WEBVTT - Weekend Listen: BTS Leads Netflix’s Push for Growth in Asia

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News.

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<v Speaker 2>After nearly a four year break, kpop super group BTS

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<v Speaker 2>is back.

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<v Speaker 3>Everyone here and everyone watching on Netflix around the world,

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<v Speaker 3>thank you for joining us tonight.

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<v Speaker 2>More than one hundred thousand fans watched their comeback concert

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<v Speaker 2>promoting a new album this past weekend in Soul, and

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<v Speaker 2>millions more watched live on Netflix. It's the first time

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<v Speaker 2>the group's seven members have shared the stage since twenty

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<v Speaker 2>twenty two, when they took a break to complete their

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<v Speaker 2>mandatory military service. In k pop, tastes change fast and

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<v Speaker 2>groups come and go quickly, but BTS has proven they've

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<v Speaker 2>got staying power. Tickets for the band's upcoming world tour,

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<v Speaker 2>all eighty two shows sold out almost instantly. Bloomberg's Asia

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<v Speaker 2>Entertainment correspondence So He Kim was at the Netflix show

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<v Speaker 2>in Seoul.

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<v Speaker 4>They have this army as a fan base who's willing

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<v Speaker 4>to buy the hundred copies of the albums, streaming endlessly

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<v Speaker 4>their music, and attending concerts a couple of times.

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<v Speaker 2>The performance was also a significant milestone for Netflix. It's

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<v Speaker 2>the platform's first live streamed concert from Asia and only

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<v Speaker 2>its third live event in the region.

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<v Speaker 5>Netflix's deal with BTS speaks to the growing importance of

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<v Speaker 5>Asia as a region for the world's largest streaming service.

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<v Speaker 5>It's been the fastest growing region in the world for

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<v Speaker 5>them the last few years.

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<v Speaker 2>Lucas Shaw is the managing editor for Media and Entertainment

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<v Speaker 2>at Bloomberg and writes its screen Time newsletter. He says

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<v Speaker 2>BTS is big comeback has given Netflix a golden opportunity

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<v Speaker 2>to build an audience with fans who aren't Netflix customers yet.

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<v Speaker 5>The return of BTS is one of the if not

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<v Speaker 5>the biggest cultural moment of the year in the region.

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<v Speaker 5>They're the most popular boy band in the world. They're

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<v Speaker 5>the most popular pop back Korea has ever produced, and

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<v Speaker 5>so this is an opportunity to try to draw in

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<v Speaker 5>a lot of fans from across the region who haven't

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<v Speaker 5>tried Netflix is even though there you know, Netflix has

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<v Speaker 5>tens of millions of customers in Asia, there are billions

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<v Speaker 5>of people and probably hundreds of millions of BTS fans.

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<v Speaker 2>This is the big Take Asia from Bloomberg News. I'm Wanha.

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<v Speaker 2>Every week we take you inside some of the world's

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<v Speaker 2>biggest and most powerful economies and the markets, tyccoons and

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<v Speaker 2>businesses that drive this ever shifting region. Today, on the show,

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<v Speaker 2>BTS is Back and Netflix is using the boy band's

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<v Speaker 2>popularity to boost its dominance in Asia, we look at

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<v Speaker 2>how Netflix and its competitors are chasing growth in the

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<v Speaker 2>region and what strategies they're using to grab market share.

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<v Speaker 2>Bloomberg Showhee Kim has been covering K pop for a decade,

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<v Speaker 2>long enough to watch BTS's explosive rise in real time.

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<v Speaker 2>She remembers the first BTS press conference she attended. It

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<v Speaker 2>was early in their careers, after they became the first

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<v Speaker 2>K pop group to win at the Billboard Music Awards

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<v Speaker 2>in twenty seventeen. That year, they beat out the likes

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<v Speaker 2>of Justin Bieber and Ariana Grande for the Top Social

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<v Speaker 2>Artist category. And we still cannot believe that we're standing

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<v Speaker 2>here on this stage at the Billboar Musical Wars.

