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Media & Entertainment

Disney's ASEAN push heralds brutal streaming war with Netflix

'Avengers' and 'Star Wars' owner stalks rival platforms with regional drive

Disney locks horns with Netflix as it expands distribution of its streaming service across markets in Southeast Asia.

SINGAPORE -- U.S. entertainment giant Disney is poised for a showdown with rival Netflix in the Association of Southeast Asian Nations, as the content provider rolls out its streaming platform in the region backed by a hiring drive to support the service.

Called Disney Plus, the streaming portal had its latest ASEAN launch in Thailand on June 30, having been introduced in Malaysia earlier that month, Singapore on Feb. 23 and Indonesia on Sept. 5 last year -- covering four of the bloc's 10 countries.

The U.S. media company has paired the regional rollout with a concerted hiring effort tied to the platform, advertising positions such as public relations and communications manager for Southeast Asia, growth and acquisition manager for Singapore and Malaysia, and social media manager for Southeast Asia.

"ASEAN represents a massive market, one with growing wealth and a long history of consuming western media," said John Engle, president of U.S.-based Almington Capital Merchant Bankers, a technology investor.

"It is also a natural fit for Disney, which has spent the past several years tailoring ever more content -- including blockbuster films and series -- with an eye toward distribution in Asian markets," he added.

U.S. releases this year by the conglomerate include superhero film "Shang-Chi and the Legend of the Ten Rings" and animated movie "Raya and the Last Dragon," both of which prominently feature Asian cast members and the region's cultures.

Southeast Asia's importance to digital businesses is widely recognized. The gross merchandise value of the region's internet economy is expected to grow threefold to $300 billion by 2025 from 2020, according to research by Google, Temasek and Bain & Co.

The three companies also found that interest in streaming services rose last year amid the COVID-19 pandemic, which forced people to remain indoors as governments imposed movement restrictions.

Online media grew 22% to $17 billion in 2020 from $14 billion in 2019, the research found, boosted by a surge in search interest in video streaming providers -- with an eighteenfold spike observed in Thailand and a twelvefold spike in Vietnam.

Within ASEAN, U.S. content platform Netflix has a five-year advantage over Disney Plus, having rolled out its streaming service in the region in 2016, noted Abhayanand Singh, group chief executive of Vistas Media Capital, a Singapore-based media and entertainment company.

"Both services are leveraging exclusive content and ownership of its own fictional characters to ensure consumer loyalty and subscriber growth," he said.

Disney owns lucrative franchises like the "Star Wars" science fiction series and also superhero titles like "The Avengers" from comic book publisher Marvel.

Netflix boasts exclusive content like the horror-drama series "Stranger Things" and "The Crown," a historical series about the reign of Queen Elizabeth II.

"Eventually, it would come down to which service can provide higher quality programming at a competitive price point and its business model to drive long-term growth sustainability," Singh told Nikkei.

Both Disney and Netflix would not reveal how many subscribers each had amassed for their streaming services in Southeast Asia. In terms of acquiring new viewers, however, Disney appears to have outpaced its rival.

A May report by research company Media Partners Asia listed Disney Plus as having the largest market share of new paying subscribers in the region at 43% in the first three months of the year.

Netflix held just 9% of the market while other Asian content players also had their shares dwarfed by Disney. Viu, a provider of Korean entertainment, held 12%, Thailand's AIS Play 9%, China technology giant Tencent's WeTV 5% and iQIYI, also a Chinese platform, 3%.

"With streaming minutes growing each quarter, we find that the battle for consumer time is not zero-sum, but certainly competitive for smaller streaming platforms," said Dhivya T, an analyst at MPA. "New breakout titles are critical to capture and sustain consumption share."

Globally, Disney Plus has amassed nearly 104 million paid subscribers as of the end of Disney's second fiscal quarter, and is on track to hit 230 to 260 million subscribers by 2024, CEO Bob Chapek said during a recent earnings call.

At the end of 2020, Netflix had over 200 million paid subscribers internationally and an Asia-Pacific customer base exceeding 20 million. Its streaming service is available in all ASEAN countries.

"Competition means that there are more opportunities for storytelling, which is great for creators and consumers," said Malobika Banerji, Netflix's director of content for Southeast Asia.

Jonathan Kok, partner at law firm Withers KhattarWong, said Netflix had been commissioning production companies based in Southeast Asia to churn out locally focused content for the Asian market.

The lawyer, who is part of the firm's intellectual property and technology unit, represents local production companies. Kok said that Netflix, apart from international content, has also tried to curate its library to suit regional demands.

"This is a competitive market and viewers are spoiled for choices," Kok told Nikkei, noting that Asian-focused streaming platforms that offer popular programming such as Korean dramas also compete with U.S. peers to gain subscribers.

"To be competitive and win market share, a streaming platform can't depend on international programs alone, they have to have a good mix of local content that would attract locals to sign up on their platform."

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