Although both companies have tons of capital to spare, producing content that caters to locals’ palates may be a challenge

Mainstream TV is suffering a slow death, and the chief reason behind it is the growth of OTT platforms such as Netflix and Amazon Video. Both are well-known names in the international market, and now their next goal is to gain the same leadership position in one of the fastest growing digital economies in the world — Southeast Asia.

With countries like India and China already on their radar, both these digital entertainment giants have made their vision clear. And they don’t intend to stop just here. Their near-future goal is to disrupt the Southeast Asian digital entertainment market. The most prominent question here is — can they replicate their success in Europe and US in Southeast Asia? Let’s try to find out the hurdles waiting for both Netflix and Amazon in the Southeast Asian market and how they can be overcome.

Competition In Local Market

Netflix started its operations back in 1997 in the United States whereas Amazon Video came into existence in 2006.

During that period, there were few major companies ambitious enough to explore the digital entertainment field, and given the fact that social media hadn’t become as popular as it is now, both Netflix and Amazon didn’t face any competition in the US market. They kept on investing in the technology and scaling operations between 2005 to 2013 in different parts of the world; however, the real hurdles only appeared when they expanded to Asia.

Netflix entered this market sometime during 2015-16 whereas Amazon began its operations in Southeast Asia in 2017. Since digital entertainment had already become the talk of the town by then, both the companies faced massive competition from local players such as Viki, iflix, Hooq, Viu, and Catchplay.

All these local players have an edge over their global rivals when it comes to understanding the taste of the local audience. Besides, they have been investing a lot in creating original domestic content; something which Netflix and Amazon have yet to fully grasp. In an interview with TechCrunch, Mark Britt, CEO of flix said: “The best way for us to grow is producing local content, not Western. The majority of our top 10 content is local or regional.”

iflix isn’t the only Southeast Asia-based digital content producer that’s focusing on creating content for the local audience. Almost all other local players are following the same path. This has further increased problems for Netflix and its global rival.

Even though both these companies have a lot of cash reserve to be spent on content that can attract people in Southeast Asian countries, the only thing that matters here is time. If they intend to catch up with their domestic competitors, they need to act fast and focus on creating content that can appeal to users in these markets. The road is long and full of hurdles, but Netflix and Amazon aren’t likely to bow out anytime soon.

Trend Setting & Capturing Market Leadership Position

Netflix and Amazon are known as trendsetters all across the world; however, it’s tough to say whether they hold the same position in Southeast Asia. During the time, both these companies were busy scaling their operations in first world countries, many startups worked their ways into the local market and became first movers, capturing a healthy share of the market. Now, even though both Netflix and Amazon have come up with various innovative ideas to capture new users, staying ahead of the competition is not as easy as they used to be in the past.

Also Read: 4 key growth metrics startups should watch closely

Unlike the old days, almost all top-notch digital entertainment players seem to have ample capital to spend on promotional offers and unique plans. Last year, Hooq raised over US$25 million to expand its operations and reach in Southeast Asia. Another leading entertainment player iflix also raised over US$90 million to take on Netflix in Southeast Asia. Other digital content companies are also not sitting idle. They’re fully aware of Amazon and Netflix’s plans and are leaving no stone unturned to keep their positions intact.

Innovation Is The Key To Success

From how things have shaped up in the last five years or so in the Southeast Asian market, one thing is pretty clear — money isn’t the most valuable asset anymore to grow in the digital entertainment space. Everyone has got the capital; however, not everyone can use that money innovatively. It’s the constant innovation that will determine who among these companies which are willing to disrupt digital entertainment industry will have the last laugh.

We all know how Kodi established itself as a leading digital entertainment sharing platform in the previous decade. With the help of Kodi addons, users could easily share their favorite music, TV shows and music with others around their house in a hassle-free manner. Kodi’s services worked across all leading operating systems and devices, making it easier for users to keep using it with ease.

However, that example cannot be compared with the present era as there are so many competitors now. Nonetheless, Netflix and Amazon will have to come up with unique ideas constantly to rule the next decade of the 21st century. They’ve got the resources. And if they can put those resources to use perfectly, they might just win the battle for Southeast Asia. If not, their struggles won’t stop anytime soon.

—
Image Credit: georgejmclittle / 123RF Stock Photo

Editor’s note: e27 publishes relevant guest contributions from the community. Share your honest opinions and expert knowledge by submitting your content here.

This article was first published in March 16, 2018.

The post Why Netflix and Amazon may face difficulties claiming pole positions in Southeast Asia appeared first on e27.