Here are three reasons why newcomer Netflix will have a tough time in Singapore

There are several hurdles on its way.

Over-the-top content provider Netflix will have a tough time surviving by itself in Singapore, according to a report by DBS.

DBS highlighted that a key constraining factor for Netflix’s growth here is the relative small market size in the country.

“Singapore had 965,000 Pay-TV subscriptions 3Q15 with 80%+ household penetration. If Netflix can capture a similar market share with UK and US, Netflix is likely to see 400,000-500,000 subscriptions in the medium term. Given the comparatively small subscriber base, c.1% of the US base, we may see a limited catalogue of content, making the service less attractive to Singaporeans,” said DBS.

Censorship is another issue that Netflix has to contend with, as it might result in a limited selection of content for viewers.

“Netflix is likely to present a curated selection of content to viewers when it enters the Singaporean market. However, complying with censorship requirements is likely to be costly, putting further strain on the variety of content,” DBS said.

The popularity of free TV will also impact Netflix’s popularity here.

“Free-to-air TV is among the most watched TV programming in Singapore with a total weekly viewership of 85% in 2014. In contrast, total weekly viewership for pay TV was only 52%. Similar to the UK, this makes attracting new customers to the subscription video market (from outside the Pay-TV universe) more difficult,” DBS said.