By R.T. Watson
Tech companies and Hollywood studios are increasingly looking to
expand their streaming services abroad by spending more money on
developing local content geared to the billions of potential
overseas subscribers as the U.S. market becomes saturated.
Following the lead of Netflix Inc., companies such as Walt
Disney Co. and Amazon.com Inc. are pulling away from the production
and distribution model of old, in which Hollywood shipped its
movies and TV shows abroad, with the content dubbed or subtitled
for the local market. Now, with a direct line to consumers through
global streaming platforms, these companies are investing billions
of dollars to make culturally specific, local-language content to
woo subscribers.
"What you're seeing is more and more streamers come online
realizing the vast majority of their consumers are going to be
outside the U.S., over time," said Erik Barmack, a former Netflix
executive who during his tenure at the company spearheaded
international production. "The question is how international does
your content need to be to be successful."
The rise in overseas production is spurring a historic boom of
new films and TV series in many different languages, including
Hindi, French, Portuguese, German and Polish. The emphasis on
global content is creating more work and competition for
international producers and storytellers, while also ushering in a
new era in which Hollywood-made American content plays a smaller
role in the world-wide entertainment industry.
The number of streaming subscriptions world-wide exceeded 1.1
billion last year, up from fewer than 400 million subscriptions in
2016, according to the Motion Picture Association. The growth was
driven by Netflix's overseas expansion, Disney's launch of its
Disney+ service and a pandemic that kept many people at home.
Netflix's quarterly results this week showed the importance of
the overseas business. The company said that 89% of its nearly four
million new customers in the year's first three months came from
outside the U.S. and Canada, and that its most-watched new series
during the quarter was "Lupin," a thriller set in Paris that is
inspired by a literary gentleman thief.
"The show was not like a watered-down French show; it was a very
French show," said Netflix's co-chief executive and chief content
officer, Ted Sarandos, adding that with international films and
series, "the more authentically local they are, the more likely
they are to play around the world." In a sign of how tastes are
evolving in Hollywood and world-wide, South Korea's "Parasite" last
year won the Oscar for best picture, the first time a
non-English-language film took the prize.
Netflix's drive abroad is part of a paradigm shift in which
content fashioned with Hollywood-level production values is being
created all over the world for one digital platform. In the past,
new TV shows and movies -- especially those produced by Hollywood
-- were distributed to consumers in a much different way.
"Over the years, media companies have been really great at
exporting Hollywood content around the world," Mr. Sarandos said.
"We started launching in international territories with no original
programming in local language with local producers. And now we're
producing in most corners of the world."
About half of the new content Netflix is developing are
productions based outside the U.S., with roughly 38%
non-English-language content as of mid-March, according to media
measurement company Ampere Analysis. In South Korea, Netflix
recently announced it would invest $500 million there in
local-language content.
Netflix projects spending more than $17 billion on content this
year, and between 2018 and 2020 it doubled its investment in
non-English original content. Netflix is in over 190 countries and
has more than 200 million subscribers world-wide.
As for Disney, Ampere said, 24% of the new content in
development is based overseas. Only 3% of Disney+ content
originated outside the U.S. as of mid-March, Ampere said. Disney is
in 59 countries and has nabbed more 100 million subscribers in
about a year and a half.
Disney said during its investor day in December that it would be
spending up to $9 billion a year on content for Disney+ by 2024,
which would include 50 international projects. Then, in February,
it announced a slate of 10 European projects for countries
including France, Italy and Germany.
At Amazon, the volume of original, local-language content being
produced has doubled each year since 2017, said James Farrell, head
of international originals at Amazon Studios. "If you're going to
have a successful service in Japan or Brazil you've got to have
Japanese shows, Brazilian shows," Mr. Farrell said.
Amazon recently said that its Prime service has more than 200
million subscribers and that the number of international
subscribers streaming video jumped by more than 80% in 2020
compared with the previous year.
While growth opportunities abound overseas, at home in the U.S.,
the market has become saturated in recent years as more companies
launch streaming services. More than 80% of American consumers
subscribe to at least one paid streaming service while the average
subscriber pays for four services, according to a Deloitte report
published this week.
Joining Amazon, U.S.-based streaming rivals such as AT&T
Inc.'s HBO Max and Apple Inc.'s Apple TV+ are increasing spending
on local-language content as they chase international subscribers.
Apple TV+ is available in more than 100 countries, and HBO Max
plans to be available in more than 50 by the end of the year.
The push to create more content abroad is disrupting the global
entertainment industry. The moves have triggered increased
competition for writers, actors and crew members outside Hollywood;
threatened entrenched broadcast networks and distributors in other
countries; and raised questions about equal pay and ownership.
In Europe, the race for content is forcing local players to be
more aggressive when bidding for projects, according to several
industry leaders. "It's a very competitive environment," said
Martin Moszkowicz, executive chairman of German-based Constantin
Film, which has worked with major U.S. streaming services.
Sanford Panitch, a former executive at Fox International
Productions who now presides over Sony Pictures Entertainment
Motion Picture Group, said it wasn't that long ago when Hollywood
shunned the idea of executives' focusing on local-language content
for international markets.
"It was incredibly unpopular, and almost weird and unheard of 10
years ago," he said. "The profit and loss statements used to say
'U.S. and Other.'"
Write to R.T. Watson at rt.watson@wsj.com
(END) Dow Jones Newswires
April 22, 2021 05:44 ET (09:44 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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