Netflix May Target Russia, Eastern Europe, Australia for Originals Next, Study Suggests

The Rain Still - Publicity - H 2018
Courtesy of Netflix

Ampere Analysis suggests several international markets are underserved by Netflix's local-language series and could be the next targets for production investment by the streaming giant.

Where will Netflix go next?

The global streaming giant — which already boasts 152 million subscribers worldwide — has ratcheted up its non-English language production as it rapidly expands its service outside the U.S.

The company already produces local-language originals in dozens of countries, from thriller Money Heist in Spain to Indian crime drama Sacred Games to German mystery series Dark. With domestic subscriber figures falling — in July Netflix reported its first subscriber loss in the U.S. in eight years — international audiences are becoming ever more important for the streamer.

But where in the world will Netflix next put its production focus?

A new study, published Thursday by Ampere Analysis, suggests the company may target underserved audiences in Russia, Eastern Europe and Australia for the next wave of locally sourced originals.

The study looked at Netflix's local original production and compared it to subscriber penetration in the respective international markets to identify which territories might be next for Netflix's investment.

It found Russia and Russian-speaking territories across the so-called CIS region, were prime targets, given the size of the market and the fact that, so far, Netflix has not produced a Russian-language original series.

"Netflix could face regulatory issues if it tries to produce in Russia," admitted Guy Bisson, director of Ampere Analysis. "But they could benefit from producing a Russian-language series in a neighboring territory, like Ukraine, for example."

Smaller European territories, including Hungary, the Czech Republic, Belgium and Switzerland, are also "crying out" for Netflix series with a "local flavor," the study concludes. In Belgium this week, Netflix announced it has commissioned its first original series, the dystopian drama Into the Night, created by Narcos and Scandal producer Jason George.

“Beyond Netflix’s largest 30 markets, the next 10 biggest markets yet to receive investment include major Central and Eastern European countries like Hungary and the Czech Republic, and several Middle Eastern countries,” Bisson said. "I'd expect announcements of new originals in these markets in the next few months and beyond."

Smaller territories like Saudi Arabia, the United Arab Emirates, as well as Greece, Hong Kong and Peru, could be the next on Netflix's list, Bisson argued, because producing even a single local-language original can have "a massive impact on subscribers" in a territory. Ampere found an "extremely high correlation" between the number of original productions Netflix has in any country and the total number of subscribers in that territory.

Netflix already produces more original series outside the U.S. than in, with around 52 percent of its originals made internationally, according to Ampere's figures. Netflix has been booking up studio space worldwide — see its recently announced 10-year lease for much of Pinewood's Shepperton Studios outside London or its new long-term leases on space in Toronto and British Columbia.

Ampere identified Australia, Poland, Germany and the Netherlands as territories displaying “the characteristics of underweight markets,” arguing that the market potential in those countries suggests Netflix would benefit from upping its production operations there. Australia is Netflix's seventh-largest market, with subscriber figures set to hit 4.5 million Down Under by the end of this year. But Netflix currently has just 12 Aussie original productions, compared to 23 in France, where the streamer has only slightly more subscribers (just more than 5 million). Mexico, which is almost identical in terms of its Netflix subscriber base to the Australian market, has a total of 40 local-language originals. 

While demand in Australia is, for the moment, being met with Netflix's large library of English-language originals, the study found that “productions with a home-baked Australian flavor will pay dividends in a market with strong SVOD penetration," especially in the light of Disney’s imminent launch there of streaming service Disney+. 

In contrast, countries like Denmark and India, as well as several Latin American countries, “appear to have a glut of content and investment” from Netflix, comparable to the size of the streamer's local subscriber base. Ampere explains this by pointing to the popularity of Danish series internationally — Danish show The Rain has become a global hit for Netflix — and to the exportability of Spanish-language content such as Narcos and Club de Cuervos to the U.S.

Inward investment in India is not yet justified by the size of the market there though, Ampere argues. Netflix has 24 originals in India with just over 2 million subscribers in the region, its study found, but Netflix obviously sees significant long-term potential in the region.