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Analysis: Global markets key to Netflix expansion

November 8, 2021

An Ampere Analysis report shows where Netflix is likely to increase its content investment as the streaming giant’s focus of activity becomes more global than ever. Between Q4 2019 and Q3 2020, North American commissions accounted for 55 per cent of Netflix Original titles, but this share fell to 45 per cent between Q4 2020 and Q3 2021—despite the fact that North American commissions increased in volume— as Netflix continued to grow investment internationally.

Comparing the link between Netflix’s subscriber base and catalogue of local titles illustrates where the streamer has an opportunity to expand local libraries to better service existing subscribers and attract new customers. Markets in which Netflix is underweight for local original content include Poland and Turkey – and in these countries, localisation is indeed already underway.

Netflix’s formula for localisation

Markets localised in the last three to four years, such as South Korea, Mexico, and South America, display a common formula in local content acquisition and Original projects. First, an acceleration in the acquisition of third-party titles, small trials of local commissions and then a wider rollout of original local production. This wider rollout begins with a high proportion of movie commissions and is then followed by a regular flow of TV-focused activity— key for driving subscriber retention. After 24 months, a second surge in commissions takes place. This repeating pattern allows Ampere to predict where and when Netflix’s local original content investment is likely to increase.

Poland in line for increased local content

Poland offers Netflix a comparable market size to some secondary Latin America and Western European territories, and indeed Netflix has recently expanded the volume of local third-party titles on offer in the territory. There is now further opportunity for the company to expand its Polish-origin library to better serve existing subscribers and to attract new customers.

Netflix has begun the local commissioning process in Poland, with a spike in commissioning in Q1 2021, with four new films and four TV shows. Based on patterns seen in other markets, and the current slate of Polish originals and acquisitions which continue to drive subscriber growth, Ampere estimates that Netflix is likely to commission a further 16 titles over the next two years (including four more original films), in addition to further expanding its current third-party local catalogue.

“Between Q4 2019 and Q3 2021 Netflix increased the volume of original titles being commissioned, with international now the focus of activity,” advises Richard Cooper, Research Director at Ampere Analysis. “This strategy outstrips that of its international competitors, due to Netflix’s relative maturity and the company’s drive to acquire ever more subscribers. The increase in commissioning outside the USA underscores the importance of international markets to Netflix’s continued global expansion.”

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