Okinawa 2016 Interview: Netflix Japan's Greg Peters Talks SPARK And Launching In Asia

 

Greg Peters - Probably the best way to answer that question is “What’s the game plan internationally?” Our goal is to become the first global internet-based TV network, distributing movies and dramas made all over the world to everyone, and essentially breaking down these historical boundaries of either distribution, or windowing. What we are doing in Japan is entirely consistent with that global model. 

 

We want to bring consumers in Japan the best TV entertainment experience, so the latest in video technology, like 4K and HDR, in a windowing model where they get to enjoy content at the same time as everyone else around the world. No more waiting for weeks or months for a release. 

 

On the flip side, we work with content creators here, so that they can tell their stories at a quality level that isn’t supported by just a domestic market. Then we can connect them with a global audience, which is partly just distribution, so having the access there where everyone wants to get it. 

 

But it’s also about recommending a Japanese drama to people who might not have thought about watching one before, or maybe even anime. They don’t know what it’s like and they don’t know if they will like it. But they like other characteristics of the shows that we’ve got and we feel it’s likely that if we put it in front of them, and they have confidence in our recommendation system, they can try it out and fall in love with a whole new kind of drama that they would otherwise never have had access to.

 

 

We’re realistic about that too, where we think that’s an iterative multi-year process. Ultimately it’s giving people that opportunity, them seizing it and learning from it, and then iterating on it going forward. In this business you don’t ever know exactly when it’s going to hit or how it’s going to break or what’s going to happen, but we certainly have reasonable expectations that we are investing in the eco-system and making it stronger over a long period of time.

 

 

For me it’s an extremely passionate story. At its centre it’s a human story about the interaction between two people, and then obviously the setting is around Manzai (Japanese stand-up comedy). But also it’s this question of why people commit themselves to something that they love, despite all rational reasons why they shouldn’t, and all the sacrifices that they have to go through. It gets really extreme, the level that these people will go to for this art that they just love and are passionate about. 

 

 

We’ve seen this concern or caution among major content producers and rights holders, in terms of how they engage with us, in almost every market that we’ve served. It’s been a process of exposing people to the opportunity, them figuring out the balance of risk and reward, and trying to build a new business model. How do they feel comfortable engaging with us. And that’s over a period of time as well. Whether in England or France, where we found we had to go and convince people, it was sort of case by case. In Japan too, some broadcasters were enthusiastic to work with us and saw the opportunity, while others still don’t work with us today. People have to get confident that you’re real and you’re there to stay, and then somebody’s got to take that first step and realise the benefits of what we are doing in a global model. Then it starts to snowball from there. Let’s see how long it takes, but I think you’ll see a gradual softening of that process. 

 

 

We’re active in anime as well. It may be very much along this model that we’re talking about, how we iterate more towards the model we want. We distributed an anime called Knights Of Sidonia, which is based on a manga by Nihe (Tsutomu), who’s an incredible visual artist. We distributed it outside Japan first run and took the second run in Japan. We recently did Ajin, another really great manga, where we did a contemporaneous window in Japan and first run outside Japan, and we’ve got more projects, like Seven Deadly Sins, and a bunch more we haven’t announced yet. So we’re active in anime as well.

 

 

We’re ramping up the movie projects in general globally, so we’re certainly open to doing one in Japan as well. We haven’t identified or announced a project yet but we are there. In Korea, we are doing one with director Bong (Joon-ho), so there’s an example of an independent producer who’s got enough power within the industry to move outside of it and take a little bit of a risk. I think we’ll do the same thing in Japan too if we find the right project. 

 

 

Every country is different in that regard, so we’re going through a process of understanding what specific regulatory requirements we have to work with in every different market and finding a way to satisfy them and get the service to the consumers. We think we’re relatively neutral from a regulatory perspective, and optimistic that over time we can solve those kinds of problems. We’re in discussions with regulators around the world where these things come up. We think we bring a pretty significant value proposition to consumers, so there’s a reason for them to engage with us to try and solve these problems. And we’re trying to be respectful of their concerns and needs as well.

 

 

We knew there were elements of the Japanese market that would make it harder than other markets we’ve launched in. For example, the desire for Hollywood content, which is the most mature in terms of our offerings, is lower in Japan. Awareness generally for things like SVOD and device connectivity are lower in Japan. So those are impediments that we have to deal with, but generally we’ve been quite happy with the results to-date. 

 

It’s an iterative process again so we’ve got to educate, make people aware and give them a compelling reason to figure out what this thing is and why they should go do it. That’s one of the reasons we love Hibana. It’s based on a well-recognised novel and we think that, given the talent attached and the performances they’ve delivered, people are going to be excited about watching it and they’ll figure out how to connect that TV to the internet. 

 

Physical media is strong as well, there’s nothing intrinsic about the market that doesn’t put it on the same trajectory as other markets are on, it’s just a matter of timing. But when it comes down to it, when you want to watch something in your home, and you can click a button and get it, that’s a pretty compelling proposition.

