The success of Korean shows “Vincenzo” and “Squid Game” and Japanese anime like “Attack on Titan” justifies Netflix’s massive spending on Asian films and TV content.
The streaming giant is expected to grow its revenue in the Asia-Pacific region by 24% this year with subscriber numbers ballooning 20%, according to new research by Singapore-based consultancy Media Partners Asia.
This optimism contrasts with investment sentiment in January when Netflix released its full-year December quarter and 2021 data, and fueled concerns in the financial community with its (global) outlook for the first quarter.
Media Partners Asia’s latest notes about the company suggest that Netflix could increase APAC’s revenue by 24% in the current year through December, to $4.1 billion. Subscriber numbers are expected to rise 20% to 39.1 million. The strongest growth was in Australia, Japan, South Korea and parts of Southeast Asia.
Japan is expected to generate revenues in 2022 of $1 billion; Australia has a net worth of $976 million, and Korea $751. Southeast Asia will contribute 18% of the regional total, or roughly $750 million, led by Thailand and the Philippines.
Media Partners Asia estimates that Netflix will spend on local content of $450 million in Japan, $120 million in Australia, and $750 million in Korea. The company said last year that it would spend nearly $500 million on Korean content in 2021, but it has not publicly provided a figure for the current year.
Given the potential to export Korean and Japanese content, this kind of spending might be justified. Media Partners Asia says “Netflix’s economics will improve even further [in Asia-Pacific] in 2022.”
“Korean originals and acquisitions had strong mobility and strong impact in 2021,” said Media Partners Asia, led by companies Vincenzo and Squid Game. In 2022, of the 10 new titles released through Q1 (8 series, 2 films), 7 Korean dramas ranked among the top 12 titles in Asian territories measured by MPA’s sister company AMPD (Korea, Southeast Asia, Japan, Taiwan, and Australia) . Among this year’s leaders are “We Are All Dead”, “Our Beloved Summer” and “Juvenile Justice”.
The researcher said that K-dramas with weekly episode releases “have had a more sustained impact on consumer demand than those with a large number of episodes.”
The Netflix-acquired animation has the ability to navigate around the region, led by “Black Clover.” The original anime hasn’t made much of an impact yet. Some local adults in Japan do not travel, but the adults who do are “Demon Slayer” (limited areas) and “Attack on Titan”. Both series released new episodes during the first quarter of 2022.
“Korean dramas and US original Netflix shows are expected to retain their influence until 2022,” Media Partners Asia said. “With increasing investment, Japanese and Korean non-scripted reality shows could become great genres in 2022.”
India is still a much tougher story for Netflix. To stay in the game, Netflix has lowered its prices in India across the plans by 20-60%. This had an immediate impact and boosted Netflix’s share of streaming minutes watched in India from 5% of the total to 7%. But it still lags behind market leader Disney+ Hotstar by 34%.
Media Partners Asia estimates that India will have the highest subscriber growth of any Asia Pacific market for Netflix in 2022 with 2.2 million net additions, but lower revenue per consumer, will stabilize revenue growth. It expects $261 million in 2022 compared to $236 million in 2021.
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