Netflix’s key to finding international success might lie in moving beyond the English language.
In January, Netflix launched in over 130 new countries on the same day, bringing it to every major market except China. But there was a problem. Many of the new countries had a Netflix catalogue that wasn’t useful to a big chunk of their citizens.
Analysts from UBS broke it down in a recent note: “The [Netflix] content and website/app was mostly in English without local language subtitles or dubbing and [Netflix] generally accepted only international credit cards as payment.” The analysts wrote that these markets had performed “poorly” as a result.
But this quarter Netflix made a big change in two of those markets: Poland and Turkey. In its Q2 earnings report, Netflix declared that it would roll out local language support for the pair of markets, and followed through on that promise in September.
For Turkey, Netflix has said that means over 80% of its content will be dubbed or subtitled in Turkish, according to The Hollywood Reporter.
This change has made a huge difference in Turkey and Poland, according to analysts at both UBS and Pacific Crest.
“In both markets the ranking of Netflix app downloads has catapulted in September,” UBS wrote, using app downloads as a proxy for general interest and subscriber growth.
Here is the chart for Turkey from UBS:
And for Poland:
Pacific Crest looked at another proxy, Google Search volume, and found a similar trend. Here is the chart from Pacific Crest:
This is certainly good news for Netflix and its investors, but how good?
“We would estimate the incremental change, should it sustain (we only have a couple weeks of data post the investment) could be on the order of +200-500k subs in 4Q16 vs. 3Q16,” UBS wrote. “Further, these results suggest Netflix stands to benefit from other skim market conversions, though Turkey and Poland are among the largest skim markets (13m and 10m broadband homes resp.). India and Russia (24m and 27m) are the other large skim markets, with a very long tail of smaller markets thereafter.”
Netflix will report its quarterly earning on Monday, October 17.
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