 

 

Yes, there’s lots of competition in the marketplace here, and in lots of markets around the world. We have Hulu, which is not the American Hulu anymore, it was sold to Nippon Television here, but there are half a dozen local competitors, including Amazon, so everyone is generally seeing that this is a thing that’s going to happen, and they’re all trying to figure out a way to participate in that. 

 

 

Do we have a plan? Our plan is to get there. We talked about regulatory complexities, and that might be the most complex. Maybe North Korea, I don’t know, but there are certainly very specific considerations we have to deal with. We’re working through those and we’re hopeful we will be able to launch the service there sometime in the near future, but we don’t have any specific line-of-sight on that date yet.   

 

 

It’s a great question and one we don’t definitively know the answer to but I’m quite optimistic. If you do a good job of connecting audiences with really strong work, and if they like art films, there are people in France and Brazil and all around the world who want to watch those films. I consider Hibana to be a ten-hour art film, it feels very much in the visual style of Sayonara Kabukicho (aka Kabukicho Love Hotel). If we can find those people and connect them I think we can find an audience that will be surprisingly large compared to the traditional expectations of how well that would travel. 

 

We’ve done a couple of other dramas in Japan, such as Atelier and Good Morning Call, which have different targets. Those shows are being watched in reasonably sized numbers in markets outside Japan right now. Mostly Asian-focused but even in Brazil and other countries in Europe. We’re finding places where people want to watch content that they haven’t heard of before and they didn’t know existed.

 

 

We’re very interested in experimenting along those lines. Those experiments have a downside and in Europe we’ve seen multinational productions that, rather than result in the best of those cultures coming out, it’s been more of a watering down or mishmash of these elements. We’re a little cautious about this approach. We need to find projects that creatively support this kind of model. 

 

 

The calculus around that is that we want people with a strong creative vision who know what they want from project and have an idea that we think is interesting and will appeal to audiences that we’re currently connected with and ideally ones that we can connect with as we grow. Then we let them go with it because that’s what they do. It’s a bet, for sure, but when you find these great creators that oftentimes works out.

 

 

When we think about promotion in the traditional sense our job is very different to that of a theatrical promotion or a broadcaster. They have to make sure that people show up the day that movie is released and they’re going to watch it in that window. We really let the product do the traditional promotion, which is finding that audience based on the tastes and interests they have, and give them the opportunity to watch the show. So the promotional budget that we have is really more about communicating the service and why people might be excited about it in a way that gets them to try the free trial, watch something and see if they like it or not. So that’s really how we think about that budget. I don’t know the number off the top of my head, but we are spending several times that number on content. If you want to think about where are expenses go, it’s on licensing and producing content.

 

 

Critically, yeah. It’s got pretty good viewership around the world, so it’s satisfying some folks. You are going to see us experiment in a bunch of different ways. Some of them will be better than others and in different dimensions, whether that’s critically or just for the average consumer. We don’t have a single formula that we know works everywhere so we’ll just try a bunch of things and see what we can figure out. 

 

 

We’ve got a bunch that are coming, I don’t think we’ve announced any after this yet, but there are several that we’re very excited about. 

 

 

It’s not a situation where you can say “We’re going to do 10. Five in this genre and five in this”, because you may or may not get the opportunities that satisfy it. So we react to them as they come, but in general we have pretty ambitious goals to get to a dozen plus productions in the next 12 months and we would happily scale that even faster if the right opportunities came about. That’s more of a guess on our part, based on the opportunities we are seeing and we think are good, as to what we will likely produce.

 

 

It’s a place to connect with diehard film fans and show them the kind of things we’re producing and hopefully give them an idea of what we’re doing, that Netflix would be a cool thing to try out and share with their friends and build word of mouth that way. 

 

 

We’re operating at the high-end of Japanese drama production. That’s part of the proposition to creators, as we believe that since we can amass a bigger audience over time, it’s rational for us to invest at the high end of that range, based on what they can produce normally. We want people to take advantage of that opportunity to up that quality level. That should create a positive feedback loop, where people around the world can watch and see how good these things are, which can help reinforce that cycle.

 

 

I would call it an investment in exactly that sense. We are lower-scale than they are so to some degree our ability to effectively monetise our asset is less than theirs at this point in time. However, we’re on a 50-year mission to create the best possible entertainment network that we can and that means supporting ecosystems and great creators around the world. We see that as an investment and we believe it will pay a huge dividend if we do it well.

 

 

I joined Netflix almost eight years ago and have done lots of different jobs there, such as product and business development, partnership expansions and all sorts of things. I’ve been excited about Japan specifically and Asia in general for a long time as I thought there is a tremendous amount of opportunity here both on the consumer side and on the content creation side. When we thought about how to best address this market I volunteered to come out and try and help as best I could. I moved here about nine months ago, but was traveling here quite a lot before that.

 

I fell in love with Japanese films growing up and I’ve always had a strong appreciation for the creativity that we see in Japan, and mostly it’s in things like manga and anime and smaller independent films that are made by true visionary creators, who have the room to go do something super interesting. We see it a little bit less so in the more traditional large-scale productions here but that’s what I think is exciting, the opportunity to find those creators and give them an opportunity to create at a bigger scale, find a bigger audience and maybe do something amazing.