It looks increasingly likely that Netflix will have its work cut out in Central and Eastern Europe.
Second quarter results published by the company earlier this week indicated lower than forecast international growth. This, coupled with arguably even more disappointing figures in the US, took the industry by surprise and resulted in a sharp fall in the value of its shares.
Contained in the results was the important news that Netflix will shortly be localising its service in Poland, and indeed Turkey, by adding the local language in the user interface, subtitles and dubbing. This will come into effect as soon as this quarter.
Recently, it was also reported that Netflix would start charging for its service in local currency in Poland. Payments will nevertheless continue to be taken solely through credit cards or PayPal, the use of which are not as commonplace as in Western Europe or North America. However, other options are being considered.
It is also interesting to note that Netflix is planning to undertake co-productions with Polish companies. While no details are as yet available, this will certainly be an important development.
To put things into perspective, a study just published by the media agency MEC showed that only 10%of VOD users in Poland who paid for services stated a preference for Netflix. This put the service in 10th place out of 11, with Cyfrowy Polsat’s ipla the most popular (55%) and pay-TV operators’ own services (5%) the least.
This arguably gives an indication of how far Netflix still has to go in Poland before it becomes an established service, even in the eyes of paying VOD customers.
We should also bear in mind that Poland is one of the region’s most mature and lucrative markets. The chances of Netflix localising its service and undertaking co-productions with local partners will be much slimmer in smaller countries.
Netflix will undoubtedly make its presence felt in Central and Eastern Europe, but the process will take some time. Moreover, it will almost certainly enjoy more success in some markets than others.