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<v Speaker 4>Oh my gosh, they were young.

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<v Speaker 3>I was young, and they looked like a very big

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<v Speaker 3>pop star already, but I could sense that they were

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<v Speaker 3>still boys.

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<v Speaker 2>Now, almost a decade later, Sooey says, the band has

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<v Speaker 2>clearly grown up.

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<v Speaker 3>Ten years after the big stardom and the military service,

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<v Speaker 3>and now they are in the thirties and I'm now

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<v Speaker 3>in thirties. The answers and the vibe that they've been

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<v Speaker 3>giving me during the interview was very mature and thoughtful.

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<v Speaker 2>K Pop as a genre has matured too. In twenty seventeen,

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<v Speaker 2>when Sooey first met BTS, kpop was relatively new to

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<v Speaker 2>global audiences, big in parts of Asia, but far from

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<v Speaker 2>the nine billion dollar business it is today.

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<v Speaker 3>K Pop started as the Korean language pop, but if

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<v Speaker 3>you listen to the music, it's not just Korean language

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<v Speaker 3>where Korean sound, it's more of a mix of a

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<v Speaker 3>lot of pop genres, and now K pop bands are

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<v Speaker 3>singing a lot in English, so I will say it's

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<v Speaker 3>more of like borderless genre right now.

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<v Speaker 2>K pop's borderless appeal is one reason tens of thousands

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<v Speaker 2>of fans from all over the world gathered in Soul

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<v Speaker 2>for the comeback. Bloomberg's Lucas Shaw says Netflix hopees moments

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<v Speaker 2>like this can act as a powerful on ramp, giving

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<v Speaker 2>BTS's massive, highly engaged fan base a reason to sign up,

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<v Speaker 2>sample the platform, and ideally stick around as long term subscribers.

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<v Speaker 3>Well.

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<v Speaker 5>The main way for Netflix to make money off this

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<v Speaker 5>is to get people to sign up to pay for Netflix, right,

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<v Speaker 5>they're not selling it as an add on. You know,

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<v Speaker 5>they're not a lot of acts where I think they'd

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<v Speaker 5>want to do live concerts like this, just because there's

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<v Speaker 5>only a handful of acts at the scale of a BTS.

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<v Speaker 5>And I imagine they would want this to be part

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<v Speaker 5>of an ongoing relationship with the band. They'd love to

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<v Speaker 5>have there be somewhat regular documentaries or touch points, just

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<v Speaker 5>because BTS has stretched a strong and passionate fan base.

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<v Speaker 2>Netflix hasn't disclosed how much it costs them to stream

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<v Speaker 2>BTS's opening show, but the BTS Live comeback gave the

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<v Speaker 2>platform a rare chance to make a big splash in Asia,

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<v Speaker 2>and it worked. The live stream drew more than eighteen

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<v Speaker 2>million views and it was the most watched show on

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<v Speaker 2>Netflix for the week. That's exactly the kind of global

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<v Speaker 2>attention Netflix is betting on.

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<v Speaker 5>I would view it as a continuation of a strategy

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<v Speaker 5>where they do a small number of major live events

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<v Speaker 5>and they want each one of them to feel special

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<v Speaker 5>and loud. But it's in keeping with you know, they

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<v Speaker 5>had the World Baseball Classic in Japan. You know, they

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<v Speaker 5>don't have a full season of football. They do Christmas

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<v Speaker 5>Day football. They don't have a full season of baseball.

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<v Speaker 5>They're doing Opening Day and the home Run Derby, and

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<v Speaker 5>so you know, what better way to have their first

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<v Speaker 5>concert than a live show with one of the biggest

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<v Speaker 5>acts in the world.

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<v Speaker 2>Lucas says BTS is just one part of a bigger push.

