Tracking the evolution of the entertainment industry worldwide, Hollywood investors and telecommunications giants alike are joining the rush to bring video streaming to emerging Asia where spotty internet speeds, underdeveloped payment systems and piracy all pose obstacles to growth.
International audiences were thrilled last week when Netflix CEO Reed Hastings surprised the industry by announcing expansion of the US streaming company's offerings to 130 countries, with a major focus on Asia, notably excluding China but including Thailand and most of Asean.
But will the product on the screen be worth the hype?
Netflix is, after all, a latecomer to an already busy Asian on-demand video market and will need to overcome various challenges, not least language support and local content for the diverse needs of the mass market.
"Having language support and attractive content is the key challenge to cater to the mass market in an emerging economy. This will take time and will require a team with broad understanding of the local culture," Artima Suraphongchai, country manager of iflix in Thailand, told Asia Focus.
Pricing and payment strategy is another competitive edge that Netflix might need to refine. While local streaming services such as Malaysia-based iflix and Singapore-based Hooq offer monthly subscriptions for as low as US$3, Netflix packages in Thailand cost 280, 350 and 420 baht ($7.99, $9.99 and $11.99) a month depending on screen resolution and the number of screens a viewer uses.
Payment methods also need to be tailored to the capacity of emerging market consumers, many of whom still do not have credit cards.
Ms Artima said iflix was obsessed with meeting the unique challenge of emerging markets to provide services that suited the nature of each one. Those challenges include infrastructure, cultural preferences, existing local programming and language.
Iflix surpassed one million subscribers in December last year, six months after its launch in Malaysia, and is now available in Thailand, Malaysia and the Philippines with Indonesia, Sri Lanka and Vietnam to follow.
"Iflix will continue to broadest the most relevant selection of content for local consumers at a price that everyone can afford as well as offering payment methods that are most convenient for the viewers," said Ms Artima.
Iflix group CEO Mark Britt said that service localisation, as well as accessibility and affordability would be key differentiators as global players such as Netflix entered the market.
Peter Bithos, chief executive officer of Hooq, a streaming joint venture of SingTel, Sony Pictures Television and Warner Bros, added that a one-size-fits-all approach would not meet the needs of everyone in emerging markets.
"Our mission has always been to drive the entertainment revolution exclusively for the emerging market customer. We are happy that a large player like Netflix is now seeing the same opportunity we have seen," he said in a statement.
Hooq now operates in the Philippines, Thailand and India with a population footprint of 1.4 billion people.
Aside from the local content that Netflix lacks, its global subscribers may think twice as the on-demand service in their country may offer a different library than the US version.
For example, the award-winning drama Breaking Bad is not available on Netflix in Thailand Singapore, Indonesia, India and Malaysia (though its spinoff Better Call Saul is available in Thailand). Top-notch Asian-oriented content such as Ipman or Naruto is also conspicuous by its absence.
Offline downloading, available on iflix and Hooq, is another feature that Netflix does not yet offer.
In addition, to successfully capture film-obsessed Asians, Netflix needs to consider adding more Bollywood films and Asian dramas to its library.
ASIAN CUSTOMERS
Indonesian movie director Joko Anwar has weclomed Netflix, saying it provided users with wider, legal access to movies that were only available in limited numbers through theatres, home video and streaming services.
"As for the industry, I am sure it could reduce demand for counterfeit [DVDs] while for local producers, it serves as an expanded opportunity for a market platform. Let's just hope that access to selling movies to Netflix will be wide open and be made easier for Indonesian producers," he told Asia Focus.
He hopes that Netflix will increase cooperation with local filmmakers to develop more local content.
He also dismissed concerns that Netflix content might clash with guidelines for Indonesian movies or pay TV. Movies have to be cleared by the Film Censorship Agency while pay TV content must follow Indonesian Broadcasting Commission (KPI) guidelines against illicit or pornographic elements or other content deemed inappropriate.
"Such content is easily accessible on pirated DVDs and other media anyway. How would they oversee this content? Censorship is out of date and impossible to regulate. What needs regulation is audience age grouping and Netflix has features for children," Joko said.
Netflix packages in Indonesia cost 109,000, 139,000 and 169,000 rupiah per month.
The largest new Netflix market is India with 1.3 billion people, though only 400 million are internet users and broadband speed will be a big issue.
As well, piracy is a huge problem in a country where few people are willing to pay for content, and some homegrown companies such as Eros Now and Star's Hotstar already offer free programmes, though with a limited library.
The launch of Netflix in India is expected to shake up the OTT (over-the-top) telecoms and media market in the country, curb piracy and add to the coffers of data providers.
Its success, however, might be curtailed by slow internet speeds, limited availability of Hindi content (Netflix will offer 100 Bollywood movies initially) and high prices.
Executives with Airtel Digital TV, a major force in India's OTT market, told Asia Focus that the launch would be a win-win both for the American internet streaming giant and the Indian network service providers.
"Netflix will be using our data. Our data usage will go up. Everybody will make money out of it. We welcome the launch," said one executive.
Airtel is confident that the arrival of Netflix will only create a better digital ecosystem and also curb piracy. "It will only affect the retailer who makes money from side-loading (installing unapproved or pirated applications) and is killing the market (for music, entertainment shows and movies)," the executive added.
India has 400 million internet users, but internet speed is poor, especially in many small towns that still have access only to 2G telecom services.
Netflix packages require a minimum internet speed of 0.5 megabits per second for a package costing 500 rupees per month. Users of the 650-rupee high-definition service will need speeds of 5Mbps. Even if they have good connections, many might consider the prices too high, the Airtel Digital TV executive said.
Airtel has introduced 4G services in India while Vodafone, its main rival, is expected to launch them sometime in the first quarter of this year. Reliance Jio is likely to follow at a later date.
The internet streaming market in India is set to expand in near future with Videocon preparing to launch Voot and Balaji Telefilms planning its own digital platform soon. The major players in the country now are BoxTV, HooqTV, YuppTV and Spuul. In the digital television segment, besides Airtel Digital TV, Dish TV and Tata Sky are other major players.