Japan is poised to emerge as the largest market in Asia for Netflix by the end of this year, according to a new study. Rival streaming platform Disney Plus is forecast to see its Asia-Pacific subscriptions double in the current year, and revenue increase by 160%, but its core market in Asia remains low-yielding India.
Data in two new studies from Media Partners Asia, a Singapore-based consultancy and analysis firm, highlights further stark differences between the multinational platform operators.
Across the region Media Partners Asia forecasts that Netflix will have $3.3 billion of annual revenues and 33.3M paying subs. This compares with $2.4 billion of revenue in 2020 and 25.5 million subs, representing a 37% revenue increase from 7.8 million net customer additions (versus 9.3 million in 2020).
For Disney Plus in Asia Pacific, Media Partners Asia is projecting $1.2 billion of revenues and 66 million paying subscribers. This compares with 32 million subs and approximately $500 million of revenue in 2020. Its revenues include subscription (direct to consumer and wholesale) and advertising from India only.
Japan is set to overtake Australia, to emerge as Netflix’s largest revenue generating market in APAC in 2021, and its largest market by subscribers. Considering that Japanese consumers were generally late adopters of online content delivery – many clung on to DVDs for their prestige and collectability – Netflix’s surge from Japan is remarkable.
The service is going gangbusters in both Japan and South Korea where it now has large addressable markets, diverse content offerings, sustainable production pipelines and it is winning over local audiences with local content. That means Netflix is now able to monetize Japanese- and Korean-made content locally and in international markets. Revenues in Japan have been helped by local price rises and strong telco partnerships.
“With Korean audiences now turning to Netflix to watch Korean content, the dynamic has changed,” MPA director Vivek Couto told Variety. Korea is now Netflix’s third largest APAC market by revenues, after Japan and Australia, its most mature market, with 60% household penetration. The company will unveil a slate of new Korean programming on Thursday.
Netflix continues to grow in Southeast Asian markets, notably Thailand and The Philippines, but if the service has a weakness in Asia it is in India. There it remains positioned as a premium product operating in a mass market and, despite content investment, it has not yet broken out to challenge established local players.
Disney in contrast, is a powerhouse in India. It owns Hotstar, the largest streaming platform in the country, and is forecast to finish 2021 with 50 million subscribers on the sub-continent. Its success to date has been driven largely by sports. Disney Plus Hotstar’s continued growth beyond 2021 may depend on key sports rights renewals. And regulatory questions could impact all OTT operators in India.
Couto describes “a tale of two Disneys.” While Disney Plus is a mass market service in India with ad-supported and two layers of premium tiers, it is more premium in other territories. The company has replicated some of the mass market strategy in Indonesia, where its 2020 launch was branded as Disney Plus Hotstar and where it boasts a substantial (mostly acquired) local content offering.
In Australia, New Zealand, Japan, Singapore (launched this week), and its yet to launch territories of Korea, Hong Kong and Taiwan, Disney Plus is understood to be targeting a pricier package juiced by the new Star offering. The report suggests average monthly revenues of $8.50 per customer in 2021, achieving total subscriptions of 7.5 million across those seven markets.
“Local content investment and recurring subscriber-based distribution partnerships with telcos and third parties will be critical to (Disney Plus’) sustained growth in Korea, Indonesia and Japan,” the report concludes.