Is Netflix a viable competitor in the local market?

Netflix made its debut in Malaysia earlier in January.

With its recent announcement, it now boasts presence in 190 countries with more than 70 million members and counting, watching more than 125 million hours in movies and TV shows every day, including original series, documentaries and feature films.

Meanwhile, broadcast satellite TV company, Astro Malaysia Holdings shares have been affected following news of Netflix’s entry into the market.

While online streaming is not entirely a novelty in the country given iflix’s introduction into the scene some six months ago, how will Netflix’s launch in the market disrupt local players?

Will satellite TV companies like Astro, fall out of favour among Malaysian consumers? Industry players predict that the game is less so about popularity than content preference.

For Malaysian audience, local content reigns supreme when it comes to capturing the most eyeballs and audience.

An Astro spokesperson told The Star that Malaysians on average spend 75% of their four to five hours of daily TV viewing watching Astro’s original local signatures.

“Viewership of our Gegar Vaganza, Kilauan Emas, Pencetus Ummah, Strawberi Karipap, Ceria Popstar, Chinese Golden Melody, Hua Hee Dai and Vaanavil International Superstar outstrips most Hollywood offering. Polis Evo, our latest Malay movie, broke the local box office and smashed all previous pay-per-view movie records,” the spokesperson said.

More local content

‎Neeraj Gulati, managing girector - Ingenuity at IPG Mediabrands, said the market’s continued high demand for local content means that Astro’s coverage of ‘live’ sports broadcast and local content will remain its core strength. While Netflix offers international content, it would not satisfy the demand of the Malaysian audience.

Moreover, Gulati pointed out that Netflix’s nascent popularity could be due to its novelty in the market. Local players should ramp up local content acquisitions and collaborate with partners to scale local content. “International content is already available, and the mass is  already consuming that. However, the proportion of viewers remain small –for instance, the English channel rating is small compared to any local channel in Malaysia,” Gulati explained.

Meanwhile, commenting on the knee-jerk reaction of Astro’s dip in shares, Girish Menon,  ‎CEO at GroupM Malaysia, said: “Netflix is just one streaming option among hundreds available on the internet. So it’s not bringing anything new to the internet that has not already existed for several years.”

Netflix is an immediate competitor to existing streaming sites and torrent sites, and not to local channels.

Menon pointed out that for any Asian country the market segment for international English-language content is limited, wavering around 5-15% of the population.

“Perhaps because industry leaders and public commentators are core audience for Netflix we tend to get very excited about it because we are the target audience for these services. But the bulk of content consumption comes from vernacular or local content. So it’s only when and if Netflix starts to commission local content in Bahasa Melayu or Chinese dialects that it is really going to offer a threat to the existing linear broadcasters.”

Still, a market of Malaysia’s size may not be financially worthwhile for Netflix to commission its own local shows.