Is Netflix a game changer in Singapore?

Local players were quick to act.

Netflix has officially launched its video streaming services here in Singapore last week with a basic plan starting from S$10.98/month, which includes streaming to one device in standard definition quality. The local players, however, are unfazed as they have already devised a plan long way ahead before the official launch.

Here's what analysts had to say:

Carey Wong, analyst, OCBC Investment Research

The local telcos with Pay TV offerings are not viewing Netflix as a direct competitor. Instead, both Singtel and StarHub are said to be working with the US streaming operator to allow viewers access to Netflix content via their set-top boxes. Singtel also sees Netflix as being complementary to its pay TV services. Given the limited localized offerings that are available on Netflix, as well as lack of “live” sporting content, we also believe that it may be hard to completely “cut the cord” just yet. And as Netflix has already been “available” here for some time via VPN, the introduction of a direct offering here may also have limited impact. News reports suggest that those who already subscribed to Netflix US are unlikely to switch over to Netflix Singapore due to the non-availability of some original content here (possibly due to licensing issues).

The local Pay TV operators have already began to offer their services via the OTT route. SingTel has its own OTT service called Singtel TV Go as well as their regional OTT streaming service called HOOQ – a JV with Sony Pictures Television and Warner Bros Entertainment – that is available to its customers in Indonesia, the Philippines, India and Thailand.

StarHub’s new online streaming service – StarHub Go – also carries HBO GO, which includes HBO original series as well as movies offered by HBO via cable. Last but not least, watching videos using the local Pay TV operators’ networks do not include additional mobile data charges.
 

RHB

On official channels from April. Both Singtel and StarHub have respectively announced tie-ups with the US’ largest on-demand internet streaming media provider, Netflix Inc (Netflix). Netflix had earlier this month announced its expansion into 130 new countries. The telcos had last year highlighted ongoing discussions with Netflix – hence the partnerships should not come as a surprise to the market. Singtel’s earlier revelation of its ‘exclusive’ partnership with Netflix may have initially led some to believe that StarHub had gotten a ‘raw deal’. While both telcos are likely to make Netflix available on their pay-TV set-top boxes from April, Singtel’s ‘exclusivity’ allows it to offer up to nine months of free subscription for new and re-contracting subscribers that sign up from 22 Jan-22 July. However, this means it would absorb the cost of Netflix subscriptions until 2017. The operators are part of Netflix’s Open Connect programme, which allows for a smoother streaming experience.

Netflix is already accessible to many Singaporeans. We believe Netflix ought not to be a game changer as it is already available to many tech-savvy Singaporeans via an internet protocol (IP) masking service. Viewers also have access to a raft of online content via peer-to-peer (P2P) file sharing sites, including pirated content. That said, Netflix may compete with Singtel’s own over-the-top (OTT) video-on demand app, HOOQ and potentially similar OTT applications. Netflix said it plans to crack down on virtual private network (VPN) users, which, if executed, would be positive for pay-TV providers that have direct collaborations.

Local content remains relevant and still a strong proposition. While there are concerns that Netflix would cannibalise existing pay-TV services of the operators, we expect this to be mitigated by the lack of local, iconic and live content on Netflix including sports. StarHub’s focus in recent years on local production has also contributed to the largely steady share of the pay-TV market despite competition from OTT content. Netflix’s plans to have more ‘localised’ content in the future and the growing demand for online streaming content are longer-term negatives for the industry.