales there toward Amazon and Netflix’s target audiences. But it said the broader trends should still hold true.

India and Germany are very different video markets, but each is key to Amazon and Netflix’s expansions abroad.

Germany is Europe’s top TV market and on-demand adoption has doubled; an estimated 24 million German users—about 30% of the country’s population—said they paid for a video-on-demand service in the past year in 2016, reported the Hollywood Reporter. Amazon launched there in 2014, shortly before Netflix. And both have been courting local audiences with German-language productions.

India, meanwhile, has one of the youngest populations in the world, with about 40% of its population under the age of 20. It’s a huge market for both Amazon and Netflix. Amazon has been partnering with Bollywood studios. And Netflix recently signed a deal with the world’s biggest movie star, Bollywood actor Shah Rukh Khan.

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