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SVOD,Japan

Netflix Drafts Japan Playbook

Netflix’s official arrival in Asia is less than a month away, with a September 2 launch confirmed for Japan, accompanied by rising promotional noise on social networks.

Japan is one of four countries that Netflix will add to its international footprint for the rest of this year (alongside Italy, Portugal and Spain in Europe during Q4), signalling a major acceleration in coverage across a diverse set of markets in 2016.

The SVOD giant, up and running in just over 50 countries so far, is targeting a presence in 200 countries by the end of next year.

Japan – next in line – promises to be its toughest new market so far.

Meanwhile, some major growth markets – including the likes of China, India and Indonesia in Asia, with distinctive and evolving media ecosystems – lie in wait next year.

DEGREES OF LOCALIZATION

Chief content officer Ted Sarandos sketched out much of Netflix’s expansion strategy during his on-stage discussion at this year’s APOS conference in April.

How deep Netflix needs to go in each market is an open question, although success in Japan will require more localization than Netflix is used to so far.

At the same time however, online piracy in Japan points to an under-served appetite for international movies and TV shows, Sarandos contended.

“We want the business to reflect the local culture, but most importantly it has to reflect and respect the local taste, whatever that taste is – not tradition, not the way it’s always been done,” he stressed.

“There’s always been this massive windowing of content that handicaps global content by windowing it so far out that, if you wanted to see it, you probably stole it by now.”

Netflix has since tied up with a local broadcaster, Fuji TV, and talent agency, Yoshimoto Kogyo, to create Japanese content, although crafted in a way to appeal to viewers in other countries too.

More commissions with content creators around the world, including in Japan, to make shows that resonate in multiple markets, will follow.

“Our chances of global success depend on our ability to launch global brands,” Sarandos said.

“If my success in Japan was 100% dependent on my ability to compete with local broadcasters on local programming, I would be a little less confident.”

Pricing plans and content availability for the Japanese service remain under wraps for now.

Netflix will still deploy its usual content strategy however, offering around 50% of what it has on day one, while building up the service and adjusting the line-up in response to local viewing behavior over the first 12 months.

A LONG-TERM VIEW

How much Netflix can emulate its current success in the rest of the world hinges on how well it can localize and execute.

Nonetheless, executives show increasing assurance that the service they are developing has global appeal, buoyed by traction in markets such as Brazil, where adoption is speeding up after a slow start.

“How we do in the first year in a new market is not that determinate of the long term,” CEO Reed Hastings remarked on the company’s most recent earnings call.

“If I think about Brazil, we were pretty weak in the first year,” Hastings continued. “Now, it’s a rocket ship.”

Take-up in Japan is likely to be slower than existing markets, Hastings added, a trajectory that might become more common as Netflix expands its footprint.

“We’re going to get in and really start the learning process,” Hastings said.

“What’s getting watched? Why? What’s generating buzz? Why? In every nation, we’re learning.”

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