“We’ve made a great start,” said Hastings, some 100 days after the service became available almost completely worldwide in January. “We increased our net subscribers by 6 million globally in the first quarter. Of that 4 million were international.”
The executives were speaking Wednesday at the APOS conference in Indonesia, the massively populous South East Asian country where Netflix is currently off air.
Netflix announced its arrival in Indonesia as part of the planet-wide push in early 2016. But it was pushed back in a row with the country’s censors which said that Netflix did not have an operating license and also deemed its content too racy for Indonesian viewers. The country’s largest Internet service provider Telkom Indonesia blocked access to Netflix shortly after.
Earlier this week Telkom Indonesia announced that it was partnering with Asia-based streaming platform iflix. And on Wednesday, the local rival gained a further foothold in Indonesia when satellite provider Indiosat Ooredoo said that it too would carry iflix.
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“Sometime ISPs block us. In Indonesia it happens to be the largest one,” said Hastings. Despite that, he said the company continues to look positively at the territory. “It can be a tremendous market for us. We will continue to invest in Indonesia.”
Giving cause for the pair’s optimism was the view that Netflix will evolve and improve its service and content offering in Asia. “We are far below the number of languages we need to support. We have 21 languages. YouTube has 50. We will grow through partnerships with network infrastructure and in particular the content,” said Hastings. There are currently no Vietnamese, Thai or Cambodian-language versions.
The road to profitability in Asia may be a long one as well as a rocky one. “It will be many years before Asia becomes profitable for us,” said Hastings. He explained that profits may take 3-7 years in many markets. “You want to keep investing in content ahead of the revenue, and our investors know that.”
Netflix has launched with seemingly great success in Australia and it launched in Japan, seen as a large mature market, in 2015 before the mass rollout. But in many territories in Asia Netflix is regarded as lacking killer content – either its own series have been licensed to other platforms and are not available, or it has so far not got very far in assembling significant rosters of local content.
“We are doing local production in Asia much quicker than in other territories,” Sarandos said.
He pointed to upcoming Angelina Jolie-directed Cambodia-set film “First They Killed My Father,” and Korean director Bong Joon-ho’s now-shooting “Okja” as examples of Netflix-produced local content intended for consumption around the world. They are in addition to local series being produced in Japan. “With ‘Okja’ we have a film that is on a much larger scale than ‘Snowpiercer,’ that will premiere on Netflix around the world,” said Sarandos. “We have a really huge audience for director Bong and I think he will be one of the really great directors of our time.”
Hastings pointed to English-language show “The Crown,” a 60-hour telling of the life Britain’s Queen Elizabeth age 29, written by Peter Morgan and starring Claire Foy. “One of the most ambitious series anyone has ever seen,” said Sarandos. “Just as epic as ‘House of Cards’,” Hastings ventured.
Other examples of wholly-owned Netflix content include forthcoming movies with Brad Pitt (“War Machine”,) Will Smith (“Bright”) and with Adam Sandler, forthcoming series “The Get Down,” directed by Baz Luhrmann, classic French political drama, “Marseille,” with Gerard Depardieu as star, launching next week in France, and feature-level 13-episode animation “Green Eggs And Ham,” based on the Dr. Seuss book.
“We hope too to create fantastic Bollywood movies that the whole world will watch, not next year, but in two or three years,” said Hastings. “We think of that as making a contribution to the art form.”
“I keep telling Ted (Sarandos) to spend more money. We will raise the money. Spend more money,” said Hastings. “Negative cash flow is a sign of great growth and that we have found great projects to invest in.” Sarandos suggested that Netflix’s content production efforts are becoming more efficient as the company goes forward. “When I look at a show like ‘The Ranch’ I’m reminded that it doesn’t cost me more to produce more for a global market than a show that is only domestic.”
Similarly, he pointed to global rights acquisition as improving efficiency and helping the global production sector. “Global licensing (to Netflix) derisks production,” said Sarandos. “Before a show even rolls it can be very profitable for a (supplier) studio.”
Such bullishness even extended to the company’s vision of China, the world’s most populous nation and the second biggest theatrical market, but one where regulators bar Netflix from operating. “We are continuing discussions with partners,” said Hastings.
“We are reminded that in Apple’s case they spent six years of discussions with China Mobile before they got the deal they were looking for. Now it is one of their largest markets in the world. Great rewards can follow great patience.”