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<v Speaker 2>Netflix has been investing heavily in CAREA and in Korean

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<v Speaker 2>content because the returns have been impossible to ignore. Squid Game,

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<v Speaker 2>the gory dystopian Korean thriller, remains Netflix's most watched title

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<v Speaker 2>of all time. Its first season generated and estimated nine

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<v Speaker 2>hundred million dollars in value and spawned multiple seasons, and

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<v Speaker 2>now Netflix is planning a k pop Demon Hunter's World tour,

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<v Speaker 2>building on the runaway success of its most popular movie ever.

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<v Speaker 5>The customer base in Korea first streaming is not a

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<v Speaker 5>top five market, but as a producer of film, television

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<v Speaker 5>and some of these music properties, it's punched away above

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<v Speaker 5>its weight.

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<v Speaker 3>Right.

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<v Speaker 5>It's been the most important in Asia by far, because

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<v Speaker 5>Korean film and television is popular not just at home,

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<v Speaker 5>but in Japan and tauth East Asia and increasingly elsewhere.

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<v Speaker 5>I'd say it's one of the three or four most

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<v Speaker 5>important markets outside of the US.

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<v Speaker 2>In Korea definitely holds the crown for content right now.

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<v Speaker 2>Asia is huge, though, so when Netflix looks at the

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<v Speaker 2>rest of Asia, where do they see the biggest growth opportunities.

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<v Speaker 3>Japan remains a very high value metro market with very

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<v Speaker 3>strong will needs to pay. So they've been working on

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<v Speaker 3>a lot of jills in Japan and they spend a

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<v Speaker 3>lot of money on WBC live streaming scale wise, India

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<v Speaker 3>and Southeast Asia over the long run could give them

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<v Speaker 3>some massive skill but for now it's a lower revenue

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<v Speaker 3>per user. So I think the opportunities like lies in

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<v Speaker 3>tailoring price and content that they are going to have

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<v Speaker 3>in each market.

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<v Speaker 5>And of course there's China right huge market, but totally inaccessible.

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<v Speaker 5>They've tried. Any Western company, or really any foreign company

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<v Speaker 5>needs to have a license or really have a local

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<v Speaker 5>partner that controls the business. It would be sort of

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<v Speaker 5>a you know, a separate venture. Netflix had tried for

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<v Speaker 5>a few years, but it probably wasn't going to happen,

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<v Speaker 5>And I think they also made a decision looking at

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<v Speaker 5>how much money would be required to invest in China

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<v Speaker 5>to make it work, you know, billions of dollars that

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<v Speaker 5>that was money better spent on places like India and

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<v Speaker 5>Japan that were equally large.

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<v Speaker 2>Global streamers like Netflix, Disney Plus, and Amazon Prime all

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<v Speaker 2>see Asia as a driver of growth, but it's also

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<v Speaker 2>a notoriously difficult market for American companies to crack. After

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<v Speaker 2>the break, we look at the strategies streaming platforms are

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<v Speaker 2>adopting as a battle for dominance in the region. Asia

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<v Speaker 2>offers enormous growth potential for global streamers, but it's a

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<v Speaker 2>complex region to scale. There's differences in length, UIG and income,

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<v Speaker 2>and diverse local taste and infrastructure. Bloomberg's Lucas Shaw says

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<v Speaker 2>the challenges vary widely from country to country.

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<v Speaker 5>The continent is home to more than half the people

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<v Speaker 5>in the world right, so it's by nature going to

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<v Speaker 5>be more diverse than like in Latin America, though it's tricky.

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<v Speaker 5>They all speak the same language, and so that's a

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<v Speaker 5>lot easier than like India alone has dozens of different languages.

