Arrival of Netflix in Singapore May End Up Disappointing

I know many people who are excited about Netflix’s arrival in Singapore next year. I am not one of them.

Don’t get me wrong. The US version of Netflix is a fabulous product, with fantastic range. You will find Hollywood’s blockbusters (think Star Trek: Into Darkness) as well as foreign films (I can recommend Danish film The Hunt). There are both interesting documentaries and risqué movies. Ben Kingsley narrates Winston Churchill: Walking with Destiny while Ang Lee’s Lust, Caution is available in its entirety. Netflix has also produced a couple of award-winning drama serials of its own. Its House of Cards was the first original online-only TV series to receive major Emmy nominations.

But will the Singapore version of Netflix be just as awesome? Probably not. Extending a product such as Netflix into a new geography is a complicated matter, involving many negotiations with rights owners and broadcast networks. The content industry has created a web of parties with their own interests to protect, and Netflix is a threat to many of them. It will take some time for the company to build up a content library here. Apple’s iTunes has had three years and still has not managed to create a store here that can rival its US counterpart.

Meanwhile, Netflix is likely to be weighed down by Singapore’s censorship standards. Foreign entrants have already had to remove content from their local libraries. In 2012, Apple’s iTunes was found to offer The Girl with the Dragon Tattoo, an R21 film that at the time was cleared for theatrical, but not home video, release. This year, Google had to remove Fifty Shades of Grey from its Google Play Movies store.

The Media Development Authority has already made it clear that Netflix will have to comply with the same rules when it enters the Singapore market. In response to news of Netflix’s plans, it said: “MDA welcomes Netflix’s expansion to Singapore. It will inject greater vibrancy into our media sector and provide viewers with more choices. MDA will work with Netflix to familiarise them with Singapore’s regulations and media capabilities ahead of their arrival.”

Such policing of content makes Singapore a difficult and expensive place for the likes of Netflix. There are 117.5 million households in the US but just 1.2 million in Singapore. If one-tenth of these households take a Netflix subscription, the company will be classifying content for a customer base of just 120,000. Complying with censorship regulations is costly, and gets costlier if you have a large library.

Singapore has, however, already considered the trade-offs. In 2012, a government-appointed Media Convergence Review Panel addressed the question of censorship of online content. “Local players are now increasingly exposed to overseas competitors that deliver content over the Internet, but are not subject to local regulatory obligations,” the report said. “How do we rebalance the playing field?” The panel went on to conclude that the government should take a tougher stance on digital media distributors.

In a column published last December, I had argued that the government ought to adopt a liberal, pro-innovation policy stance and position the country as a test-bed for content providers that want to expand in Asia. That would include relaxing its stance on censorship requirements, particularly when it comes to innovative video streaming services. It makes no sense to handicap companies such as Netflix, Apple and Google when piracy makes uncensored content easily available.

It seems that some industry players share this view. This month, the Cable and Satellite Broadcasting Association of Asia publicly urged the MDA to relax its regulations. CASBAA’s gripe is that virtual private networks have put local broadcasters at a disadvantage because customers would rather use these virtual private networks (VPNs) to access uncensored content overseas, paying money to foreign broadcasters instead of local ones.

It would appear that MDA has two immediate options to level the playing field: Restrict the usage of VPNs or relax censorship standards. CASBAA says it is not asking the government to ban VPNs. MDA has also said VPNs are “legitimate services that offer better privacy and security”. Yet, some industry players tell me there is now growing resentment towards the use of VPN here. Restricting its use might become the more expedient option.

That would be a mistake. A recalibration of censorship rules, bringing them in line with standards in developed markets, would be far more effective in protecting content creators, owners and broadcasters from the challenges of piracy. MDA could also choose to take a step back, keep an eye on the situation and hope that some other changes in the industry will render any decision on its part unnecessary.

In the meantime, I very much doubt that a Singapore Netflix subscription — when it becomes available — will offer us anything close to the variety that its US customers get.

This article first appeared in the Corporate of Issue 695 (Sep 21) of The Edge Singapore.

The Edge Markets

The Edge Markets helps its readers to make better business and investment decisions by empowering them with the latest financial news, data and analytics. The Edge Markets is part of The Edge Media Group.

1 Comment

  1. Hi Rusmin,
    Appreciate your AGM write-up; great for retail investors who cannot/do not attend AGMs of the companies they invest in.

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