Subscription-based streaming services are on fire. The Leichtman Research Group recently found that 77% of adults aged 18-24 stream content via an SVOD service each month, and as that generation becomes older, that’s likely to become the norm. Given the fact that an estimated 206 million homes, across 200 countries will subscribe to a video service by 2020, it seems like global expansion is the next logical step for digital video content.
But taking an SVOD service global isn’t simply a matter of flipping a “on/off” switch. Though SVOD services might not necessarily need to worry about the high costs of brick-and-mortar storefronts, large staff or local infrastructure, there are cultural and physical elements that businesses will need to overcome when going global. Because international audiences are acutely aware of corners being cut and getting a watered-down version of the U.S. product, SVOD services need to have a heightened degree of empathy to make an expansion successful for international customers. Taking care to address a number of key questions is imperative when making any sort of global expansion.
How are people consuming media?
While more Americans are going online and mobile with their viewing habits, many people in Europe, for example, consume content differently. In countries like Italy and Germany, DVD consumption is still commonplace, as are set-top devices that are bundled with other services, making standalone offerings relatively new. When there is an appetite for online video, limited bandwidth challenges impact many parts of Southeast Asia and Middle East, making short form content more popular than longer, data-heavy programming. Many Latin American countries have stronger mobile consumption habits, which can impact how long viewers are willing to spend watching a smaller screen.
On top of that, different countries’ design preferences will require design tweaks, or even overhauls, to appeal to the local audience. Japanese homepages tend to be densely filled with images and content, which stands in contrast to U.S. websites with typically clean designs. Arabic interfaces are often designed right to left. And sometimes it’s not even a matter of preference; in Germany, for example, longer German words will necessitate design tweaks.
Where are consumers in the lifecycle for your specific media?
Alongside general concerns, niche SVOD services need to be particularly aware of their various global audiences’ desire because of their targeted content libraries. Unlike Netflix or Amazon Prime, that offer a little bit of content for every audience, niche SVOD services have to make sure their targeted content is culturally relevant and on trend so their customers feel they’re getting their money’s worth or risk having a disinterested audience.
On the flipside though, certain cultural similarities and values shared among audiences can result in popular cross-over content that performs well outside of its intended domestic audience. For example, Slavic countries share a lot of content, Arabic content can be popular in Turkey and vice versa, and Korean content works well in China, Southeast Asia and Japan.
What are the local media and privacy laws?
Content-streaming services are no strangers to the complications of international law, and because digital media is still a new industry, most countries are trying to figure out the right mix of privacy and protection laws. While collecting a customer’s personal and consumption data might be common practice in the U.S. to improve their viewing experience, different countries have different laws regarding how you can access and store customer data.
Other countries, like some in Latin America and Europe, also have strict rules requiring a certain amount of locally produced content to be given sufficient playtime and billing on any foreign service. Because of these kinds of concerns, international players will often try to find local partners in order to set up country-specific operations to satisfy local laws.
What are the local payments?
Without a full understanding of the intricacies of various countries’ payment habits, turning a profit will be next to impossible. While most Americans are comfortable using credit cards, in Latin America, prepaid cards are more prevalent and most European consumers use debit cards. Not only that, but without the right local payment integrators, U.S.-based companies can incur significantly higher transactions fees and charge defaults, resulting in overall negative impacts to the gross margin. Lastly, currency fluctuations are always a concern, and some countries, like Brazil, require local presence and incorporation if a U.S. service wants to charge in local currency.
Think ahead
Online video businesses need to consider these kinds of questions when building themselves out in order to provide the best experience possible for their customers or risk shooting themselves in the foot. And it’s important to start thinking about them sooner rather than later. By addressing these questions before global expansion, businesses will save themselves time and money compared to having to retrofit their platforms later on. After all that is built out, possible investments in original country-specific content in each country would be the next step to really elevate an SVOD service above the rest of the pack to become an ingrained element of the local content streaming culture.
-Terry Li is vice president, general manager and head of International at Crunchyroll, a multiscreen OTT service specializing in Japanese anime and Asian content that is majority-owned by Otter Media, a joint venture of AT&T and The Chernin Group
