A Case Study on

Rise of local content in OTT space. A study on the struggle of

In India pre-covid.

SUBMITTED TO

BALAJI INSTITUTE OF MODERN MANAGEMENT (BIMM), PUNE

BY

GIRISH PATIL

MM1921395
MBA MARKETING

SRI BALAJI UNIVERSITY’S

BALAJI INSTITUTE OF MODERN MANAGEMENT (BIMM)
S NO – 55/2-7, TATHAWADE, WAKAD, PUNE – 411033
 DECLARATION

Title of the Project: Rise of local content in the OTT space. A study on the struggle of
Netflix in India pre-covid.

I, GIRISH PATIL, student of Balaji Institute of Modern Management (BIMM), Pune hereby
declare that the project titled “Rise of local content in the OTT space. A study on the
struggle of Netflix in India pre-covid” submitted to “Balaji Institute of Modern
Management (BIMM), Pune” as an integral part of Masters of Business Administration, is
exclusively a bonafide and original work (except for those available in Public domain) done
by me during academic year 2019-21. No part of this report has been submitted to anyone at
any time before.

NAME: GIRISH PATIL

ROLL NO.: MM1921395
MBA-MARKETING 2019-21 Signature of student

Signature of internal guide Signature of external guide Signature of Director

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 TABLE OF CONTENTS

1.0 EXECUTIVE SUMMARY.............................................................................................................4

2.0 INTRODUCTION TO THE INDUSTRY.......................................................................................5
3.0 NETFLIX INC...............................................................................................................................10
3.1 INTRODUCTION.....................................................................................................................10
3.2 ROAD AHEAD.........................................................................................................................12
3.3 OBJECTIVE..............................................................................................................................13
4.0 CASE SCENARIO........................................................................................................................13
5.0 CASE ANALYSIS........................................................................................................................14
5.1 SWOT ANALYSIS...................................................................................................................14
5.2 ANSOFF MATRIX...................................................................................................................15
5.3 PERCETPUAL MAP................................................................................................................16
6.0 CONCLUSION.............................................................................................................................18
7.0 REFERENCES..............................................................................................................................19
8.0 ANNEXTURES............................................................................................................................20
ANNEXTURE A.............................................................................................................................20
ANNEXTURE B.............................................................................................................................20

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 1.0 EXECUTIVE SUMMARY

Netflix is an American media services and Production Company. The company headquarters
are in Los Gatos, California. The company was founded in 1997 by Reed Hastings and Marc
Randolph in Scotts Valley, California. The company started off as DVD rental service and
was successful in kicking out Blockbuster from the American market. Later in 2010 Netflix
expanded its business with the launch of streaming services while still retaining the
subscription based DVD rental model.
Till the end of 2019 Netflix has a subscriber base of 167 million out of which 60 million
subscribers are based out of the United States. These astonishing numbers make Netflix an
undisputed market leader in the subscription based video on demand over the top industry
across the globe.
After it’s tremendous success worldwide Netflix launched in India in January 2016 aiming to
take on Amazon Prime and Hotstar in India. By the end of 2017 Netflix gained 520,000
subscribers. Netflix initially did not invest much in local content but its competitors Amazon
Prime and Hotstar were leading the Indian market with their strong local productions.
This case study aims to analyse the reasons for Netflix’s struggle in India after 4 years in
India. Even after 4 years in India the market share of Netflix is 1.4% whereas the market
leader Hotstar has a whopping 69.40%.
This case study is from a marketing point of view and looks to analyse the strategic
approaches taken by Netflix and their pricing which appeared to be the reasons for Netflix’s
struggle in India along with a few possible suggestions or approaches that a brand in that
scenario can adopt to achieve what needs to be achieved in the long run.

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 2.0 INTRODUCTION TO THE INDUSTRY

A decade ago, "Watching TV" meant sitting in front of a screen, waiting for a set time to start
your favourite program. But with the rapid technology development coupled with the growth
of video-on-demand (VoD) options, viewers can now stream content either from a traditional
TV package or from an online source. VoD platforms have created huge opportunities for
customers now have greater control over what, when and how they watch content. There is a
considerable number of self-reported VoD viewers. According to an online study conducted
by Nielsen in 61 countries, it was found that nearly two-thirds (65 percent) of global
respondents watch some form of VoD programming that includes long and short-form
content.
The number of self-reported VoD viewers is significant. Nielsen's online study in 61
countries found that almost two-thirds (65%) of global respondents watch some form of VoD
programming that includes long and short form content.
Through December 2017, India's Internet user base was 445.96 million (the world's 2nd
largest behind China alone). The overall internet penetration of India through December
20172 was 34 per cent. The penetration of urban internet in rural India was 76.4 percent
against penetration of just 14 percent. For India's total Internet users, 81% (362.87 million)
has broadband internet access and 95% (424.76 million) has wireless access to it. Of the total
Internet users, 70% (313.92 million) are urban.
The lightning rapid development of first-time internet users is the result of the influx of cheap
mobile devices combined with attractive low-cost data plans in both rural and urban areas.
High speed, broadband, and wireless are the new generation of internet in India. 

