Netflix cannot find grip on Vietnam

Netflix and other OTT media service providers are held down by the abundance of illegal streaming websites Photo: shutterstock

Since late last year, international newswires have been calling attention to the global streaming giant’s spectacular rise, which is forecast to soon threaten the domination of cinemas across the globe.

Specifically, The Washington Post stated, “In 2017, the numbers were stark. Box-office dollars went down, by 2 per cent, a historically troubling sign given that ticket prices and the US population growth every year. Admissions – the industry term for the number of tickets sold – dropped 6 per cent to $1.24 billion, the lowest in 23 years.”

The newswire also indicated that this coincided with an 11 per cent spike in the number of Netflix subscribers in the US, a gain that put the streaming service’s tally of US consumers above the 50 million mark for the first time.

However, contrary to Netflix’s conquest in the US, despite entering Vietnam nearly three years ago, it has yet to replace websites illegally streaming movies to dominate the country’s consumers with its library of authenticated movies.

Local newswire ictnews.vn stated that as of last October, the total number of Netflix subscribers in Vietnam was only 300,000, a minuscule amount compared to the country’s population of more than 90 million.

Popular illegal streaming, unpopular e-payment

Vietnamese people are used to watching movies and TV shows on illegal streaming websites movies, and a marked preference for cash payments is the main reason behind the languid interest in Netflix in Vietnam. Setting up operations like in other countries, Netflix requires local people to pay fees via internationally-accepted credit or debit cards, which currently only make up a tiny portion of transactions in Vietnam.

According to data published at the Banking Vientam 2018 conference, 40 per cent of the Vietnamese population hold bank cards, but 90 per cent of daily transactions are in cash.

In addition, illegal streaming sites remain a big obstacle for Netflix in Vietnam. According to data published at the latest workshop on protecting the copyright of television content, the total number of visitors of illegal movie streaming websites in 2017’s first half was 236 million, 29-times higher than the total visitor number of authenticated websites.

Vu Anh Tu, executive vice president of FPT Telecom JSC, the owner of local authenticated streaming application FPT Play, told VIR that although in 2018 the amount of movies on illegal websites was cut by local authorities, they were still easily accessible. Thus, FPT Play cannot increase its customer base by a sufficient margin and finds it difficult to recover investment costs to keep producing content.

“Our calculations show that about 50-60 per cent of Vietnamese consumers access illegal websites, meaning authenticated websites miss out on more than half of the local consumers,” Tu said.

Until now, watching movies and TV shows on illegal websites has been an everyday norm in Vietnam because in addition to them being free, the resolution of the movies is on par with authenticated websites. Thus, it is difficult to corral Vietnamese consumers into paying for services that are available for free on illegal websites.

Golden road for cinemas

The unpopularity of Netflix and similar services leave cinemas the only choice in Vietnam to enjoy blockbusters and movies the copyrights of which are exclusively held by giants like CGV Vietnam, Lotte Cinema, and BHD.

According to statistics from the Vietnam Film Distribution Association (VFDA), cinemas in Vietnam reached VND3.22 trillion ($142.47 million) in revenue in 2017, up 13.6 per cent on-year. South Korean conglomerate CJ’s CGV Vietnam is in the lead with 45.3 per cent market share.

Previously, CGV Vietnam expressed the company’s belief in the growth speed of the Vietnamese cinema segment. “In 2017, annual admissions in Vietnam were roughly 45 million, which is expected to reach 54 million in 2018,” it said.

In addition, the local cinema segment’s annual growth rate of 25-30 per cent is also forecast to last for the long-term. And of course, the appearance of Netflix and local authenticated over-the-top (OTT) media services do not yet threaten cinemas.

“We are targeting young people who have a high proclivity for social activities and have a true demand for the cinema experience. This customer segment is different from Netflix’s target consumers which include people who are more willing to stay in the comfort of their home,” a CGV Vietnam representative told VIR.

Similarly, Danny Quach, director of BHD Star Cineplex, a local cinema chain, told VIR that at present, Netflix may not be able to impact the local cinema market, but it is hard to predict the future.

Future for OTT services

Despite the prospects of the cinema segment, OTT media services are an undeniable global trend. In fact, to compete with cinema exclusives and blockbusters, Netflix has taken to producing its very own TV shows and movies in the US.

Global trends suggest that once local authorities manage to settle the abysmal copyright situation, authenticated websites will find far more fertile grounds in Vietnam.

As nine out of 10 Vietnamese people use OTT services on a weekly basis, according to US-based information, data, and measurement company The Nielsen, the country remains a promising market for companies in this business line. Recognising the trend, OTT applications like Keeng and Onme (backed by Viettel Group) or VTV Go (backed by Vietnam Television), and the five-year-old FPT Play (FPT Group) are making strong efforts to conquer the market.

Tu from FPT Telecom told VIR, “To maintain FPT Play’s income, we currently run both advertisements and charge user fees. However, once local authorities tighten copyright management, there will be huge opportunities for FPT Play and similar services to develop. At the time, we will no longer depend on advertising income and people will be more likely to opt for non-cash transactions.”

This time will also hallmark more pronounced competition among OTT service providers. Regarding the issue, Tu also said, “FPT Play focuses mainly on modern trends and the rhythm of life in Vietnam, while Netflix brings a global service that will find it quite difficult to attract attention in the country. For instance, in 2018, FPT Play broadcasted and ran coverage of Vietnamese football leagues, which Netflix obviously neglected. We understand the taste of locals more and aim to focus on customers other than Netflix.”

In fact, Netflix has been carrying out its localisation strategy to conquer Asia. In last November, Netflix has entered into co-operation with South Korean, Thai, Japanese, and Taiwanese televisions to broadcast 25 TV shows on its platform. Thus, if Netflix turns a more serious eye on Vietnam, it could look to co-operate with local television channels to bring a taste of home to Vietnamese viewers.