The launch of Netflix in the Middle East and North Africa (MENA) region promises to be an interesting development not only for Netflix but also for MENA onliners and the industry. While Netflix is living up to its claim of truly becoming global by entering 190 countries, it also reiterates MENA’s appetite for such enterprises. As the dust begins to settle on the news, The Arabian Marketer takes a closer look at some of the aspects that will contribute to how Netflix fares in MENA.
How Netflix Is Different In MENA
Netflix is no stranger to MENA. The service could be accessed either through a US based credit card, or through the use of a Virtual Private Network (VPN). Given the limitations of both these sources, the launch of Netflix in the region is welcome news.
Netflix is currently offering a free first month of service with the basic plan starting at USD 7.99 a month, which works out to less than AED 1 a day. These rates are in line with the pricing in the US. Netflix will be supporting Arabic language on the platform, with the option of Arabic subtitles as well.
While both these points would encourage its viewership, the overall content for Netflix will vary between different geographic locations, and will be based on the distribution rights from different studios. Some exclusions in the content includes the likes of ‘The Office’, ‘Lost’, ‘Dexter’, ‘House of Cards’ and ‘Orange is the New Black’ among others – the latter two being original Netflix productions.
“Today is day one for Netflix in the Middle East. We will be learning from our new members starting now and will be growing our offering significantly,” commented Netflix, Vice President, Communications, Joris Evers.
Some of Netflix’ key competitors in the region include Icflix, Telly, Orbit Showtime Network and Starz Play. Here is a quick look at how each service stacks up against the new entrant.
Strength
#1. Competitive Pricing: Netflix has an upper hand of sorts in pricing in comparison major competitors in the MENA region. While Netflix’ monthly pricing is at USD 7.99, Icflix charges USD 7.99, Telly is at USD 9.99, Orbit Showtime Network (OSN) costs USD 10.99 and Starz play is at USD 7.99. However, at this pricing, Icflix is available across five devices whereas Netflix’s basic package is only available on a single device.
#2. Global Reputation: Netflix comes with an unmatched global reputation. This is backed up with the quantity and quality of content that it provides internationally.
#3. Original Content: In many ways, Netflix leveraged the binge viewing syndrome among users to not only serve premium content but also create its own content line in the form of original series. The likes of ‘House of Cards’ set new online viewing benchmarks that followed a series of exclusive titles created only for Netflix such as Marvel’s ‘Daredevil’, and ‘Riders of Berk’ and ‘Defenders of Berk’ from the Dreamworks’ Dragons franchise (‘How To Train Your Dragon’).
Weakness
#1. Licensing & Content Approval: Not unlike other regions, much depends on the content Netflix can offer in the region, and this will include creating relationships with content creators and getting necessary approvals. Both the licensing and the approval policies will vary across different MENA regions bringing in additional challenges.
#2. Gaining Incremental Audiences: Consumer research by OSN suggested that Netflix was already the largest provider of subscription web-based video in the Middle East, even though its services were only accessible through VPN connections and US based credit cards. It would be interesting to note how Netflix can get more from this existing base and add newer customers.
#3. Late to the Race: Netflix competitors have a head start in terms of deals with local distributors and global studios. OSN’s exclusive first-run deal with Warner Bros is one such example.
Opportunity
#1. Market Potential: MENA is home to some of the highest growth trends of online video viewership. With the best infrastructure in some of the markets, and onliners exploring video content, there is no denying that the region poses immense opportunity to Netflix like services.
#2. Room For More: Given the consumer demand, there are few streaming services in the region, and the likes of Iciflix and Starz Play cover a relatively small portion of the TV shows and movies. If Netflix is able to bring all its content to the region, it will score significantly over its competitors.
#3. Low Pricing: In price sensitive regions, such as MENA, Netflix might gain popularity because of its low pricing as compared to the traditional models.
Threat
#1. Pay TV players: Over-the-top (OTT) content has revolutionized television viewing in MENA. This has challenged the traditional way of watching television programs i.e. through pay TV. However, pay TV still dominates in viewership and revenue in MENA. This has been possible with the advent of digital technologies, increased effort to produce local content and dubbing of international series and movies. Pay TV household penetration in the MEA is at 29 percent. However, it is forecasted to increase to 40 percent by 2019, according to PwC. Newer players need to make a dent in this pie to see any numbers of any real consequence.
#2. OTT competitors: OTT players are going the whole mile to attract users. Icflix offers Hollywood, Bollywood, and Arabic content, including original Egyptian productions. It has around 250,000 customers in MENA. Telly allows users to share numerous videos with friends and family. The platform also launched Telly Plus with the intention to create a ‘Netflix’. OSN, a Dubai based direct broadcast satellite provider, offers 154 television channels, 53 high-definition channels and 3D entertainment. Starz Play, launched in April 2015 in around 17 MENA markets, is projected to reach one million subscribers by 2019.
#3 MENA’s Challenges: The political and economic challenges in MENA will also pose a problem for some of the international players – another area that the likes of Netflix need to evaluate before seriously investing and committing to the region.
Netflix and similar services have been of interest to marketers in terms of exploring opportunities to connect with consumers in a highly engaged, one-on-one environment. While players are still in conversations on new ways to bring in advertising revenues in addition to subscription revenues, Netflix has some experience already in testing waters in this area. At present, Netflix original series show promotions. Netflix can bring some of these learnings to the region too while experimenting with how it can do things differently in MENA.
