Netflix is losing the streaming wars

Netflix stock value down 34.35%. (Screenshot from Google Finance)

Netflix has spent the past decade leading the world in streaming but now they’re losing subscribers as much as 200,000 within the first quarter—a far cry from the 2 million the company predicted they’d gain. In January, Netflix announced its first monthly subscription increase in two years—leading to a loss of 600,000. Their stock is down more than 25% and next quarter, Netflix expects to lose another 2 million subscribers,

In the old days, shows, movies, and the rest of Hollywood were willing to let Netflix have their old stuff because they thought no one wanted them enough to pay. 

Now all the big film and TV companies have figured out the gold rush that is streaming. HBO, Hulu, Paramount, Peacock, Apple, Amazon, and many other streaming services have taken back their handouts and are competing with Netflix for new titles. 

It's gotten so bad that Co-CEO Reed Hastings has said that the company was going to eventually add a cheaper ad-supported version of their services. For years, Netflix has insisted they were better because they were ad-free (if you don’t count the shameless product placement).

Arguably, plenty of people are still watching Netflix. It's still the largest streamer with roughly 222 million subscribers. The company’s investor letter includes a chart showing that Netflix’s share of “total TV time” in the US has actually increased in the last year. But it’s also a chart that shows just how much competition the company is facing, taking away customers’ time and subscription dollars.

So much so that Netflix is looking at gaming, which launched last November, as part of their international strategy in getting more of the slice of that consumption time.

Maybe it’ll work. After all, The Adam Project and Bridgerton can’t keep suffering from chronic back pain from carrying Netflix. They could do with taking cues from Viu CEO Janice Lee.

Not one-size-fits-all but tailor-made

Viu has overtaken some of the largest streaming companies on its main turf despite Netflix doubling down on Asia. With 7 million paying users at the end of 2021, Hong Kong-based Viu is the second-largest streaming service by paid subscribers in Southeast Asia and Hong Kong, second to Disney Plus’ 7.2 million. Viu has amassed a viewer base of almost 60 million monthly active users across 16 markets, including the Middle East and South Africa.

Viu first gained market share by feeding Southeast Asian viewers’ appetite for Korean shows and movies, plus some Japanese and Chinese language productions. 

Then Viu goes a step further with their content-localization strategy to gain viewership in markets far beyond their own, such as South Africa. They tailor content by adapting international hits to star local talent. 

Viu not only caters to individual countries but also to cross-border and pan-Asian viewers. People’s tastes are more open-minded now and Thai content, for example, has shown that it works in more than its own market. 

Lee’s “built in Asia for Asia” playbook includes free ad-supported content and subscription-only content. Viu’s revenue—which is split equally between advertising and subscriptions—grew 37% to $142 million last year. 

While lockdowns have triggered the region-wide surge in video streaming, key Southeast Asian markets such as Indonesia, Philippines, Singapore, and Thailand more than doubled to 25.7 billion hours in the first quarter of 2021 from a year earlier, and climbed to 27.7 billion hours in the fourth quarter. 

“It’s not like the internet bubbles of the past,” notes Lee. “This is an evolution of consumer behavior that’s here to stay.”

To stay ahead, Viu is ramping up its own content. Its newly created Viu Original Studio is set to launch more than 30 original productions this year that will include content in six languages. It also expanded its Korean and Chinese productions targeted at pan-Asian audiences. Viu previously produced close to 300 titles largely by commissioning local production houses.

Viu started licensing the distribution of its content beyond its core markets in a bid to diversify revenues. “We have been distributing our content beyond the Viu markets, into Japan and Taiwan, even in North America,” says Lee. “That allows us to fine-tune what we produce, reflect on whether we are producing the right content; is there a market for our content beyond ourselves?”