Week 2: Media, culture and economy: key themes

Is it possible to watch Netflix content in your ‘home country’, and if so, how do people do it? What kind of Netflix content is available – and can you explain why?

Is it possible to watch Netflix content in your ‘home country’, and if so, how do people do it?

As Netflix continues to grow in popularity worldwide, more countries are joining this massive media platform. There are two ways to watch Netflix: either through an official Netflix subscription or by accessing Netflix-licensed content through media companies. For example, in Hong Kong, users can pay HK$73 to become a member of the local television station TVB, which provides access to a Netflix Open Connect server box for streaming Netflix content. 

When Netflix entered the Hong Kong media market, TVB was the only major media company. From a business strategy standpoint, collaborating with local companies proved to be a more valuable approach for Netflix. Wayne and Castro (2021,cited in Gómez & Muñoz, 2023, p.91) noted, “These pay-TV providers and other telecom service companies occupy a crucial position between national regulations and local audiences”. This is also referred to as “co-opetition.”. Such multiplatform strategies are envelopment strategies that work by “extending another platform’s value proposition and offering it in a multiplatform bundle, by overlapping user bases and harnessing cross-sided network effects to swallow the other platform”(Ranaivoson,2019,p. 104, cited in Gómez & Muñoz, 2023, p.92). Gómez & Muñoz (2023, p.91) suggest that partnering with these companies allows Netflix to streamline subscriber acquisition at the national level and enhance its global presence in the subscription video-on-demand (SVoD) market.

Netflix’s alliances with local multi-platform providers significantly influence the type of content available on the platform. In the media market, consumer taste plays a more crucial role than price (Lee & Jin, 2018, p. 37). This is especially true for Netflix, as an American company, trying to enter the Asian market, which has distinct cultural preferences. They must tailor their content to suit regional tastes and regulatory requirements. In other words, the content must align with the cultural backgrounds of these countries. For example, rather than focusing on violence and action, Asian audiences are generally more receptive to realistic narratives and romantic dramas, such as J-dramas and K-dramas. This strategic approach enables Netflix to engage effectively with diverse audiences across different regions.

Let’s compare Netflix’s top ten lists in Hong Kong and the UK in October. In the UK, the top ten include romance dramas, reality shows, and series featuring violence, such as ‘*Gangs of London’. Only four shows overlap with Hong Kong’s list, all of which are Western romance dramas. Notably, one is ‘Monsters: The Lyle and Erik Menendez Story’, adapted from real-life cases involving violence. All these overlapping shows are produced or acquired by Netflix, making them exclusive to the platform. In contrast, Hong Kong’s top ten primarily consists of Asian romance dramas, anime, and live cooking shows, with six being Asian romance dramas.

As Netflix founder Ted Sarandos pointed out (The Media Show, 2019), Netflix uses personalization algorithms to collect user preferences, allowing it to identify viewers’ tendencies toward local content (Lobato, 2019, cited in Gómez & Muñoz, 2023, p. 92). In media economics, consumer taste plays a more important role than media pricing (Lee & Jin, 2018, p. 37). Therefore, market-tested genres are more likely to resonate with audiences. Thus, Netflix decided to strengthen localized content production. This approach involves pursuing original works that are culturally and geographically diverse (Jenner, 2018; Lobato, 2019; Lobato and Lotz, 2020). On the other hand, this strategy also allows Netflix to increase the intellectual property rights of its content library to address content licensing costs and maximize potential profits (Gómez & Muñoz, 2023, p. 92). This is part of its vertical integration strategy.

 As Hesmondhalgh (2019) points out, Netflix operates differently from traditional media giants such as Hollywood entertainment companies (Gómez & Muñoz, 2023, p. 92). Netflix used original programming [produced abroad] as a way to position itself glocally as the company continued its international expansion efforts（Halprin, 2018). Thus, I agree with Gómez and Muñoz(2023, p. 94) that Netflix is not subject to local jurisdiction due to the extraterritorial nature of the company’s foreign digital services.

This raises a question:

Should Netflix, as a global media company, be responsible for local regulations and standards in the markets it serves?

What do you think?

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References:

• Gómez, R., & Muñoz Larroa, A. (2023). ‘Netflix in Mexico: An Example of the Tech Giant’s Transnational Business Strategies’, Television & New Media, 24(1), 88–105. https://doi.org/10.1177/15274764221082107
• Lee, M. and Jin, D. (2018) ‘Chapter 3: Theories and approaches to study the business of media’, Understanding the Business of Global Media in the Digital Age. Abingdon: Routledge.
• The Media Show (2019) The Story of Netflix with Ted Sarandos. BBC.

To read the full list of references, please go to Reference.