It isn’t breaking news that movies and TV shows have been the prime source of entertainment for all of us. Book lovers, please don’t get mad.
Ever since streaming services arrived in the Indian market it has done a neat job being a competitor for the regular television cable services. OTT platforms offer a range of entertainment from movies, series, reality shows, and everything else that falls in between.
One of the most popular streaming platforms is Netflix. They sit on 3rd position among competitors Amazon’s Prime Video and Disney+ Hotstar.
Ted Sarados and Reed Hastings founded Netflix in 1997, which started providing streaming services in 2007 and hasn’t stopped since. It’s difficult to find anyone who’s not heard of Netflix and hasn’t used it to watch a movie or a series at least once.
Netflix claims to have over 222 million subscribers worldwide. As a consequence, it is fair to say that it is the most popular streaming service.
However, Netflix India unexpectedly encountered serious issues, and they are solely to blame. Netflix projected to win 2.5 million new members in the first quarter. But on the other hand, has lost over 200k customers in only a few months, and its stock has plummeted.
Netflix’s share price plummeted back in April of this year and has remained at the lows so far. Comparatively, it’s down by a whopping 43.60%
Not only this they lost almost a million subscribers between April and July as more viewers decided not to renew their subscriptions.
So why is that?
Netflix is struggling to retain its position as a flagship service, raising the price to outrageous levels. Netflix’s most basic plan, priced at INR 149 per month, allows for just one user account on one device, either a smartphone or a tablet.
It also provides 4K streaming across four concurrent streams with the INR 649 a month premium plan.
Without context, these figures seem adequate, even fair. After all, as compared to its global price [$10-20 (INR 750 – INR 1500) in the US and £6 – £14 (INR 600 – INR 1400) in the UK], Indian Netflix provides has the lowest cost.
However, when key macroeconomic indicators are considered, we can understand why Netflix does not appeal to the typical Indian as a feasible alternative, despite India being one of the world’s biggest content marketplaces.
Surprisingly, considering that Netflix is far and by the most expensive OTT platform in India, it does not provide any additional services. Its rivals, on the other hand, are not making the same error.
Subscriptions to Amazon Prime include not just video-on-demand programming, but also free delivery and special discounts on Amazon, Amazon Prime Music, and Kindle Unlimited.
Amazon Prime also consistently licenses the most popular Bollywood films and distributes material in numerous Indian languages, making it a considerably more appealing option for individuals searching for entertainment in Indian languages.
On its busy main page, Prime subscribers can also access eight other smaller streaming services – programs, films, reality TV, and documentaries – with a single payment option.
Disney+ Hotstar, on the other hand, has collaborative relationships with TV broadcasters and has the right to stream several Indian channels, in addition to the complete Disney+ collection and the HBO library.
Furthermore, Disney+ Hotstar has the rights to the English Premier League and the IPL, two of India’s most-watched sports events – IPL allegedly had 7.2 million views on Day 1 alone for Hotstar.
Furthermore, both have package agreements with all three of India’s telecoms, making them significantly more accessible to subscribers. Netflix, on the other hand, is only accessible with Vodafone’s postpaid plans priced at INR 1,099 and more.
Lack of Localisation of content
While Indian Netflix is adjusting its pricing approach by first providing a mobile-only package and subsequently lowering prices, the emphasis on markets will also be important, according to analyst Karan Taurani, senior vice-president of Elara Capital.
“They offer a considerable amount of material, however, the majority of the programs are metro-centric, mostly in English, and some in Hindi. The platform’s content is geared toward an urban-metro audience. Localization of content is critical if they want to target Tier I and II markets” He said.
Taurani believes that when it comes to content localization, a regional language emphasis will be critical.
Since Netflix’s arrival, a big number of regional OTT Players have developed in India, capturing the population that can afford to pay for customized content. OHO Gujarat, Aha, and SUn NXt have dominated their respective marketplaces by catering to localized tastes in India’s Tier II cities.
While Netflix does provide regional programming, it lacks the excellence in writing and production quality that distinguishes it in the English genre content.
Another disadvantage of Netflix is its inability to concentrate on quantity. Netflix looks to be a big deal despite the low quality of material on its site. Since its arrival in India, the corporation has spent over Rs 3,000 crore and generated 70 originals.
It certainly falls short of the expectations of Indian consumers, who spend around 11 hours per week consuming online OTT material, compared to the worldwide average of eight hours per week.
Netflix seems to have undervalued its role in catering to another Indian addiction, cricket. In India, Disney+ Hotstar controls the OTT cricket genre. Cricket consumes more than all other types of OTT material in India during a live event.
Does Piracy have an effect?
Piracy required greater attention and effort, both on the side of the pirate and the downloader, back in the 2000s (i.e. until about 2015).
Pirates would go to great efforts to get material, whether it was ripping official CDs or DVDs, sneaking a camera into a movie theatre to film a running movie, or patiently waiting through hours of scheduled television to catch the complete run of a show.
With practically every download, downloaders had to spend in storage devices and high-speed internet connections, as well as risking virus infestations and unwittingly downloading malware and ruining their computers.
However, now that all information has been willingly posted online across several platforms, pirates may easily duplicate the content (using sophisticated software) or get the back-end file from secret sources.
Furthermore, with the evolution of smartphone technology and the speed of mobile internet, pirates are now more mobile than ever, and material is being pirated and streamed concurrently, on the move, rather than being limited to laptop or desktop systems.
Such a global phenomenon hurts businesses, especially ones that are licensing them. Imagine losing a chunk of new subscribers, or even older ones because a new popular show got pirated or leaked online.
Given the choice, most people will choose the free option.
More on Piracy
Netflix, which has spent approximately $3 Bn on original and licensed local content, has adopted the same playbook it uses in the US and other countries — it partnered with Indian studios to add local content but splurged money on pushing ‘foreign’ original content on Indians.
But it seems like a slow burn.
Fortunately for Netflix, it is not too late for the corporation to turn things around. While rivals have indisputably accumulated more members than they have, success in India’s streaming market does not now imply much.
Streaming services like Disney+ Hotstar, Zee5, and Sony LIV, like startups in other IT industries, presently offer a pittance as a monthly subscription, apparently anticipating that habit creation would convince consumers to endure price rises down the road.
Even with price cuts in 2022, Netflix’s pricing remains among the highest in India. And, for the time being, Indians are reluctant, and in many instances, unable, to pay these fees.
Furthermore, ARPU from India would be so low in comparison to other nations that, even if saturated, the Indian market would be of comparatively lesser relevance to Netflix investors for at least a few years.
That takes us back to Netflix’s annoyance. While the corporation has spent years focusing on home audiences over worldwide success from India, it is not too late to rethink what success in the country might truly look like and play a long game that takes Indian storytelling — and the heights it may achieve internationally — seriously.