OTT Providers: Beware When Expanding Service Internationally

"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video.

Today’s column is written by Evelina Grines, vice president of media and entertainment at MPP Global.

Video audiences in the US are soaring, growing 46.8% from August 2016 to 2017, per the MPA. And while that’s good news, viewership won’t rise like that forever, which makes it ever more important for streaming services to consider opportunities in other markets.

Among the biggest challenges over-the-top (OTT) providers face is how to scale globally, while considering new local sensibilities. This is as true for Netflix as it is for less globalized players.

When expanding internationally, OTT providers must have multi-language capabilities. Lots of young people outside the US have grown up accustomed to subtitles, but this isn’t the case for their parents or older generations. Even the colors of subtitles can court sensitivity.

Yellow, for instance, is often associated with informational programming in the Netherlands, France and other countries. Many European countries also have a rich dubbing sector, so providers must research what is available to them.

Multi-language capabilities should also extend to customer support. Providers must ensure their support teams can speak the languages of the countries being entered. It can be as irritating to come across someone who speaks your language but isn’t from your country as it is to encounter someone who speaks only English and assumes you should, too. An approach that feels tailor-made goes a long way to engendering local trust.

OTT providers must be sensitive to how people like to transact.

For example, in Latin America, the average person doesn’t have a credit card, and in Germany, while most people do have credit cards, using cards for online payments is uncommon. OTT service in these markets that fail to account for these preferences will vastly limit the audiences they can capture.

Additional consideration needs to be given to the demographics of a target audience within the country as well, as different age groups or population segments may have individual spending and consumption access and preferences.

What business models will resonate in different markets? Is a new market oversaturated with subscription services? Is the content and value proposition compelling enough to compete for a subscription? Or is a pay-per-view, transactional approach more likely to work? Sony’s Crackle app is offered as an AVOD app in the US, but has launched SVOD apps throughout Latin America. OTT providers must be flexible.

Prioritize localized content. Everyone loves a hit US show, so they shouldn’t be discounted, but there’s a growing amount of equally well-produced storytelling coming out of local markets. Failing to consider them will lead to failure.

OTT providers should also be mindful of taxation and other regulations that may make working in a new country difficult. In Brazil, taxation is almost impossibly difficult because businesses with a physical presence in the country are prioritized. In France, securing licensing for content can be complex because OTT providers may not have access to all episodes at once, or even in order.

In short, providers can’t underestimate how complex international market expansion can be. They must keep an open mind and not simply replicate what they’ve done in their home markets. What worked for the United States won’t work for Argentina, even if residents in both markets are big fans of “Friends.”

Follow MPP Global (@mppglobal) and AdExchanger (@adexchanger).

 

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