Streaming giant Netflix is set to enter the Asian countries of South Korea, Singapore, Hong Kong and Taiwan in early 2016. This launch will be part of the company’s aggressive international expansion strategy that intends to establish the Netflix brand in 200 countries by the end of 2016. Accordingly, Netflix has been targeting Asia in a big way and the company entered its first Asian market with its September 2 Japan launch. Now Netflix wants to build on that launch and has decided to enter South Korea, Singapore, Hong Kong and Taiwan. Additionally, the company is also searching for ways to enter other lucrative markets such as China and India. In Part-I of this article, we take a look at the biggest of Netflix’s new target countries, South Korea. In Part-II, we will be focusing on the other countries ? Singapore, Hong Kong and Taiwan.

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South Korea Is An Excellent Opportunity For Netflix

Netflix has stated earlier that the company intends to continue expanding internationally and South Korea seems a logical choice. South Korea has a population of about 51 million and, assuming one connection per household, is home to an estimated 18 million broadband households. The country’s average Internet connection speed is the fastest in the world and was measured at 23.6 Mbps in Q1 2015. Around 96% of South Korea’s internet connections have connection speeds of 4 Mbps or above, the minimum speed recommended for streaming high definition content. A report from Media Partners Asia reveals that pay-TV penetration in South Korea is close to 100%. While traditional pay-TV might be looked at as competition to online streaming, this figure shows that South Korean nationals are very comfortable with the paid-subscription format for consuming content and this bodes well for Netflix. Netflix entered Japan with a tiered pricing structure starting from $5.40 (JPY 650) per month and a similar pricing structure in South Korea could find many takers.

As far as the competition is concerned, Netflix will face off against telecom companies and cellular carriers such as KT Corp., SK Broadband and LG Uplus Corp. that operate their own IPTV services. However, the South Korean OTT streaming is still considered to be in its infancy and Netflix will have ample opportunities to grow. Netflix will also offer 4K ultra HD services to its subscribers in South Korea. We believe that there could potentially be many takers for this service as 58% of South Korea’s Internet connections operate at speeds of 15 Mbps or higher, the highest in the world. Additionally, Netflix will be available on mobile devices and smartphones. This is a smart move because the country lends itself exceedingly well to the mobile platform. Approximately 63% of South Korea’s mobile connections have speeds exceeding 4 Mbps and the average connection speeds for mobile networks is around 8.8 Mbps, the highest in all of the Asia Pacific region.

Netflix’s Push For International Subscriber Growth

Netflix is currently present in around 50 countries and intends to expand into 200 countries by the end of 2016. Going forward, the company’s international expansion should have a significant positive impact on its subscriber additions. Netflix launched operations in six Western European countries in September 2014 and in Australia & New Zealand in March 2015, giving it access to a combined potential subscriber base of about 74 million broadband households. The company is also poised to launch in Spain, Italy and Portugal next month. (Read in detail – Launching Into Spain, Italy And Portugal Makes Sense For Netflix) Additionally, Netflix has been targeting Asia in a big way and the company entered its first Asian market when it launched in Japan weeks ago. (Related – A Closer Look At Netflix’s Foray Into Japan) Apart from the recently announced target countries South Korea, Singapore, Hong Kong and Taiwan, there have been reports of the company entering India in 2016. (Related – With Eye On the Future, Netflix Could Enter India In 2016) Netflix is also very keen on entering the Chinese market and is exploring potential routes for entry. (Read in detail – China Makes Sense For Netflix, But It Won’t Be Easy) The subscriber growth in the international segment has been very robust so far, with the subscriber base increasing from 1.9 million customers in 2011 to 23.3 million by the end of Q2 2015. We believe that Netflix can reach 68 million international subscribers by the end of our forecast period if it continues on its current expansion plans.