The Joint Venture HOOQ Service In Asia, A Tactical Move Against Netflix Inc

The Joint Venture HOOQ Service In Asia, A Tactical Move Against Netflix Inc

Today, Netflix Inc. the leading video streaming, internet and TV subscription service stated that it will grow in Japan by the end of this fall, in order to complete its worldwide roll-out by the end of 2016.

In another news, a joint venture between SingTel (a telecom joint in Singapore), Sony Pictures and Warner Bros. Entertainment is planning to launch a video streaming service by the name of HOOQ all over Asia. This joint venture is more likely to be considered as a tactical move against the video streaming joint Netflix Inc. (NASDAQ:NFLX).

The HOOQ video streaming service will primarily launch in Indonesia, Thailand, Philippines and India during the first quarter of 2015. However, later the service will expand to countries like Australia and Singapore.

At its initial stages HOOQ will serve customer with more than 10,000 movies like Harry Potter, Spider Man along with TV shows like Gossip Girl and Friends. The service will also provide a wide range of Chinese, Thai, India, Filipino, Indonesian, Japan and Korean content.

Netflix services are currently being availed by 14 countries across Europe, North and Latin America. However, it should keep expanding overseas to balance its slow growth in United States.

Almost 69% of Netflix’s users are from United States and 31% are from other countries. However, the company’s international total revenue has increased by 76% annually to $388 million, compared to U.S. revenue which rose by only 24% to $917 million. In this quarter the company expects its international growth to slow down by 59% and U.S. growth by 22%.

In the meantime, the internet users across Asia have climbed over the last few years, creating a fruitful market for video streaming services. With the increasing rates, Asia has the potential to become the largest user of streaming service in the whole wide world.

With over 500 million subscribers, having presence in more than 25 countries and owner of second biggest telecom company of Australia (Optus), SingTel is all set to get the most out of this market by launching HOOQ. Having only 54.5 million paid subscribers, it’s not good news for Netflix Inc at all.

During last year, Netflix promised to pay an amount of $7.3 billion to TV studios and films for its content security, which rose to $9.5 billion. To reduce these costs, Netflix started making expensive original content like Marco Polo and House of Cards, which cost them around $50 million and $90 million.

The increase in content costs and making of original content has affected Netflix’s income which fell by 21% on annual basis. In the last 5 years, Netflix’s expenses have surged and free cash flow has declined.

The movie service provider’s share is down by 0.02% at $448.60 in after-hour trading, as of 7:55 pm EST.

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