مقاله سال ۲۰۱۶

The rapid growth of broadband network and smart devices has changed the pattern of content consumption and encouraged the development of various over-the-top (OTT) services. OTT is defined as “video content offered through an Internet or other Internet Protocol (IP)-based transmission path” (FCC, 2015). The leading global OTT provider is Netflix, which now offers services in over 190 countries worldwide with a subscriber base of 83 million, of which 35 million members are projected to be international members outside of the USA. Around one-third of its revenue comes from international markets.i Netflix continues to expand its international operations and is ambitiously seeking to enter the Asian market. On September 2, 2015, Netflix marked its first entrance into the Asian market by launching its service in Japan. On January 2016, Netflix surprised the industry by announcing a simultaneous launch in 130 additional new regions, including Korea, in a move that marked “the birth of a global Internet TV network.”.

Despite forecasts that Netflix would collaborate with local IPTV providers in Korea, the global OTT service provider started its business as a stand-alone OTT service. Some anticipate that Netflix will shake up the current video content consumption paradigm by offering a wide variety of global content and a marketing mindset unseen among incumbent Korean content providers. However, others doubt the impact of Netflix due to the sluggish growth and mediocre performance of current OTT players in Korea. With a one-month free trial period, Netflix Korea is eager to reach out to domestic users. However, the impact of Netflix seems quite meager in comparison with early expectations, due to various reasons possibly including its comparatively high price.

Netflix plans to reach 200 countries and officially enter mainland China in the near future (Forbes, 2015a). China is a lucrative market for OTT services. With low pay TV penetration and robust population growth, China’s pay TV market assures incumbents and new players significant profit potential (Forbes, 2015b). Successful expansion into China is vital for major OTT players like Netflix as it promises an increase in subscribers, profits, and revenues for future investments in high-quality original content (Shaw, 2016). Unfortunately, Netflix is challenged by strict government control and piracy issues in China. While many users illegally download or watch online videos for free, potential local allies such as Alibaba Group Holding Ltd., Baidu Inc., and Tencent Holdings Ltd. offer similar video services. Global OTT players need a comprehensive understanding of the market and discrete strategies to expand their operations successfully.