Ushering Netflix in Bangladesh

Syed Tashfin Chowdhury | Published: May 17, 2019 21:17:05 | Updated: May 22, 2019 20:58:16

A screenshot of Bangladeshi film Komola Rocket on Netflix. This is the first Bangladeshi movie available on the platform.

Netflix, the online streaming service, has been open for subscribers in Bangladesh since 2016. The number of Bangladeshi subscribers is around 200,000 according to some estimates. This number is gradually increasing with every month. Most of these users are paying the subscription fees through international credit cards and by purchasing gift cards. However, this is not helping the Bangladesh government to tax the online streaming service which is generating around $ 21 million annually from Bangladesh alone.

But all this is likely to change after last month when the Bangladesh Telecommunication Regulatory Commission (BTRC) allowed Netflix to set up cache servers in Bangladesh. BTRC senior officials and others are upbeat that this step will help foster a mutually beneficial relationship with Netflix.

EVOLUTION OF NETFLIX: Around mid-2000s, the increasing affordability and availability of smart-devices and penetration of the internet paved the way for online streaming services. This has led to the success of international streaming services like Netflix, Hulu, Amazon Prime and many others, as they are no longer restricted to viewers within one country. The entire globe is now their playground.

Netflix is by far the biggest player among all the streaming services. The US-based Video-on-demand service started operations in 1997. It initiated online streaming services from 2007. Since then, it has been the market leader in global streaming services. Besides offering television shows and movies, Netflix has been producing its own exclusive content that is available to its users on the platform.

The platform can be subscribed at the standard package of $ 10 per month. Under the package, Netflix subscribers can watch movies, TV shows, documentaries, cartoons etc. available on the platform in High Definition on one screen and also download videos on two devices or phones for viewing offline. The basic package costs $ 9 per month.

NETFLIX IN BANGLADESH: Netflix launched its services to different parts of the world in phases. The service was opened for Bangladeshi subscribers in 2016. Subscribers in Bangladesh have to pay the charges through their international credit cards.

Waiving off the hassles of paying through international credit cards and the monthly fees that totals to $ 108 per year, already 200,000 subscribers in Bangladesh are regular users of Netflix.

According to estimates of Bangladesh Telecommunication Regulatory Commission (BTRC) and PI Strategy, a private management consulting firm, Netflix earns around $ 21.60 million from Bangladesh alone.

On April 30, during a BTRC meeting, the commission decided to allow Netflix to set up a cache server in Bangladesh. Under the decision, licensed National Internet Exchange (NIE) operators can set up cache servers for Netflix. This is a commendable move by BTRC. Prior to this, the demand for Netflix was forcing internet providers of the country buy costly international bandwidth. Local cache servers will allow better streaming and also save the cost of internet providers.

MUTUALLY BENEFICIAL ARRANGEMENT: According to some BTRC contacts, talks are ongoing between the BTRC and Netflix management to open an office in the country.

This is a positive development as this can open up scope for taxes and revenue sharing. At the moment, there are no clear tax obligations tagged with the use of Netflix.

But there is a High Court rule to realise taxes from online platforms. In April last year, the High Court (HC) ordered the government to realise taxes, including source tax, from all online transactions, advertisements, domain sales and licence fees from all internet-based platforms such as search engines Google and Yahoo, e-commerce platform Amazon, social networking platform Facebook and video sharing site YouTube.

Setting up office in Bangladesh will also be beneficial for Netflix. Presently, 200,000 subscribers are paying for the service through their international credit cards. With an office in Bangladesh, Netflix can tap the subscribers who do not have international credit cards. They can pay through mobile financial services. This would also increase the subscriber base that Netflix has in Bangladesh.

OPPURTUNITY FOR THE LOCAL ENTERTAINMENT SECTOR: A step like this can also help the local entertainment sector of the country. Netflix users are increasingly experimenting with TV shows and movies of foreign countries. Besides US and British popular shows and movies, the platform offers content from countries including Spain, Canada, Australia, Israel, Indonesia, Malaysia, India, Bangladesh and other countries. Users may not know the languages, however, the subtitles help Netflix's 148 million users worldwide to enjoy the shows and also learn about the cultures and traditions of country the movie is from. This is opening up new segments of audience for content makers and owners. For example, after Netflix opened its office in India, it has produced some exclusive content like 'Lust Stories', 'Delhi Crime', 'Ghoul', 'Selection Day' and the critically-acclaimed 'Sacred Games'. Other Indian shows and movies are in the pipeline. These shows are being watched by an expanding segment of audiences across the world.

Besides producing exclusive content, Netflix has included blockbuster Hindi, Marathi, Telugu, West Bengal, Tamil and Telegu language movies and popular TV shows on its platform. This is helping the producers and makers of movies and television shows in India. Movies and television shows from Pakistan is also gaining popularity on Netflix right now.

Bangladesh's entertainment sector can be similarly benefited if Netflix opens an office in the country. Currently, very few Bangladeshi movies like 'Komola Rocket' are available on the platform. As far as licensed content is concerned, Netflix pays reasonably well compared to other streaming services. In 2018, the company spent nearly $13 billion in 2018 on content licensing and production alone.

Since its initiation in the late 1990s till date, Netflix has survived the test of time. Despite increasing competition from giants like NBC, Disney, Warner Brothers and others, it continues to do well and expand. For fiscal year 2018, Netflix had an annual revenue of $ 15.8 billion and reported earnings of $1.21 billion. This was an increase of approximately 116 per cent over the previous fiscal cycle.

BTRC allowing Netflix to set up cache servers in Bangladesh may encourage the company to open an office in the country. This will be helpful not only for entertainment seekers of the country, but also for Bangladesh's national revenue and the growth of its entertainment sector.



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