As internet penetration is growing exponentially in some emerging economies, particularly Brazil and India, the two biggest video streaming services Netflix and Amazon Prime Video are going all in.
Amazon Leading the Way, Netflix Trailing Behind
Amazon came to India in 2013 and has already caught up with India’s biggest eCommerce site Flipkart in only 3 years. The numbers were impressive, from 2015 to 2016 Amazon grew its business 120%. In December 2016, Amazon launched its Prime Video service there. The price was an important factor in attracting new subscribers: charging only $15 per year as opposed to $7.50 Netflix per month.
Amazon’s philosophy was to attract new customers with its video streaming service and make them stay for the other perks that its Prime members have (e.g. Free and fast shipping for goods purchased).
A big challenge for Amazon prime video was to offer local content creation which will help differentiate between competitors. In December 2016, Amazon announced the creation of 17 shows from Indian creator and on top of that, it already offers shows in Hindi, Tamil and Bengali – one of the most spoken languages in the country.
Netflix came in January 2016 and seems to be struggling to catch up with Amazon Prime Video. The big problem for them lies in the content offered. Netflix India only offers 15% of the Netflix US library. Of course, Netflix has the advantage of having their worldwide famous series, but their localised content is still very small.
The advantage that Amazon Prime Video has over Netflix is that they are targeting all people with internet access through their eCommerce site, not just those wanting video on demand.
Brazil: Netflix Is Taking the Country by Storm
Netflix had their job cut out when they decided to enter Brazil. They would have to go head-to-head with Rede Globo, one of South America’s biggest TV companies. Brazilians have a habit of watching telenovelas, and Globo is the main producer.
So instead, they decided to invest heavily in local content.
The trump card for Netflix was to bring famous Brazilian actress Bianca Camparato onto one of its original productions. Camparato reached fame through telenovelas and Netflix executives invited her to head the Netflix original series “3%”. Set in a dystopian future and with an all Brazilian cast, “3%” became an instant success. They made the series not only available in Brazil but also in all the 190 countries Netflix is present.
For Netflix still, however, there remains a big obstacle to overcome. Brazil continues to have a somewhat rudimentary internet structure. Even in the big cities internet speed is low and 3G connections are patchy. So, they know that in order to get more subscribers, Netflix has to give a helping hand to Brazilian telecoms. This took the form of a partnership with telecom giant Telefonica, already one of the biggest telecom companies in Brazil, to increase internet speeds with Netflix supplying additional servers for no extra charge. It was a win-win for both sides.
Netflix’s success left the local competition up in arms and ready to strike back. For instance, Globo refused to license any of its TV programs to Netflix. Globo also introduced Globo Play, with all their TV programs on demand at much lower price than Netflix.
Nevertheless, it seems that for Netflix, the big challenge of taking on a country like Brazil finally seems to be paying off.
This post was originally published on The Market Mogul.