Netflix eyeing 2016 launch

Netflix eyeing 2016 launch

Thu, 8 October 2015 ppp

Cam McGrath

The Netflix sign is seen at the entrance to the company’s headquarters in California. The world’s largest internet TV network plans to launch service in Cambodia by the end of 2016. Bloomberg

Netflix, the world’s biggest internet television network, is set to change the local pay-TV landscape when it launches services in Cambodia next year as part of a global rollout.

“We intend to offer our service globally by the end of 2016 and that includes Cambodia,” Netflix spokesman Jonathan Friedland told the Post in an email.

Netflix has 65 million subscribers in over 50 countries and has borrowed $1 billion to finance a global presence. The US-based streaming video on demand (SVOD) giant already has a foothold in Asia, having entered the Japanese market last month, and plans to move into Hong Kong, Taiwan, Singapore and South Korea early next year.

It plans to complete its 200-country campaign by the end of 2016.

The company, which also puts out original programming such as House of Cards and Orange Is the New Black, says growing internet use and interconnectivity in Asian markets have broadened opportunities for streaming video.

“The combination of increasing Internet speeds and ubiquity of connected devices provides consumers with the anytime, anywhere ability to enjoy their favorite TV shows and movies on the Netflix service,” Reed Hastings, CEO of Netflix, said in a statement.

However, the company could face stiff competition in Cambodia as at least two Netflix clones are poised to enter the Kingdom’s market – and could be well-entrenched by the time it arrives.

One, iflix, has already launched its internet television service in Malaysia, Philippines and Thailand, and is planning an aggressive expansion to secure its title as Southeast Asia’s leading internet TV service.

Meanwhile, Singapore-based HOOQ has rolled out its premium SVOD service in the Philippines, Thailand, Indonesia and India, and is eyeing new markets.

Netflix appeared unfazed by the Asian upstarts, suggesting that competition is good for the industry.

“We have competition everywhere. It helps educate the market about the benefits of streaming,” said Friedland.

Mark Britt, CEO of iflix, said his Malaysia-based company is currently completing its analysis of the Cambodian market and expects to launch in mid-2016 with a homefield advantage.

“iflix has been specifically created to address the demands and challenges facing consumers in emerging markets,” he said.

“We are 100 per cent about creating and delivering both an exceptionally high quality, mobile optimised service in markets with frequently unreliable infrastructure.”

The company already has over 450,000 accounts in the region and has struck content deals with the likes of MGM, Warner Bros and Starz to provide an extensive library of Hollywood, Asian and local TV and film content.

About half the content for Cambodian subscribers will be local or regional programming, according to Britt.

While there is no word on pricing yet, in other markets iflix has priced down to maximise its reach. In Thailand, for instance, a one month subscription costs 100 baht, or less than $3.

Eelco Dijkhuizen, general manager of market research agency TNS Cambodia, said that while internet television networks have proved highly successful in other markets, the margins could be razor-thin in Cambodia.

“Initially, it would be a fairly small market as not a lot of people have internet at home and most people still prefer to watch local programs,” he said.

“So they will be starting from a low point. But over time it could be profitable.”

Although internet penetration in Cambodia remains relatively low at 25 per cent, usage grew an impressive 414 per cent between January 2014 and March 2015, largely on the back of smartphone and tablet sales, according to Singapore-based consultancy We Are Social.

Plugging in to this mobile internet growth could be crucial to the success of the TV on-demand model.

“They will need to go straight to mobile devices and if the mobile internet bandwidth is enough it could be a hit,” said Dijkhuizen.

“Cable TV never really established here so Cambodians could go straight to TV on-demand, much like they’ve done with telecoms, where [the mobile] leap-frogged the landline.”

He said SVOD service providers might need to consider very short-term subscriptions, perhaps even weekly, or look at ways to offer it for free.

“Cambodians tend to be hesitant about paying up front for services, as people are afraid they’ll spend on something they won’t use,” he said.

Britt said iflix would consider partnering with a local telecom firm to bundle its subscription with their data plan – an arrangement where a mobile operator uses iflix’s content library to attract and retain subscribers, while iflix piggybacks on the operator’s customer base to increase its own.

“Partnering with telcos, as we have done in other markets, allows us to accelerate our growth by making iflix immediately available to each telco’s customer base,” he said.

Marc Einstein, a digital media analyst at Frost & Sullivan in Tokyo, said bundling would be essential to making SVOD services accessible and affordable in the price-sensitive Cambodian market.

“Netflix is an elephant [in terms of data volume,]” he said. “It’s really vital for this business model that subscribers are not incurring data charges for the movies they download.”

While Einstein questions whether a premium SVOD service can turn a profit in Cambodia – especially given its dearth of home broadband users – he said with several competing services lined up the game will not be decided on timing alone.

“Being a first-mover is important, but content is king in this business,” he said.