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Source: The Indian Telecom Services Performance Indicators December, 2017

Source: ComScore MMX Multi-Platform Report, March 2018

By March 2018 95% of the total mobile internet users registered for entertainment purposes.
In March of the previous year, this figure was 91%. The charts below demonstrate how the
consumption of entertainment content is an extremely popular practice for digital users.

Source: comScore MMX Mobile Metrix Report, March 2018

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Source: PwC India
There are currently around 40 over - the-Top Media Services (OTT) providers in India who
distribute streaming media over the Internet. In fiscal 2018, India's OTT market was worth
some 2,150 crore (between $221.5 billion, $303 million as of 2018), and in 2019 its value
increased to some $35 billion. The Indian OTT market is expected to grow 45 percent by the
end of fiscal 2023, according to KPMG Media and Entertainment Report 2018. According to
an Ernst & Young report, the country's number of OTT users will reach 500 million by 2020,
making India the second-biggest market after the US.

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Source: comScore MMX Mobile Metrix Report, March 2018

Source: VentureBeat

8
 Market Share by Acti ve Users
Hotstar 40.18%

Jio TV 17.60%

Voot 11.76%

Sony Liv 3.17%

Netflix 2.08%

Amazon Prime 1.43%

Alt Balaji 0.21%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%

Source: Statista.com

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 3.0 NETFLIX INC.

3.1 INTRODUCTION

Netflix began online rentals for films in 1997. It launched a DVD rental and sales website
netflix.com next year, and started a subscription service the following year. Netflix
introduced streaming of TV shows and movies on personal computers in 2007, and extended
this facility during the next three years to Blu-ray disc players and TV set-top boxes, gaming
consoles and tablets. The expansion of Netflix to other territories began in 2010, as its digital
footprints spread across Canada, Latin America, Europe and so on. Netflix was available
worldwide by 2016.
India is Netflix's biggest subscription market, with a potential customer base of 100 million.
Netflix had 520,000 subscribers at the end of 2017, according to IHS Markit12, 6-8%% of
which are paying for the services.

Source: Netflix.com
Netflix was introduced in India with the goal of providing Indian viewers with international
content, so it did not invest heavily in local content. It is gradually changing its approach to
realize that its rivals including Amazon Prime India and Hotstar have built a greater
subscriber base with local productions. Reports suggest greater binge consumption of Netflix
in India (3 days) compared to a global average of 4.

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44% users state it was among the top five travel essentials15. Netflix is also viewed heavily
on connected televisions, making up 34% of its viewing hours in India.
Netflix and other over - the-top (OTT) platforms are slowly but steadily eating the cable TV
business, a new KPMG report said, adding that in the fourth quarter (Q4) of the financial year
2019 there was a decline of almost 12-15 million active cable and satellite (C&S) subscribers.

Source: eMarketer, September 2019

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3.2 ROAD AHEAD

Netflix partnered with Green Gold Animation to launch the original animated series of its
first children in India, called Mighty Little Bheem, which will debut in 2018.
Netflix acquired the rights to stream the war epic Bahubali of SS Rajamouli: The Beginning
and Bahubali 2: The Conclusion for INR 255 million (USD 3.74 million). In April 2018,
Netflix partnered with Tatasky, through which Tatasky subscribers can browse and access the
entire Netflix service. Netflix also has partnerships with Vodafone, Airtel and Videocon.
Netflix plans to spend $8 billion (approx. INR 544 billion) on content globally in 2018,
compared to the $6 billion (INR 408 billion) it spent in 201718. It will create more than 700
original spectacles. It plans to add more than 100 hours of original content to India for India
and is launching 5 new original shows-Leila, Ghoul, Crocodile, Selection Day and Bard of
Blood. Reportedly, Netflix has set aside 3,000 crores ($418 million) for localized Indian
market content.

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Source:media.netflix.com

3.3 OBJECTIVE

1. To find out why does Netflix have such a low market share in India despite being a
global leader?
2. To find out if local content driving the scene for Netflix in India.

4.0 CASE SCENARIO

This case study aims to analyse the reasons for Netflix’s struggle in India after 4 years in
India. Even after 4 years in India the market share of Netflix is 1.4% whereas the market
leader Hotstar has a whopping 69.40%.

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Netflix had difficulty in gaining a share of the Indian video-on-demand subscription (SVOD)
market due to its relatively high prices and low content in the local languages. Our latest
estimates show Netflix will have 8.1 million viewers in India this year since it entered the
market in 2016, which will grow to 10.2 million by 2020. Netflix viewership in India
represents less than 5 per cent of the country's total digital video viewers.

