Why Netflix Competitors Target Countries, Not Genres

Streaming video service iflix, the Netflix of Southeast Asia, has raised at least $90m, bringing their total amount raised to $165m. The investor roster is not who you’d expect for investors buying into an early-stage growth company — they raised most of their funds from cable companies. Cable companies care

Streaming video service iflix, the Netflix of Southeast Asia, has raised at least $90m, bringing their total amount raised to $165m. The investor roster is not who you’d expect for investors buying into an early-stage growth company — they raised most of their funds from cable companies. Cable companies care about Netflix because they provide the externality that Netflix relies on: cheap, highly-reliable bandwidth. If there’s only one major incremental user, that user has a strong negotiating position; if there are more, the bandwidth sellers have the upper hand.

It’s expensive to compete with Netflix for general-interest television. Companies like Hulu can do it because they’re joint ventures with broadcasters. Amazon can do it because they bundle streaming with Prime; their video offering grows their ecommerce business. But most competitors try to restrict themselves by either genre or geography: AMC-owned Shudder is the Netflix of horror, and iflix is the Netflix of Southeast Asia.

Why does the Netflix of Southeast Asia have more potential than the Netflix of Horror?

[T]he team in Brazil got to work installing web servers around the country. Along the way, they teamed up with telecommunications giants such as Telefónica, which were in the process of introducing high-speed broadband nationwide. Netflix supplied the companies with additional servers at no charge.

Building a sustainable streaming business is hard. Depending on whether you’re Netflix bull or a Netflix bear, it’s been done either one time in history or zero. But there’s demand for Netflix clones — not just from consumers, but from wealthy telcos who dread negotiating against a streaming video monopoly. A genre-focused competitor is easier to imagine, and theoretically much less work, but a regional competitor is the best bet.