Post-Corona Phase Warning of Slump... OTT Giant Netflix Also Slows Down

COVID-19 Driven Streaming Competition Saturation
New Subscriber Numbers Plummet to One-Quarter
High Growth Continues in Asia Region
Possibility of Intensified Competition in Domestic OTT Market

[Asia Economy Reporter Cha Min-young] As expectations for the post-COVID era grow in major countries such as the United States and the United Kingdom, Netflix, the world's number one global online video service (OTT) company, has taken a direct hit. The number of paid subscribers has plateaued after surpassing 200 million. There are also observations that Netflix will focus more on the high-growth Asian region.

On the 20th (local time), Netflix announced that the number of new global paid subscribers in the first quarter totaled 3.98 million. This figure is significantly below the consensus estimate of 6.2 million released by financial information firm FactSet. Compared to the net increase of 15.8 million in the first quarter of last year, it has sharply decreased to one-quarter. The cumulative number of paid subscribers stands at 208 million.

The intensifying competition among global OTT platforms such as Apple TV Plus, Discovery Plus, Disney Plus, HBO Max, and Peacock has also overlapped. Netflix's sequential price increase policy is also cited as a variable. The outlook for the second quarter is not bright either. Netflix expects a net increase of around 1 million. Due to the gloomy forecast, Netflix's stock price plunged 11% in after-hours trading following market close.

The market, which had expected results not to reach the exceptional performance of the first quarter last year during the COVID-19 pandemic, appears to be taken aback. The U.S. Wall Street Journal (WSJ) evaluated, "As many countries worldwide are emerging from COVID-19 lockdowns and streaming competition intensifies, potential warning signs for Netflix have appeared."

However, the Asian region, a new market, showed continued high growth. By region, Europe, the Middle East, and the Asia-Pacific region stood out. Europe and the Middle East recorded the highest number with over 1.8 million, and Asia secured 1.4 million subscribers, performing well. In Latin America, as well as Netflix's home turf of the United States and Canada, the increase was limited to 810,000. In particular, Korean Wave (Hallyu) content is believed to have played a leading role in Southeast Asia, where OTT penetration rates are low.

In the domestic OTT market, expectations and concerns are mixed. Although the domestic OTT market shows an average annual growth rate of 26.4%, it is saturated with numerous OTT companies including Netflix, Wavve, TVING, Season, and Watcha. Disney Plus is also expected to enter Korea in the second half of this year. Domestic OTT companies are making content investments worth hundreds of billions of won and are not hesitating to form partnerships with other industries. TVING's collaboration with Naver Plus Membership and Season's bundled products with KT Group affiliates are representative examples.

A domestic OTT industry insider said, "Netflix is the undeniable global number one, and Korean companies are diligently chasing as latecomers," adding, "Since Korea is still a growing market, various global companies are bound to have their eyes on it."