Article 16: The Three C's of Netflix

Global Expansion Strategy

Summarized by: Zubair Ahmed Memon

Link: https://blog.dynamiclanguage.com/the-three-cs-of-netflix-global-expansion-strategy
Posted by Dynamic Language on Apr 4, 2017

Submitted to:
Sir Adnan Kehar

OCTOBER 20, 2018

Global ambitions have taken the content streaming giant, Netflix far from its California roots into
markets across Europe, Latin America and Asia. In early 2016, streaming giant Netflix, Inc. announced
that it had rolled out its service to 190 countries around the world. In June, 2016 Netflix international
subscriber growth wasn't performing as forecasted. The company had faced major headwinds as it tried
to conquer the world. However, Netflix blasted past its own forecasts — and most of Wall Street's and
now it has 104 million subscribers worldwide.
The three C's Netflix has tackled to improve its global expansion strategy:
CONTENT:
Internationally, Netflix had far less content. The company had to bulk up on global licensing deals.
There is a strong demand from foreign audiences for more and different content. In 2016, Netflix had
focused mainly on English-language films and series, with an 80/20 model of U.S. vs. local content in
most territories. It had focused much of its local investment on marquee original productions — with
foreign-language series such as Columbian crime drama Narcos, French political
thriller Marseilles or Hibana (Spark), a series set in the world of Japanese stand-up. The bulk of its
content, however, had been in English, something that, in many territories, limited Netflix' audience
appeal.
Netflix addressed this problem by introducing dubbing and subtitling in Poland and Turkey and is tilting
more towards local content in countries like Japan. When Netflix began to work with international rights
holders, it often got translated subtitles that weren’t exactly up to par. Now that the company is
distributing its originals around the world, it is itself working with thousands of translators, said Chris
Fetner, the company’s director of content partner operations. The international subtitling of Chelsea
Handler’s talk show alone required 200 translators. Netflix has also improved its own internal
translation tools. “Three years ago, we had a blanket style guide for all languages,” Fetner said. These
days, Netflix is working on a constantly updated Wiki, often tapping into a pool of translators and
academics to make sure that key terms and phrases don’t get lost as international audiences tune into
Netflix’s shows. To further build a stable roster of global translators, Netflix even developed its own
online test, dubbed Hermes, which the company launched to the translation community this Friday.
Translators can use that online tool to get scored by the company as a way to get approved for future
projects. To date, Netflix has only translated its apps and catalog into 20 languages.
COST:
In many parts of the world, Netflix is already, arguably, much expensive. In most Asian markets, notes
Venugopal, Netflix is among the most expensive SVOD offerings and often more expensive than
existing pay-tv services.
The company has negotiations with cable and cell phone operators to give it almost instantaneous access
to potential new users without having to spend a fortune on advertising and distribution deals in markets
where its brand and content are often still relatively unknown. Though many of them initially resisted
such deals with online content providers, gaining access to Netflix’s exclusive programming helps set
them apart from local rivals, just as customers’ online habits have shifted toward video, particularly on
their smartphones and other mobile devices.
COMPETITION:
Netflix's main challenge comes from local competition. In Europe, Sky is a major buyer, and producer,
of the kind of binge-worthy TV that Netflix specializes in. Netflix said it expects to see strong growth
ahead even as it faces more competitors such as Amazon, which is also expanding globally. Amazon
Prime's streaming service is a major Netflix competitor in select European markets. In Germany,
Amazon is actually ahead of Netflix.
In order to continue ingenuity in their business model, the company is tinkering with different formats
for the way its 104 million subscribers in nearly 200 countries consume its content. Its newest
innovation revolves around interactive technology and story branching options.
Netflix now has a handful of children’s shows with the ability for the subscriber to choose the way the
story plays out. If this catches on, other adult-oriented shows will join in the experiment. Netflix is
growing rapidly, but the battle for video entertainment is now on a global scale. Can Netflix keep up?
They're on the right track with creating their own content, which certainly help prevent licensing
conflicts.