Streaming giant Netflix has reported its first loss of subscribers since 2011, with media reporting that the US subscription streaming and production company lost nearly a million subscribers in the first half of this year. Although the number was far lower than the company itself had expected – around 2 million subscribers – the loss was followed by hundreds of job cuts and a sharp drop in its share price.
The loss of such a large number of subscribers seems baffling, given that Netflix has produced many successful drama series, including the Squid Game – the most-watched series in the world in its history – in 2021 and that people spent longer hours online as they were housebound due to the COVID-19 pandemic.
It seems that some factors have taken Netflix’s breath away, like its Chinese streaming counterparts who laid off a large number of employees late last year and came under heavy criticism for having increased subscription rates. Yet the growth of broadband network users in the United States and Canada had stalled even before the pandemic hit. Additionally, Netflix has faced fierce competition from rival platforms such as Disney Plus, Amazon Prime Video, and Apple TV in recent years.
In fact, many US streaming platforms, including the leader Netflix, had decided to tap overseas markets more vigorously to propel growth long before the pandemic hit. Apart from Japan and the Republic of Korea, the streaming giant has already entered the Nigerian market and plans to expand to other markets in Africa.
Yet, in many ways, Southeast Asia is one of the most promising overseas markets for American streaming companies. One of the few bright spots in Netflix’s first quarter results was positive growth in Southeast Asian countries such as the Philippines. In fact, in a letter to investors, it said it aimed to return to growth by stepping up its efforts to expand its presence in Southeast Asia and West Africa.
Southeast Asia’s GDP is around $3 trillion, the fifth highest in the world, after the United States, China, the European Union and Japan. In addition, the region is home to nearly 700 million people, or 9% of the world’s population, with young people and people of working age making up a significant percentage of the total. Certainly, demographic dividends are driving a booming Southeast Asian market.
While Netflix entered the Southeast Asian market long before the pandemic hit, Disney Plus expanded its share in the region during the pandemic. Now, Chinese streaming platforms such as Tencent Video and iQiyi are also placing greater emphasis on Southeast Asia, including strengthening cooperation with and/or acquiring local streaming platforms such as Malaysia’s iflix. .
Indeed, Chinese and American streaming platforms are growing rapidly, with the Southeast Asian market being one of the main drivers of their overseas growth.
Southeast Asia’s digital economy was worth $174 billion last year, and it’s expected to reach $360 billion in 2025. That’s one of the main reasons the United States wish to increase their share of the Southeast Asian market and set the standards for the digital economy in the region, which is an important part of its “Indo-Pacific economic framework” and an extension of its “Indo-Pacific strategy”. peaceful”. As a result, virtual space has become a major battleground for competing economies and businesses.
Therefore, it is necessary for stakeholders to maintain economic globalization and make efforts to level the playing field, especially since in early 2020, Taiwan’s ruling Democratic Progressive Party banned Mainland China’s Taobao , an Alibaba Group e-commerce platform, and iQiyi, a streaming platform, thereby politicizing market competition and creating barriers to free trade. The DPP also targeted other online businesses on the mainland by spreading lies about them.
US streaming platforms such as Netflix, Disney Plus, Apple TV and Amazon Prime Video are expected to further increase their spending in Southeast Asia to compete against Chinese competitors including Tencent Video, iQiyi, Bilibili, Xiaohongshu and TikTok – platforms that were widely welcomed. In the region.
Streaming companies from the two largest economies certainly face fierce competition in Southeast Asia. Chinese companies should therefore strengthen their competitive advantage and take other steps to increase their presence in Southeast Asian countries.
The author is a researcher at the Chinese National Academy of Arts.
Opinions do not necessarily reflect those of China Daily.