Now for the Next 100 Million

Netflix Talks to Telkom to Re-Enter Indonesia


This week, Netflix reported that it's in talks with Indonesia's state-controlled telecom company Telekomunikasi Indonesia (Telkom) to roll out its video streaming service in the country. For Netflix, which is about to reach a milestone of 100 million subscribers, Indonesia potentially offers big numbers, but the company will have to adjust to local preferences and regulations.

Indonesia, with a population of 250 million, isn't a new market for Netflix. Rather, its move into the country is a reboot of its strategy. In January 2016, Netflix launched its service in 130 countries worldwide including Indonesia, where the company was banned after it ran afoul of the film censorship board for carrying content that was deemed too violent or sexual in nature.

According to executives at Telkom, the operator is now negotiating a partnership agreement with Netflix and hopes to complete the process next month.

Netflix is now a household name in many countries around the world and has continued to make a strong push to expand its service globally, but it's clear that it faces tough local competition and regulatory hurdles, particularly in some important Asian markets such as China (see Netflix Goes Bollywood).

With more than 50 million subscribers in the US, Netflix's content is accessed by more than 40 percent of households in the country. The company still has scope to grow in its home market, but the landscape is getting crowded with an array of new streaming options.

During the first quarter of 2017 in the US, Netflix gained 1.42 million subscribers, lower than the 2.23 million added in the same quarter of 2016 (see Instant Insight: Netflix Results, 1Q17). Its year-on-year subscriber growth in the US was 8 percent — a figure many service companies would hope to achieve. But investors are accustomed to bigger numbers. Outside the US, Netflix gained 3.53 million customers in the first quarter of 2017, a subscriber growth rate of 39 percent year-on-year. But even this is a significant slowdown from a year-on-year growth rate of 70 percent in 2016. Netflix realises it needs markets such as Indonesia, the world's fourth most populous country.

Netflix's business model relies on customer gains to offset its mushrooming content costs. We believe its decision to re-enter the Indonesian market with a new strategy is a laudable business move. Part of this strategy includes plans to strengthen investment in local original content that could have global appeal.

Netflix faces the threats of slowing subscriber growth and growing competition, particularly from Amazon, which launched its video service globally in late 2016 and recently signed a deal to stream a package of NFL Thursday night football games in the US.

Maturity is not part of Netflix's business plans. Jakarta is next on its playlist.

This entry was posted on April 19th, 2017 and is filed under Services. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Posted By Raghu Gopal On April 19th, 2017


Comments
(There are no comments yet)
Leave a Comment

Hot News

Team Tweets

CCS Insight
Qualcomm takes aim at the server silicon market with Centriq 2400 https://t.co/GziZl8sPP6 https://t.co/6yUxnilCsr
Follow CCS Insight
Shaun Collins
Good day today. At the @TheO2 watching @rogerfederer and @JackGrealish1 on the bench for @AVFCOfficial at @QPRFC.
Follow Shaun
Ben Wood
Think we’ll be seeing a lot more capabilities added to HomePod beyond high end audio when it finally shows up. Very… https://t.co/qjDDoK8rS9
Follow Ben
Martin Garner
@Google TensorFlow Lite launched in beta: https://t.co/MtHWGweD32. Late, but strong competitor to Azure IoT Edge an… https://t.co/FQi4JKOvOK
Follow Martin
Geoff Blaber
RT @mikeddano: . @sprint COO of Technology @guengott68 is leaving the company just a week after @Son_Softbank promised to triple Sprint's c…
Follow Geoff
Marina Koytcheva
@EisenTV @CCSInsight Ah! I thought I said "brief success" :)
Follow Marina
Nicholas McQuire
RT @lbcbreaking: AC/DC co-founder and guitarist Malcolm Young has died aged 64, the band has announced.
Follow Nicholas
Paolo Pescatore
@SpringhamJustin Shame they don’t play like that every week!
Follow Paolo
Kester Mann
RT @CCSInsight: A leading Western operator adopts a radical new business model by 2021 #ccspredicts https://t.co/4TfM8XpeSN
Follow Kester
Laura Simeonova
RT @CCSInsight: Optimization for artificial intelligence defines competitiveness in mobile chipsets in 2019 and beyond #ccspredicts https:/…
Follow Laura
Katie Taylor
RT @guardianscience: Scientists make first ever attempt at gene editing inside the body https://t.co/e8u0BT9a09
Follow Katie
Tony Worthington
Thoroughly enjoyed speaking at #ccspredicts event today. They get better every year. Keep it going Team CCS! https://t.co/6A5hQF9ESR
Follow Tony

Recent Blog Posts

Blog Post
Mobile Scale, from Device to Data Centre Taking Advantage of a Colossal Market The technology indu... Read more
Blog Post
Multi-Gigabit Wi-Fi Comes of Age Faster Wi-Fi in an Age of Gigabit LTE Multi-gigabit Wi-Fi... Read more
Blog Post
Uber Partners with NASA Ride-Hailing Company Envisions Flying Cars Uber moved a ste... Read more
More blog

Latest Company News

Blog Post
CCS Insight Predicts 1 Billion Users of 5G by 2023, with More Than Half in China 5G to take off faster than any previous mobile technology ... Read more
More news