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<v Speaker 5>If you're talking about places in Southeast Asia, for example,

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<v Speaker 5>generally poorer, so they don't have the disposable income to

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<v Speaker 5>spend on Netflix subscriptions. A lot of them don't have

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<v Speaker 5>credit cards, and there's also not the same local infrastructure

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<v Speaker 5>to produce local content, which tends to be very popular

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<v Speaker 5>and key. So it just it requires a much longer

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<v Speaker 5>term investment, right like Netflix could slip a switch in

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<v Speaker 5>Canada or Australia and it immediately worked. It could slip

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<v Speaker 5>a switch in the UK and it pretty much immediately worked.

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<v Speaker 5>Latin America. Let's say it took them three to five

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<v Speaker 5>years to figure out India. They're ten years in and

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<v Speaker 5>I still don't think they'd say they've cracked it.

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<v Speaker 2>All of the big American content companies looking at Asia

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<v Speaker 2>have similar stories to tell. Take Disney. For years it

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<v Speaker 2>tried to set up in India on its own, but

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<v Speaker 2>without success. Eventually it merged its India business with a

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<v Speaker 2>company backed by Reliance Industries, the conglomerate owned by Mukesham Bani,

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<v Speaker 2>Asia's richest man in India. Competition from local providers is fierce,

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<v Speaker 2>so he pointed to India's Geostar, which owns the country's

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<v Speaker 2>largest collection of TV networks and its most popular paid streaming.

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<v Speaker 4>Service, Geostar.

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<v Speaker 3>They are disrupting the markets with this like a free,

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<v Speaker 3>ad supported platform and the live streaming for sports and

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<v Speaker 3>other regions like Southeast Asia, for example, videos there, view

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<v Speaker 3>is there, and Korea. Tving is now expanding their territories

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<v Speaker 3>with multiple deals with the international players. They are going

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<v Speaker 3>into Japan and as well. The local players also have

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<v Speaker 3>their own, like a strategy to scale their business in

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<v Speaker 3>this market and eventually they want to like have more

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<v Speaker 3>of international viewers from the USS wall.

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<v Speaker 2>Local platforms also battle it out on price. That makes

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<v Speaker 2>it hard for premium service like Netflix to compete. In India,

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<v Speaker 2>for example, a monthly subscription to Geostar streaming service costs

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<v Speaker 2>around eighty cents. A Netflix subscription is almost double that.

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<v Speaker 2>The same goes for a lot of the other local

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<v Speaker 2>markets where Netflix expanded in the region.

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<v Speaker 5>They just rolled it out at the same price everywhere

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<v Speaker 5>and wanted to see how it work. Because Netflix is

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<v Speaker 5>a big fan of test and learn, rather fail in

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<v Speaker 5>public and figure it out quickly than try to map

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<v Speaker 5>out the perfect strategy on the spreadsheet. They soon realized

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<v Speaker 5>their problems and rolled out lower cost plans in some

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<v Speaker 5>of Southeast Asia and India. I think it's still a

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<v Speaker 5>work in progress for them, still something that they're fermenting with.

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<v Speaker 5>I think it is unlikely that you will see company

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<v Speaker 5>like Netflix offer their product for as little as Geostar does,

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<v Speaker 5>you know, they're not going for the masses in quite

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<v Speaker 5>the same way, but it's been a real, real limiting

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<v Speaker 5>factor for their growth in some of these more populous

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<v Speaker 5>but poorer markets. Part of what.

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<v Speaker 2>Makes Asia such a complicated target for global streaming companies

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<v Speaker 2>is that audience habits in the region can look very

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<v Speaker 2>different from the US and Europe, both in terms of

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<v Speaker 2>what people consume and how they consume it, and it's

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<v Speaker 2>something these companies still haven't fully figured out yet.

