It’s one of those brands that have such a strong presence in our everyday lives, that they became synonymous with their product. We don’t watch a show or see a movie anymore, we watch Netflix. And understandably so, since the company radically changed the way we consume media, leading the shift from broadcasting to streaming.
Whether you’re one of Netflix’s over 130 million subscribers or not, you should keep an eye on the streaming service’s moves. If not for entertainment, for an example of a strategically impeccable international expansion.
Netflix, International Expansion & The Role of Data
For Netflix, international expansion was a careful, well-calculated process. Expansion efforts started in 2010, to make up for slowing domestic growth.
The initial Netflix international expansion strategy wasn’t out of the ordinary. The company aimed to penetrate into adjacent markets — that is, into markets that were geographically, culturally and regulatorily close to the company’s country of origin. So they decided to first disembark in Canada. Latin America and Europe followed, with amazing results.
Netflix always enters a new market through a limited-time offering. This allows the company to minimize the risks associated with expansion while garnering some initial data from a few users. With this data, they shape a region-specific business model.
How Netflix Goes Beyond Localization
When a company’s expanding its platform to new regions, it’s common practice to localize it. That is, to have it undergo translation and comprehensive cross-cultural adaptation. International marketing services are also part of the equation, tailoring our marketing message for our new customers.
Netflix didn’t forget to localize. Along the way, the Netflix team went out of its way to develop design processes that facilitated localization. But this was just a minuscule part of the plan. Aside from offering good UX and quality subtitles, the company started engaging new audiences by investing in new content.
Finding out that local competitors had an advantage content-wise, Netflix began to partner with local production companies to create originals that would appeal to their new user base. It’s estimated that, in 2016, Netflix invested approximately 5 billion dollars in international content creation. The company also bought the exclusive streaming licenses for local content.
It’s worth mentioning that Netflix also refined its algorithm to make sure users find just what they’re looking for, within its expanding global content library.
On the other hand, knowing that mobiles are the primary device through which people access the internet in developing nations, Netflix made sure its mobile experience was up-to-par. And, in order to spare their users of potentially inconvenient international payment processes, they partnered with local operators.
Netflix’s Greatest Expansion Challenges
In spite of its undeniable success, Netflix’s expansion process wasn’t a garden of roses.
For instance, Australian TV stations repudiated Netflix’s entrance into the country because being classified as a technology company, instead of a broadcaster, it didn’t have to comply with local regulation.
In 2016, the Kenya Film Classification Board denounced that some of the content included in the streaming platform’s catalog “threatened [the Kenyan people’s] moral values”. Likewise, the Indonesian, Vietnamese and Malaysian governments prevented Netflix’s expansion because the company didn’t comply with its censorship policies. Similar regulatory differences prevent Netflix from penetrating into perhaps the most promising international market: China.
On the other hand, the American streaming platform was unable to defeat competitors in India. When Netflix got to India, it was welcomed by four major platforms: Hotstar, Ditto TV, Spuul and Eros Now. Eros Now, for instance, had 30 million subscribers, and a catalog of over 3 thousand Bollywood films.
Aside from competition, the Californian giant had to face connectivity issues, and grow out of its initial failure to properly translate its platform.
Netflix also had a hard time in Japan, with both local and foreign competitors having very sizeable and very attractive content libraries. Netflix’s partnership with local content producers and license purchasing is reaping good results, but it has the company operating at a short term loss.
What Netflix Teaches Us About International Expansion
Netflix is currently operating in more than 190 countries. The company’s approach to expansion was successful because it was methodic, data-driven and user-oriented.
- You can’t get everywhere at once. So, start with countries that won’t pose significant regulatory or cultural challenges. And, throughout this process, document your challenges and build on them. And, even in these markets,
- Don’t go all-in. The more costly the decision, the more data you need to ensure it makes sense.
- Focus on guaranteeing users a top-notch experience, nation by nation. Garner real insight into your audience, so you can properly localize and tweak your offer to appeal to them.
Localization is a complex process. It involves linguistic, cultural and technical efforts. Translating your company’s website might not be enough to get sustained business in foreign markets. Going the extra mile can guarantee, not only a great ROI, but also long-term relationships with your customers.