Netflix Faces Being Blocked Without Local Office In Vietnam

Providers of cross-border over-the-top (OTT) television services such as Netflix and iQiYi will be permanently blocked if they do not establish legal entities in Vietnam, said an official.

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“If a cross-border OTT television service provider does not have a legal entity in Vietnam, the Ministry of Information and Communications will coordinate with telecommunications enterprises to block access to it,” Nguyen Ha Yen, deputy general director of the ministry’s Authority of Broadcasting and Electronic Information, said at a conference on the issue Monday.

Five cross-border OTT television service providers are operating in Vietnam, including two from the U.S. and three from China, he noted.

According to a new policy on communications media management that came into effect at the beginning of the year, pay television service providers operating in Vietnam must have a representative office in the country that falls under the management of Vietnamese authorities.

Photo: CNBC
Photo: CNBC

According to the ministry, the policy is to ensure fairness between international and domestic enterprises in the pay television service market.

“The world’s OTT giants attract a large amount of advertising but do not comply with Vietnamese regulations. That’s not fair to domestic OTT businesses,” said Tran Van Uy, chairman of the Vietnam Pay Television Association.

Uy said that if OTT television services are not managed, there is a risk their content could upset a variety of cultural, political, and legal norms.

Many films that are not allowed to be shown via Vietnamese OTT services due to violations of specific regulations are still broadcast by Netflix, he noted.

Huynh Long Thuy, general director of VieON Corporation, the owner of the Vietnamese OTT app VieON, said that over the past five years, cross-border OTT service providers have directly charged users in Vietnam, and have many times shown content that distorts Vietnamese history and infringes on the country’s sovereignty.

The streaming services did not remove the content until Vietnamese authorities asked them to do so. If Vietnamese OTT services provide such content, they will be punished immediately, Thuy said.

According to ministry statistics, revenues from OTT television services in Vietnam stood at VND1.55 trillion (US$65.68 million) in 2022, up 27.2% over 2017.

The number of OTT television subscribers reached 5.5 million, an increase of 26.2% compared to 2017.

Netflix may open a Vietnam office by late 2023

Netflix’s proposed office in Vietnam could officially open in late 2023, an inside source revealed.

“The company is in the early stage of planning for a local entity in Vietnam after completing an assessment in late 2022 that evaluated the security and political risks of operating an office in the country, including handling user data and sensitive content,” Reuters reported.

In December last year, Vishal Sarin, Netflix’s vice president, met with representatives of the Ministry of Planning and Investment’s Office, to discuss the opening of a representative office in Vietnam.

Photo: Reuters
Photo: Reuters

“Netflix currently does not have a representative office in Vietnam but has gradually invested in Vietnam by licensing more than 200 local movies, hiring Vietnamese partners to dub and make subtitles for these movies,” said Vishal.

According to a report by Google, Temasek Holdings, and Bain & Company, Vietnam’s digital economy is said to boast the fastest growth in Southeast Asia, with gross merchandise value rising 28 percent on-year to $23 billion in 2022. This figure illustrates the country’s vast potential and the main reason for Netflix’s desire to capitalize on this opportunity.

Since March 2022, when cross-border businesses in Vietnam started to declare and pay taxes, local authorities have collected more than $145 million from 42 companies. Of these, there are six major foreign corporations comprising Meta (Facebook), Google, Microsoft, TikTok, Netflix, and Apple, accounting for 90 percent of the market share in the revenue of e-commerce services and cross-border digital platforms in the country.

Charlotte Pho