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

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


Facebook to apply state media labels on Russian, Chinese outlets

Updated 05 June 2020

Facebook to apply state media labels on Russian, Chinese outlets

  • Facebook will not label any US-based news organizations
  • Social media giant said even US government-run outlets have editorial independence

SAN FRANCISCO: Facebook will start labeling Russian, Chinese and other state-controlled media organizations, and later this summer will block any ads from such outlets that target US users, it said on Thursday.
The world’s biggest social network will apply the label to Russia’s Sputnik, Iran’s Press TV and China’s Xinhua News, according to a partial list Facebook provided. The company will apply the label to about 200 pages at the outset.
Facebook will not label any US-based news organizations, as it determined that even US government-run outlets have editorial independence, Nathaniel Gleicher, Facebook’s head of cybersecurity policy, said in an interview.
Facebook, which has acknowledged its failure to stop Russian use of its platforms to interfere in the 2016 US presidential election, has since stepped up its defenses and imposed greater transparency requirements for pages and ads on its platforms.
The company announced plans last year to create a state media label, but is introducing it amid criticism over its hands-off treatment of misleading and racially charged posts by US President Donald Trump.
The new measure comes just months ahead of the November US presidential election.
Under the move, Facebook will not use the label for media outlets affiliated with individual political figures or parties, which Gleicher said could push “boundaries that are very, very slippery.”
“What we want to do here is start with the most critical case,” he said.
Chinese foreign ministry spokesman Geng Shuang told reporters during a daily briefing in Beijing on Friday that social media companies should not selectively create obstacles for media agencies.
“We hope that the relevant social media platform can put aside the ideological bias and hold an open and accepting attitude toward each country’s media role,” he said.
Facebook is not the first company to take such action.
YouTube, owned by Alphabet Inc’s Google, in 2018 started identifying video channels that predominantly carry news items and are funded by governments. But critics charge YouTube has failed to label some state news outlets, allowing them to earn ad revenue from videos with misinformation and propaganda.
In a blog post, Facebook said its label would appear on pages globally, as well as on News Feed posts within the United States.
Facebook also said it would ban US-targeted ads from state-controlled entities “out of an abundance of caution” ahead of the November presidential election. Elsewhere, the ads will receive a label.