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<v Speaker 5>There are a bunch of media types that are very

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<v Speaker 5>popular in Asia that people have tried to replicate in

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<v Speaker 5>the US and the West with mixed success. This is

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<v Speaker 5>less maybe less pertinent to film and TV, but I

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<v Speaker 5>think matters with celebrity and talent, like live shopping is

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<v Speaker 5>a huge thing in Asia that it has just not

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<v Speaker 5>really picked up in the US. And I'd say in general,

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<v Speaker 5>the fan economy in Asia is larger and a little

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<v Speaker 5>more developed. Americans spend a ton of money on concert

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<v Speaker 5>tickets and on merchandise, but there's not as many online

0:14:10.679 --> 0:14:14.440
<v Speaker 5>and kind of direct transactions and tipping and like live

0:14:14.480 --> 0:14:17.679
<v Speaker 5>streams where you're paying for to be able to use

0:14:17.720 --> 0:14:20.400
<v Speaker 5>emojis and certain things like that that I think are

0:14:20.440 --> 0:14:22.000
<v Speaker 5>just bigger in this part of the world.

0:14:23.560 --> 0:14:26.960
<v Speaker 2>All of those differences are shaping how streaming evolves in

0:14:27.000 --> 0:14:30.720
<v Speaker 2>the region and where it may end up next. One

0:14:30.720 --> 0:14:33.480
<v Speaker 2>of the main ways global streaming platforms are trying to

0:14:33.480 --> 0:14:36.880
<v Speaker 2>get an edge and more subscribers in Asia is by

0:14:36.920 --> 0:14:41.320
<v Speaker 2>investing heavily in local language programming. The idea is simple,

0:14:41.640 --> 0:14:45.280
<v Speaker 2>Shows made for local audiences are more likely to break

0:14:45.360 --> 0:14:48.720
<v Speaker 2>through at home, and the biggest hits can travel far

0:14:48.800 --> 0:14:52.280
<v Speaker 2>beyond the original markets, like what Squid Game in Korea

0:14:52.400 --> 0:14:53.280
<v Speaker 2>did for Netflix.

0:14:53.960 --> 0:14:57.840
<v Speaker 3>Netflix strategy is local for local. For example, in India,

0:14:58.200 --> 0:15:02.760
<v Speaker 3>India's content used to be in Mumbai, but now they

0:15:02.800 --> 0:15:06.880
<v Speaker 3>are expanding in like a South India, Tamil and Teleku

0:15:07.120 --> 0:15:09.560
<v Speaker 3>for their next big growth river.

0:15:10.200 --> 0:15:10.400
<v Speaker 1>Yeah.

0:15:10.480 --> 0:15:14.920
<v Speaker 5>Netflix has been the biggest investor in local programming in

0:15:14.960 --> 0:15:18.440
<v Speaker 5>Asia and the world by leaps and bounds. Amazon has

0:15:18.480 --> 0:15:24.080
<v Speaker 5>invested heavily in select markets where it has an existing business,

0:15:24.120 --> 0:15:27.880
<v Speaker 5>oftentimes where there's overlap with their prime shipping service. Disney

0:15:28.200 --> 0:15:32.720
<v Speaker 5>has historically believed that it is producing programming in the

0:15:32.840 --> 0:15:35.360
<v Speaker 5>US that travels the world, and it does not need

0:15:35.400 --> 0:15:38.040
<v Speaker 5>to invest as much in local markets because Marvel and

0:15:38.080 --> 0:15:41.520
<v Speaker 5>Pixar and Star Wars are universal. That has changed over

0:15:41.520 --> 0:15:44.080
<v Speaker 5>the last few years as it has realized the importance

0:15:44.160 --> 0:15:45.200
<v Speaker 5>of local programming.

0:15:45.840 --> 0:15:48.800
<v Speaker 2>It's a lot to think about for these streamers. Serious

0:15:48.880 --> 0:15:53.240
<v Speaker 2>investment in local programming means developing multiple streams of content

0:15:53.520 --> 0:15:58.400
<v Speaker 2>in diverse markets across the region. It's an expensive proposition

0:15:58.880 --> 0:16:04.000
<v Speaker 2>with no guarantee of success. Let's pretend you're both looking

0:16:04.000 --> 0:16:07.080
<v Speaker 2>into a crystal ball. It's twenty thirty. What does the

0:16:07.120 --> 0:16:09.160
<v Speaker 2>Asian streaming market look like.

