How can brands such as Amazon Prime and Netflix ensure they approach high growth markets fully prepared, to maximise the viable revenue opportunities on offer?

As advanced economies are rapidly reaching saturation point and consumer acquisition is becoming increasingly challenging, digital content brands seeking expansion have no option, but to look for new revenue streams.

With three billion content-hungry consumers, high growth markets offer exactly this. In fact, according to Upstream’s 2016 Developing Markets Mobile Commerce report, there is an estimated $70bn revenue opportunity on offer.

Not only is there a desire for digital services and a willingness to pay, but with the purchasing power of consumers also increasing, emerging markets are a truly viable option for brands.

The expansion of Netflix to a further 130 countries earlier this year suggests these markets are beginning to be identified for their revenue potential, but digital content brands still have a long way to go before they are truly maximising the opportunity available.

Whilst Netflix recorded double the number of subscribers in Q1 this year compared to 12 months earlier, it has also projected a slowdown in new subscribers for Q2, suggesting more needs to be done to engage consumers.

Understanding the mobile-first markets and the habits and preferences of those within them is critical. For the likes of Netflix, it’s clear that taking a one-size-fits-all approach based on the practices followed in Western markets is not going to deliver long-term success.

Whilst there is an appetite for digital content services, this is simply not enough to drive revenue growth. Recognising the environmental and cultural limitations and adapting accordingly is going to be key for any brand looking to extend its reach.

So, how can brands such as Amazon Prime and Netflix ensure they approach high growth markets fully prepared, to maximise the viable revenue opportunities on offer?

netflix

Make digital services affordable

The economic intricacies of each emerging market means digital providers will need to adopt pricing strategies that take into consideration the huge gaps in GDP, compared to developed markets in the West.

The total cost of services needs to be affordable, taking into account both the initial cost of purchasing the service and the ensuing on-going cost of using it.

In terms of the initial cost for purchasing its service, for example, while Netflix introduced pricing in Brazil that is 39% lower than that in the US, it is worth bearing in mind that the income differential in other emerging markets can be as much as 94% lower compared to the US.

It is therefore necessary for brands to set pricing in line with purchasing power, adjusted to the local currency.

In addition to the initial cost of purchasing a digital service, streaming and mobile data charges are also costs consumers need to bear. For the average consumer in an emerging market, streaming costs use five times more of their monthly income, compared with the corresponding percentage of the average US consumer’s monthly income.

Therefore it should come as no surprise that the majority (87%) of consumers accessing digital services on mobile devices in high growth markets, demand lower data charges.

Netflix just released a new tool to help people avoid costly bills for high data use when viewing streamed television shows on mobile devices, which indicates that it is taking steps to overcome this.

Another approach brands can take is to create an affiliation with local mobile operators to offer bundles that reduce charges for consumers. Brands may also need to reconsider monthly subscription offers in emerging markets as pay cycles can be much shorter, often weekly.

Understanding the specifics of the market will enable brands to develop a proposition that suits the behaviour of the consumers they are trying to engage.

netflix data usage feature

Netflix’s new cellular data usage tool

Keep content ‘Lite’ to make it accessible

Digital brands that make their content as accessible as possible on mobile devices can perform better in developing markets.

In high growth markets, 61% of consumers report internet connectivity as still being slow and unreliable, with intermittent Wi-Fi, which means accessing digital content is reliant on mobile data. One option for brands to consider is to provide ‘lite’ versions of services, which use less data.

Additionally, it’s important to remember that digital commerce isn’t solely focused on apps. Research shows that consumers are accessing content via mobile web browsers more than apps (43% vs 40%).

SMS and MMS messages also still play a role for some services, so shouldn’t be discounted.

With this is mind, brands should not be too reliant or restricted to apps but instead deliver content through multiple delivery channels where possible to ensure they reach 100% of the population.

Deliver localised content

Before launching digital offerings in emerging markets, brands must first do their due diligence to understand what type of services are missing and develop content that truly meets consumers wants and needs.

Providing content and services that are compelling, have a local feel and are available in native languages will be important for brands.

Whilst there is a demand for international content in emerging markets, 76% of consumers have a strong preference for content and services to have a sufficient local feel, in terms of language and cultural nuances.

Netflix recently announced a move towards producing exclusive Bollywood content for the Indian market and also added Arabic, Korean and Chinese to the 17 other languages it already supports.

This willingness to adapt to the local market and deliver content that appeals to the consumers is something digital brands such as Amazon Prime will have to prioritise if they hope to truly take advantage of the $70 billion digital opportunity on offer.