Netflix: Not coming to a screen near you?

Western expats in the Middle East – a big potential market – are able to bypass local content restrictions with a VPN, viewing as if they were at home. (Shutterstock)
Updated 23 July 2018
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Netflix: Not coming to a screen near you?

  • For the second quarter running – Netflix failed to hit its target for new subscribers – resulting in $30 billion being wiped off its stock market value
  • The service is not a dominant force in the Middle East and North Africa – for the very good reason that so little of its content is in Arabic

LONDON: What is going on with Netflix? On one hand, the streaming service is now so popular that Ofcom, the UK’s media regulator, says it poses a real threat to traditional television, and especially to pay-TV channels such as Sky and Virgin.

On the other hand, the numbers tell a different story. For the second quarter running, Netflix failed to hit its target for new subscribers. This resulted in $30 billion being wiped off its stock market value, fueling a debate around one question: Has Netflix hit its peak?

The service has more than 130 million subscribers around the world, but that global reach is not as global as it could be.

The service is not a dominant force in the Middle East and North Africa, for the very good reason that so little of its content is in Arabic.

According to data from IHS Markit, the Starz Play and Shahid Plus services each have more than a quarter of Internet-TV subscribers in the region, while Netflix’s share is just 16.5 percent.

 

The Netflix strategy has been to attract subscribers through the quality (generally high) of its content. That content doesn’t come cheap but it is supposed to be covered by revenue from a growing number of subscribers.

This year the Netflix budget for content — 700 original TV shows and 80 films — is $8 billion.

Though Arabic films are available on Netflix, since launching in the Middle East at the end of 2016, it has produced only one original program in Arabic, a comedy special with the Lebanese actor and comedian Adel Karam.

In February, Netflix announced its first original series in Arabic, “Djinn.” The six-part young adult fantasy adventure is directed by Lebanese director Mir-Jean Bou Chaaya, the screenplay is by Oscar-nominated writer Bassel Ghandour and the actors are Middle Eastern.

But as filming was set to start in Jordan “later this year” it has not hit the screens yet.

Little wonder, then, that Netflix is having problems competing with rivals that already offer programming more tailored to locality.

“If Netflix wants to have as much clout in the Middle East as it does in English- and Spanish-speaking countries, it will need to produce much more content than reflects the area’s culture and languages,” said Jon Fingas, associate editor of the technology news website Engadget. Netflix did not immediately provide a comment for this story.

However, Netflix appears to be addressing another reason for its failure to make the desired impact in the Arab world: Accessibility.

In a region where incomes vary greatly, not everyone can afford to upgrade their television set or buy the supplementary device required to receive Netflix.

In February, Netflix signed a deal to make its content available through Dubai-based pay-TV provider OSN. Subscribers will simply pay through their existing OSN bills.

Media analyst Ronan Shields, digital editor of The Drum, said, “Success in markets such as the Middle East and North Africa relies on localization. While this is true of anywhere, the Middle East is undoubtedly a key region where Netflix will have to focus if it is to return to growth rate that will please investors.”

Netflix also announced it intended to appoint an executive charged with sourcing local content in the MENA region. But the search “appears to be ongoing,” said Shields.

The fact that the OSN partnership was not due to kick in until the latter part of the second quarter also means it is still too early to judge if the moves have made a difference to Netflix’s fortunes, he added.

“I would expect Netflix to spend big on publicizing these utilities (and content) in the region in order to boost take-up in the region.”

How people pay for Netflix services could also hamper its penetration in the region. While the use of credit and debit cards is widespread in some parts, other parts remain cash-based.

The ability and possibly the availability of wireless networks to support streaming could be another factor, along with local censorship of content. Western expats living in the Middle East — a potential big market for Netflix — are able to bypass local restrictions on content by using a VPN, enabling them to view programs as if they were in their home country. Analysts wonder if expats would be willing to pay for Netflix content when they have alternatives to hand.

However, Gurpreet Kaur at JPMorgan Chase said there were encouraging signs for the streaming service from India, given the success of the film “Lust Stories” (launched in the last quarter) and the first original series from India, “Sacred Games,” which began on July 6. Another series, “Ghoul,” is due to launch on Aug. 24.

“We believe these pieces of content can help drive word of mouth around Netflix and build the brand in India,” said Kaur.

“Overall, while second-quarter net adds and the third quarter outlook are disappointing, we do not believe they reflect a fundamental change in the Netflix story. We continue to believe Netflix can reach 200 million global subscribers in 2021.”

FASTFACTS

130 million — Netflix’s global subscriber base / $30 billion — Drop in share price after announcing disappointing customer growth / $8 billion — Netflix’s budget for content this year / 700 — Number of original TV shows it plans to make / 80 — Number of films


Despite setbacks, Arab summit at media forefront

Updated 20 January 2019
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Despite setbacks, Arab summit at media forefront

  • Japanese journalist says they have to cover the summit because the Mideast region is too important for Japan
  • TV, print and radio journalists were given the necessary equipment and space to allow constant reporting of the summit’s opening remarks

BEIRUT: Journalists from across the world gathered in Lebanon’s Beirut Waterfront to cover the Arab Economic and Social Development Summit on Sunday despite the tumultuous days leading up to the event.

It was not just Arab and Middle Eastern journalists who were present at the summit’s official media center; reporters from Japan, Europe and the US were also in attendance. 

There were conflicting reports on the number of journalists attending, ranging from 600 to double that. The summit’s official spokesman Dany Najim said 1,200 journalists covered the event. 

In addition to journalists working with news organizations and institutions were those traveling as part of country delegations. 

The Arab League sent 11 journalists, while official numbers put an average of 10 journalists per delegation. 

“We must cover the summit. The region is very important to us. It’s where we buy oil and gas,” said a Japanese journalist.

TV, print and radio journalists were given the necessary equipment and space to allow constant reporting of the summit’s opening remarks. While they were placed in a hall adjacent to the main summit meeting room, two large screens were continuously airing the summit’s activities and talks.

Rigid security protocols were in place for the safety of attending delegations. Roads starting from Beirut’s Phoenicia Hotel in Minet Al-Hosn district all the way to Al-Nahar newspaper’s offices in Martyrs’ Square were closed as part of a security zone. 

Transportation of journalists was organized by the summit, where a bus was available round the clock to pick them up and take them to the Monroe Hotel — the media hub for the summit — in Minet Al-Hosn, before taking another bus to the Beirut Waterfront.

Several stores and restaurants were forced to shut for the days of the summit, while some issued mass text messages to the public to announce that they will stay open.

This is the fourth Arab Economic and Social Development Summit. The previous ones were hosted by Kuwait in 2009, Egypt in 2011, and Saudi Arabia in 2013.