0:16:09.800 --> 0:16:12.600
<v Speaker 3>It's likely to be a hybrid like global players that

0:16:12.680 --> 0:16:16.560
<v Speaker 3>will dominate in scale and premium content. The local platforms

0:16:16.840 --> 0:16:19.920
<v Speaker 3>will continue to hold ground and team markets like India,

0:16:20.040 --> 0:16:24.200
<v Speaker 3>Japan and Korea. They're also trying to spend more money

0:16:24.760 --> 0:16:29.280
<v Speaker 3>on live streaming deals like in sports, and there will

0:16:29.320 --> 0:16:31.680
<v Speaker 3>will be like a special event, so like Netflix and

0:16:31.960 --> 0:16:35.480
<v Speaker 3>Disney Plus will have in this market to generate the

0:16:35.480 --> 0:16:40.080
<v Speaker 3>buzz around those events and use it as a growth momentum.

0:16:40.480 --> 0:16:46.560
<v Speaker 5>Netflix will still be the most successful premium streaming video service.

0:16:46.680 --> 0:16:50.280
<v Speaker 5>You know, we're going to set the YouTube TikTok Instagram

0:16:50.360 --> 0:16:54.640
<v Speaker 5>aside for the moment you'll see a newly combined Paramount

0:16:54.680 --> 0:16:58.440
<v Speaker 5>and Warner Brothers Discovery kind of push its product across

0:16:59.040 --> 0:17:01.560
<v Speaker 5>a lot of Asia, but I think we'll still be

0:17:01.600 --> 0:17:04.959
<v Speaker 5>a pretty small player and not have invested enough in

0:17:05.000 --> 0:17:08.040
<v Speaker 5>local programming because it's just too expensive. I wouldn't be

0:17:08.080 --> 0:17:11.600
<v Speaker 5>surprised if you saw some local players do what we've

0:17:11.640 --> 0:17:14.480
<v Speaker 5>already seen happen in certain markets, where they license their

0:17:14.600 --> 0:17:17.000
<v Speaker 5>TV network or they do a deal with a Netflix

0:17:17.040 --> 0:17:20.679
<v Speaker 5>or an Amazon where that becomes their streaming home for

0:17:20.840 --> 0:17:23.560
<v Speaker 5>their TV network. Right there's a deal between TF one

0:17:23.880 --> 0:17:26.000
<v Speaker 5>in Netflix in France. PF one is one of the

0:17:26.040 --> 0:17:28.760
<v Speaker 5>biggest media companies in the country, and they basically just

0:17:28.800 --> 0:17:31.400
<v Speaker 5>said competing with Netflix online is not going to work

0:17:31.440 --> 0:17:34.000
<v Speaker 5>for us. Let's just partner and benefit from the audience.

0:17:34.080 --> 0:17:36.240
<v Speaker 5>And I think you could see some of that if

0:17:36.280 --> 0:17:39.000
<v Speaker 5>some of the local streaming services don't work. But I

0:17:39.040 --> 0:17:46.480
<v Speaker 5>don't know. Twenty thirty is not actually that far away.

0:17:51.960 --> 0:17:54.720
<v Speaker 2>This is the Big Take Asia from Bloomberg News. I'm

0:17:54.720 --> 0:17:58.040
<v Speaker 2>wanha to get more from The Big Take and unlimited

0:17:58.080 --> 0:18:01.159
<v Speaker 2>access to all of Bloomberg dot Com, subscribe today at

0:18:01.160 --> 0:18:04.800
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0:18:04.880 --> 0:18:07.160
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0:18:07.240 --> 0:18:10.000
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0:18:10.040 --> 0:18:12.240
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