Netflix is embarking on a global rollout of a standard prepaid card that can be used to access its services. The cards have already been in use for some time in the United States, Australia, Austria, Belgium, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland, and the company recently announced that the […]
Netflix is embarking on a global rollout of a standard prepaid card that can be used to access its services. The cards have already been in use for some time in the United States, Australia, Austria, Belgium, Denmark, Finland, France, Germany, Luxembourg, the Netherlands, Norway, Sweden, and Switzerland, and the company recently announced that the U.K. and Ireland will be added to the list. Netflix is pushing these prepaid cards as “Gift Cards”, similar to those already offered by the likes of Amazon and Apple. As for the content that these cards provide access to, one month of standard-definition viewing on a single screen will cost USD 9.22. The same level of content can be viewed via two screens for $11.53, while $13.84 will secure access through four screens and include Ultra HD 4K content.
The company intends to be fully global by the end of 2016, an expansion strategy that most certainly includes the countries of the MEA region somewhere down the line. And by establishing these cards in its more mature content markets, Netflix will find itself well positioned to iron out any potential issues before it begins its creep eastward. This will certainly help in emerging markets, where payment is one of the biggest challenges that OTT providers face when trying to monetise content.
That issue is particularly pronounced here in MEA, where a general lack of consumer trust in the safety of online payment systems makes the act of securing returning customers one of the biggest inhibitors to success in the region’s OTT market. This must be addressed if media providers are to truly succeed in monetising their content, as there is a clear need to alleviate the reluctance of many customers to part with money online.
While reluctance to pay online is a significant barrier in the region, it is important to note that many potential customers across MEA do not even have access to credit cards, so cash is the only payment method available to them. This means that enormous numbers of potential consumers cannot pay to access content using traditional monthly plans and are unable, rather than just unwilling, to enter credit card details into online portals. Given this reality, media providers must become more creative and explore ways in which they can extract cash from potential customers that does not involve the traditional one-size-fits-all payment plans prevalent in more mature markets.
There are isolated efforts aimed at facilitating such a move, but the region is sadly lacking when it comes to a universal approach to addressing this ongoing challenge. Currently, Nigeria’s iROKOtv lists Western Union money transfers as an alternative to credit card payments.
The region’s Icflix platform has list of payment options but very limited visibility in the market as to where prepaid cards can actually be bought, and OSN’s untethered online TV offering Go is currently a credit-card-only subscription. In the Middle East, carrier billing is becoming increasingly popular, as it negates the need for credit cards entirely, with viewers who consume OTT services via their mobile devices paying for access via their prepaid or monthly phone bills.
A number of developments are taking place to facilitate innovative new payment methods in MEA, but plenty more still needs to be done in this regard if media providers are to fully exploit the huge untapped potential that clearly exists in the region. The provision of standardised prepaid content cards would be a step in the right direction, and Netflix’s adoption of this model in the mature markets of Europe, Australia, and the United States should instill a new level of urgency into the efforts of the region’s OTT providers as they bid to secure the MEA market before Netflix’s hotly anticipated arrival in the region.
With MEA being home to a huge potential customer base that is either unwilling or simply unable to pay for services through traditional online channels, IDC anticipates a flurry of activity in the market over the next two years as media providers introduce new payment options and engage in mutually beneficial partnerships with other industry players. Amid all this activity, media providers must continue to bear in mind that their customers’ ability and propensity to pay will ultimately determine the level of success providers achieve.
To this end, the introduction of prepaid cards that are universally available across the region’s retail landscape would undoubtedly provide a boost to subscriber acquisition and retention. In the United States, consumers are already well accustomed to purchasing Netflix cards when doing their weekly grocery shopping in Target and other such stores. Could we soon see a similar scenario here in MEA, with customers heading to Carrefour not only to buy their Friday night goodies but also to purchase a prepaid TV content card in preparation for a weekend of binge watching? Only time will tell.
This IDC Flash addresses Netflix’s recent announcement that it is to begin offering prepaid top-up cards for accessing its content in the U.K. and Ireland. In particular, this document looks at the payment challenges that over-the-top (OTT) media providers here in the Middle East and Africa (MEA) are experiencing as they bid to monetise their content, and speculates whether this latest move by Netflix will be the nudge that they need to start rolling out their own prepaid top-up cards to consumers across the region.
