10 key questions when considering D2C international expansion
Video consumption habits have undergone a profound transformation over the past 10 years. Delivering content Direct-to-Consumer (“D2C”) via over-the-top technology has been a paradigm shift to the content distribution model with pure-players such as Netflix and DAZN, cloud providers such as Amazon, studios such as Disney, and traditional broadcasters such as NBC Universal and HBO all develop their own offerings.
To reach the scale required for the economics of D2C it is necessary to deliver the service across markets. In recent years leading D2C have expanded aggressively across geographies – Amazon Prime Video has presence in more than 200 countries, whilst Disney+ has reached over 70 countries within two years of launch. Netflix, also present in approximately 200 countries, has more than 60% of its customer base out of North America, with this region growing in the low single-digit, while the Asia Pacific region, for instance, is growing above 15% annually1. As such, getting international expansion ‘right’ is a fundamental key success factor for any D2C provider with ambitions to reach sustainable scale.
International expansion is critical to create sustainable scale economics for the D2C business model. However, multiple local factors such as content preferences and go-to-market requirements necessitate that country-specific rather than regional approaches are taken.”
The challenge with getting international expansion ‘right’ is that content providers cannot take a broad-brush regional approach – there are many factors such as viewers’ preferences and habits, the competitive landscape, network speed, penetration of devices, and willingness to pay, which mean that the approach needs to be adapted on a market-by-market basis. Given the costs of building a compelling content portfolio and CAC required for the go-to-market, getting it ‘wrong’ can be very expensive.
Based on our experience helping some of the leading D2C video providers in their internationalisation strategy, we have identified the 10 key questions that executives must answer for a successful international expansion divided in three categories:
- Strategy validation
- Value proposition
- Go to market
We believe it is critical that executives responsible for expanding their D2C offering into new markets consider all of these areas as given the dimensions of complexity within, and difference between, local markets it is the combination across these 10 areas that ensures successful market entry and growth.
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