Netflix, with its natural commercial competitiveness, wants to dominate SVoD streaming in every market where it operates. We know it was slow to acknowledge the need to cut prices in India so that it remains only a minor player there, but more surprising at first sight are the difficulties Netflix has encountered in exploiting the booming Nordic SVoD market.
It is a stretch as some analysts have done to say that Netflix is struggling in the Nordics given it has 45% of the SVoD market there overall, making it number one in some of the countries, but this is well short of the European average penetration of 72% in a region which has taken to SVoD more fervently than almost anywhere else in the continent.
The Nordics would seem to be perfect hunting ground for Netflix with the predilection there for English language content and American movies. The people there have also taken to SVoD in general, big time. SVoD penetration rates are over 75%, compared with 56% in the UK where Netflix was first to land in Europe. Penetration is 76% in Sweden, 77% in Norway, 86% in Denmark and 89% in Finland.
But scratch beneath the surface and we find that for once Netflix has been guilty of not doing its homework thoroughly. As many Europeans outside the Nordics could tell them, the region is a hot bed of production for crime series and thrillers, often with a high psychological thrust. These have been widely exported across Europe in recent years and it is surprising that Netflix has not fully picked up on this, given that this genre referred to as Nordic Noir, defined as crime content originating in the Scandinavian countries, has become world famous.
It may be partly that Netflix has failed to invest sufficiently in local language content in the belief viewers are quite happy to watch English language imports. But it is clear Scandinavians themselves are hooked on crime or thriller content which accounts for 47% of all shows currently in production or conception.
The related factor here is the strength of local competitors that are producing content in this genre, both streamers and linear operators. There are over 20 established local streaming providers, most just operating inside one of the countries given that each has its own language, while both HBO and Amazon Prime, as well as regional players Modern Times Group’s Viaplay and Telia, compete in all Nordic markets.
Netflix recognized around five years ago that local content in the target country’s language was key to foreign success outside the English-speaking world. This has been borne out in many cases, such as France where natural resistance to the Netflix invasion was stronger at first. Movies could appear on legacy pay TV channels a year after their theatrical release, but OTT platforms had to wait 36 months. This rule has held back SVoD adoption as a whole to just over 18% of broadband users, the lowest penetration of any major European country. Yet this combined with rules over quotas for local content have actually played into Netflix’s hands because it is better equipped than rivals to cope. By focusing on local content, Netflix has surged ahead of its nearest rival Vivendi’s Canal+. While Netflix piled on 1.5 million subs in less than a year to pass 5 million by the end of 2018, Canal+ sunk by 233,000 to 4.76 million.
Netflix is raising its game in France further by moving to open an office later in 2019 while launching more French originals including romantic comedy Plan Coeur and sci-fi series Osmosis. Crime fiction is not quite as popular in France as in the Nordics.