Netflix’s Corporate Sphere in Asia in the Digital Platform Era

Dal Yong Jin

Introduction

In the early 21st century, several over-the-top (OTT) service platforms, including Netflix, Disney+, and Amazon Prime have become cornucopias. As the number of global users of platforms like these has rapidly increased over the past 10 years, OTTs, together with some of the largest commercial digital platforms like Facebook and Google, have influenced people s daily activities and cultural lives. Among these, Netflix has become one of the most significant OTT platforms in terms of monetization based on its soaring number of global customers.The subscription members in the US have been staggering in very recent years; however, international membership figures in Europe, Latin America, and Asia are rapidly increasing. While several OTT platforms still focus on the American market, Netflix has shown tremendous growth in global audio-visual markets.

As the most successful OTT service, Netflix has greatly influenced global entertainment systems. From content distribution to exhibition and to production, Netflix has substantially shifted the ecology of global entertainment industries. As people consume cultural content on digital platforms, Netflix has especially increased revenues through a monthly fee-based business model, unlike other digital platforms like Google and Facebook, which rely mainly on advertising. This status quo is crucial for the capitalization of Netflix, and as such, Netflix as a digital platform has fundamentally transformed cultural industries.

By employing a critical political economy approach and platform imperialism theory, this chapter analyzes OTT services, in particular Netflix’s global dominance, in order to determine the ways in which Netflix newly constructs platform imperialism as a new form of imperialism. It discusses the major characteristics of Netflix in the global cultural industries, which controls the vicious chain of the broadcasting and film industries. Second, it examines the ways in which Netflix influences the content production sector, as well as consumption in Asian cultural and platform industries, as Asian countries have shifted their methods of production and exhibition by learning from Netflix. Finally, it examines how Netflix promotes imperialism which expands asymmetrical power relations between the US and other parts of the world. In other words, it articulates whether Netflix actualizes platform imperialism, referring to an asymmetrical relationship of interdependence between the West, primarily the US, and many developing countries, based on its crucial role in reshaping the global cultural industry Qin, 2015). 1 expect that discussions in this chapter will shed light on the current debates on the increasing role of Netflix as a digital platform in the globalization context.

Netflix’s Global Penetration in the OTT Markets

The history ot Netflix started only 24 years ago when it was founded in the US in 1997 as a video rental service company, which offered offline movie rentals. Its streaming service began in 2007. Ever since it started its streaming service, Netflix has been the forerunner in the streaming television system and “its streaming service has become internationalized” (Ju, 2019,33). Netflix introduced streaming, which allowed members to instantly watch television shows and movies on their personal computers and later on smartphones. Regardless of such a short history, Netflix has become the most successful OTT service. Netflix has especially utilized artificial intelligence (Al) supported by algorithms to develop the best recommendation system, which drives the company’s global dominance.

Due to its diversification of business strategies, Netflix’s global impact is not limited to the distribution sector, but the production sector and the OTT service industry. Netflix’s business strategies have shifted to grab the customer’s attention, from “its original business model as exhibitor of film content” to “the business of being producer of serialized drama” (Jenner, 2016, 261). Netflix has also “rewritten the rules of TV and movie deal-making, talent paydays, TV scheduling, film release windows, and marketing campaigns. It’s an extraordinary level of influence exerted on a mature industry dominated by long-established stalwarts” (Littleton, 2018).

More importantly, Netflix has penetrated other countries since its successful launch in Canada in 2007. Netflix has continued to diversify its global markets. In 2011, Netflix launched throughout Latin America and the Caribbean. In 2012, Netflix became available in Europe, including the UK, Ireland, and in the Nordic countries. Netflix finally moved into the Asian market, including Japan and Korea, in the mid-2010s to become the biggest OTT platform around the globe (Netflix Media Center,2020). Netflix entered Japan in 2015 and then entered several other Asian countries, including Korea in 2016, gaining a tangible presence in most Asian countries, with the exceptions of China and North Korea, although they planned to work in China (Team, 2015). According to Netflix (2020a), its subscribers with a streaming-only plan could watch TV shows and movies instantly in over 190 countries in December 2019.The content that is available to stream may vary by location, though.

Netflix kept getting bigger, but it was not growing quite as fast as it had been in the US, partially because of other competitors including Disney+. For Netflix, going global is its biggest asset, and how to increase international subscribers, in particular in Asia, in the midst of fierce challenges from late comers, is its concern. What is interesting is that Netflix shares have soared by more than 65% in the first half of 2020 during the COVID-19 era. The COVID-19 outbreak has led more people to subscribe to streaming services, including Netflix, and spend less on traditional cable TV and movies in theaters, which means that Netflix has been one of the major beneficiaries of the pandemic (La Monica, 2020).

With its soaring global penetration, Netflix has rapidly increased its revenues, from SI 1.7 billion in 2017 to S15.4 billion in 2018, and to $20.1 billion in 2019 as the number of subscribers has increased from 110 million in 2017 to 167.9 million in 2019.The number of international subscribers surpassed US subscribers in 2017, and it consisted of 63.5% in December 2019 (Netflix, 2017, 2020a). Asia Pacific was the smallest region, in both revenues and paid members; however, the growth rate was much higher than the US market. By comparison, the revenues in Asia in 2019 increased by 55.4% from 2018, while the revenues in North America increased 21%. The number of paid customers in Asia increased as much as 53% during the same period, while it was only 1.5% in North America (Netflix, 2020a).

As the New York Tinies (Lee, 2019) reports, Netflix is in fact an international business platform whose growth (and value) come from Brazil, Mexico, India, and elsewhere. The report continues to claim that “the Asia-Pacific region, which includes South Korea, Japan, and India, is the fastest-growing segment, with 14 million subscribers, more than triple what it had at the end of March 2017, the earliest period for which the numbers were made available.” That region accounts for 9% of its total subscribers, after Netflix gave up on China. Due to its potential with a huge population and emerging economy, Asia has been the most significant target for Netflix, and perhaps later other global OTT service platforms, including Disney+.

 
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