Can Netflix win over markets such as HK and Taiwan with its Chinese content offering?

In November last year, Netflix announced that it is ramping up on its Chinese content offering by introducing a slate of Chinese-language content from Hong Kong and Taiwan, such as Hong Kong’s action film Warriors of Future, Taiwanese fantasy series Agent From Above and Taiwanese LGBTQ+ show The Nipple Talk.

While Netflix’s recent acquisition certainly makes for an interesting indication of the emerging power of Chinese content, it is worth noting that as early as 2015, Netflix had already begun acquiring director Zheng Xiaolong’s costume drama Empresses in the Palace.

In a conversation with MARKETING-INTERACTIVE, Vijay Kunduri, RVP OTT and CTV, APAC at PubMatic said that the early move in 2015 definitely gave the Chinese television series and industry an international breakthrough. Needless to say, since 2015, the quality of storytelling, cinematography, and artistry and the “fantasy epic” nature of Chinese TV and web series has only got better – much of which Kunduri said can be attributed to growing legions of foreign audiences.

Further agreeing on the increase in quality of Chinese content is Caterina Camerata, head of strategy, Publicis Media Hong Kong (PMHK) who said the rise came as early as a decade ago when Chinese OTT players started entering the content production arena bringing more variety and innovation.

“In just few years, we saw the quality of content raise at incredible speed, creating iconic programmes that have been streaming outside mainland China through international spinoff of Chinese OTT players or via YouTube,” Camerata said. Giving the example of Yanxi Palace that was ranked as the number one most googled show on earth as early as 2018, she elaborated that the pandemic only served to accelerate and diversify the global audiences’ appetite for content. 

Will Chinese content work for markets such as Hong Kong and Taiwan?  

According to a report titled Taiwan Online Video Consumer Insights and Analytics 2022 conducted by Media Partners Asia (MPA), the SVOD paying subscribers in Taiwan topped 4.1m at year-end 2021. Among the largest SVOD-based premium platforms, Chinese content efforts pay off with Netflix’s Light the night and iQIYI’s Danger zone and Rainless love in a godless Land driving strong subscriber demand, according to MPA’s executive director Vivek Couto.  

It is also worth noting that viewers in Hong Kong and Taiwan generally subscribe to Netflix to access international content. On the other hand, platforms such as iQIYI, MyVideo, KKTV, Line TV and CatchPlay+ catered to the Chinese content audience. However, this has slowly started shifting.

According to Antony Yiu, chief executive officer of PHD Media, platforms such as Viu, which gave birth to stars such as Mirror have helped keep audiences in markets such as Hong Kong glued to their screens. As such, adding on Chinese content is a “very strategic move” to grow the user subscription based in Hong Kong due to the surge in popularity in local movies in both markets.

Meanwhile, PubMatic ‘s Kunduri added that Netflix’s growth in Asia comes on the back of content offerings through Korean and Japanese, local Taiwanese and Chinese content, and markets such as Taiwan has piqued its interest in Chinese content. “By offering more diverse content ranging from International to Asian, it hopes to chip away the market share of some of the local players,” he said. 

Having a slightly different view on the role that Chinese content will play in markets such as Hong Kong and Taiwan is Ranga Somanathan, former CEO of Omnicom Media Group. “In my opinion, it is less to do with acquiring more customers than to have Chinese content as table stakes, when operating in HK and TW. It will be a struggle for Netflix to stack up to the Chinese OTT players with Chinese content,” he said. 

As such, for markets such as Hong Kong and Taiwan, Somanathan said Netflix is better off presenting international content to draw new subscribers. Where the opportunity lies is in using the procurement of Chinese content to drive growth of audiences in SEA and North Asia regions.

How will it help with advertisers?   

In November 2022, Netflix started its venture into embracing advertising dollar by launching a new subscription mode namely “Basic with Ads”, which is an ad-supported subscription plan that allows viewers to enjoy movies and TV shows at a lower price. 

On the other hand, Disney+ rolled out its ad-supported tier, “Disney+ Basic,” in December 2022 to compete with Netflix. The plan is currently only available in the US and will be available in other countries sometime this year.

According to Vishnu Mohan, ex-CEO and chairman APAC of Havas Group, the OTT universe has seen an accelerated growth under the arrival of new players of global, regional and local levels, as well by increased consumer demand for content during the pandemic. However, the resulting fragmentation has seen consumers being very picky about their subscription choices, resulting the fall in new subscriptions and even cancellations from existing subscribers.

“Consistent good quality content both original and distributed will be key to arresting these but that would call for more costs which platforms are now looking at an ad supported model to defray them,” said Mohan. 

Meanwhile, in Somanathan’s view, the acquisition of Chinese content helps OTT platforms to power their growth. “With international, regional and local OTT platforms vying for high quality content, I see a great opportunity for local TV stations and production houses, to pivot their business model from just being ad-funded, to embracing creative economy by producing high quality content for international streaming services,” said Somanathan.

Will international OTT platforms acquire more Chinese content?  

Given that the benefit of acquiring more Chinese content, PHD’s Yiu claimed that OTT platforms such as Netflix and Disney+ will slowly acquire more Chinese language shows. However, he doubted that they will be a sudden rapid expansion of their Chinese content inventory.   “Regional players such as iQiyi will continue to thrive in the short to midterm due to the massive content inventory that they have across all genres,” said Yiu.

Facing iQiyi as one of the global platform's competitors, PMHK’s Camerata agreed that they will continue acquiring Chinese Content to grow their consumer base, as well as to ensure they have the rights for the next big hit.

"Regional players still have the competitive advantage to be more in tune with the local audiences, have stronger existing relationships with local content providers and they have already penetrated these markets with ‘freemium’ model, which is most suitable for these audiences. However, the battlefield is increasingly cluttered and definitely we will see the weaker players leave the market," said Camerata.

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