Netflix’s global earnings were released this morning, and they were disappointing. The share price was down 8% in after-hours trading, and the company pointed its fingers squarely at one particular region.
Australia and New Zealand.
In its quarterly letter to shareholders, Netflix blamed a slower international growth on what is basically a flatline of subscribers in the ANZ market. The company pointed out that international net adds more than doubled in the same quarter last year when it launched in the market.
Netflix also said that if you didn’t include ANZ in its international growth numbers, the international net adds would actually be up.
But this growth problem comes down to one thing. Content. This is why there’s such an emphasis on it creating and promoting its the Netflix stable of shows. Globally, it’s paying off, with flagship brands such as House of Cards and Orange is the New Black becoming global hits and sweeping the Emmys.
This can only go so far when you jump into a new market. And Australia is still one of those new markets.
At launch, Netflix’s US library was a massive six times the size of Australia’s, boasting over 7200 titles, while the Aussie one featured 1120.
Even today, that title gap isn’t all that much better, and has only really improved because Netflix in the US has skimmed some unwatched titles. As of February 2016, Netflix Australia had just over 2000 titles, while in the US it featured a little under 5800. Still, that’s a difference of almost 4000.
That is a lot of television.
In fact, Finder has a neat table that lists all global Netflix regions in order of the size they are compared to the US offering. Australia comes in at a little over 36% of the size, and sits at 59th in the world in terms of library size.
Before Netflix even landed in Australia, existing rights holders began hoarding the rights to shows, preventing the giant from boasting a library the size of its US counterpart. Even its own shows were locked up with existing rights deals, with Foxtel holding first run rights to season 3 of Orange is the New Black, and still has rights to season 4 this year.
The Nine Network, which owned the commercial TV rights to the hit show Gotham, even delayed the airing of it to push back the digital rights becoming available for Netflix.
In the US, Gotham began airing on 22 September 2014 and finished on 4 May 2015. Nine delayed its Australian premiere by a month, and its finale even longer, which meant Netflix didn’t have access to the show until October 2015.
There’s more competition with rights in Australia too, with two new streaming services in Stan and Presto also trying to find their feet and win customers, they’re swooping in and grabbing rights ahead of Netflix.
Stan has been the biggest player here, with huge shows such as Friends and Breaking Bad available on the service here, which are on Netflix in the USA.
Netflix says that its library is tailored for each region, which to an extent is true, but really that’s just a nice way of saying we don’t have the rights for your region yet.