Source: entracker.com

5.0 CASE ANALYSIS

5.1 SWOT ANALYSIS

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Source: Rancord.org (For reference), bsstrategyhub.com (For reference)

The SWOT analysis clearly highlights the opportunities on which Netflix can cash on in India
to gain more market share even after its premium pricing.
The ever growing threat of Hotstar is inevitable but Netflix needs to work on its cash burn
rate and needs to find new revenue generating options other than just subscription fees.
The strengths of Netflix set it apart and that is why the ARPU of Netflix is the highest
amongst all OTT providers. The highest ARPU enables a large revenue share but it still
struggles in unique users and a larger market share.

5.2 ANSOFF MATRIX

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Source: Rancord.org (For reference)

Ansoff matrix out here has enabled us to see Netflix’s generic competitive strategy and what
it can be ahead. In terms of market development and product development Netflix can surely
work on its strategy by redefining its content creation and pricing strategies for the world’s
second largest internet market.
As far as diversification is concerned, Edutech looks more of a gamble and an unknown
territory where Netflix has no experience.
Sports streaming is one area where Netflix can capture more market share to take Hotstar
head on. A strategy of staying away from sports streaming might have worked back home for
Netflix but trying it out for the Indian market is worth a try.

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 5.3 PERCETPUAL MAP

OTT PLATFORMS
Wide Choice

Hotstar

Sony Liv

Netflix Zee5

Amazon Prime Voot

Price
High

Price
Low

Limited Choice

Source: Indianexpress.com (For references)

The perceptual map here is created after referring to the data provided by Indian express
where it explained various subscription plans offered by all the OTT platforms along with
their offering in those plans.
Netflix was the most expensive OTT out of the prominent ones whereas Voot was the one
with no charge. In terms of library and overall offerings Hotstar was leading the pack
whereas Voot was the one with the smallest library along with basic SD (Standard Definition)
viewing.

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Hotstar turned out to be the complete package with mediocre pricing and the most extensive
library and overall offerings. Netflix was at par with the range of library but was also the
highest in terms of pricing.
This enables us to see where Netflix needs to work on in order to become a more optimum
OTT provider.

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 6.0 CONCLUSION

From this case study we were able to see what Netflix was doing currently and what it could
possibly achieve. Having the highest ARPU amongst the OTT players meant a large revenue
share but that would be credited only to the premium pricing strategy they adopt. When it
comes to market share Netflix is struggling possibly because of again its pricing strategy.
Hotstar has the largest market share because of its “Freemium” plan on offer. Hotstar offers
80% of its library for free. The wide choice it provides to the users is the reason users are
willing to pay the mediocre price plan starting from Rs. 299 per month as compared to Rs.
199 per month offered by Netflix only for mobile viewing that too in 480p.
The threat for Netflix has to be the debts it has because of its extensive investment in content
creation. Netflix spends 80% of its yearly budget on an average just for content creation. This
means it might run into losses with time.
The opportunity for Netflix is to adopt a new strategy of widening its offerings and taking
Hotstar head on by entering into the sports streaming market. Edutech can be a vague
longshot idea to play a gamble upon. Also Netflix had delayed its local content production in
India and that was the time the Jio disruption took place and its competitors like Prime video
and Hotstar widened its library by gathering more local content.

Many services in India are aggressively priced to lure customers, relying largely on revenue
advertising, said Frank Dsouza, an analyst with the consultancy group
PricewaterhouseCoopers. Unlike Netflix and Amazon, Hotstar outputs almost 80 per cent of
its catalogue to customers at no charge. At a New Delhi event earlier this year, Netflix CEO
Reed Hastings wondered loudly if Bollywood's land — which releases more than 2,000
movies a year and sells more tickets than Hollywood, but only generates a fraction of its
revenue — could be the place that gets its next 100 million users from its platform.
Analysts say sporting events and local content prove crucial when it comes to bringing new
users to video platforms and then keeping them online, two areas where international giants
are fighting. SonyLiv, which streams the FIFA World Cup exclusively in India, is witnessing
similar growth in its spectatorship. Uday Sodhi, executive vice president and head of digital
business at Sony Pictures Networks India, told CNBC each game generates an average of 1
million concurrent views on the platform. Amazon and Netflix for their part have also tried to
cash in on cricket's success in India. Both the OTT giants produced shows like Inside Edge
(By Amazon Prime) and Selection Day (By Netflix) where the main plot was based around
on the most popular sport in India i.e. cricket.
In 2019-2020, Netflix invested 3,000 crore rupees in India, Hastings revealed. He said the
streamer is ramping up original Indian content, something that will be visible in the coming
months to the audiences. So the road ahead for Netflix looks promising totally depending on
the strategies they look to adapt in the coming future.

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 7.0 REFERENCES

 Pogue, David (January 25, 2007). "A Stream of Movies, Sort of Free". The New York
Times. ISSN 0362-4331. Archived from the original on March 22, 2016. Retrieved
February 7, 2016.
 Netflix. (2018, May 14). Retrieved May 21, 2018.
 Molla, R. (2018, January 22). Netflix now has nearly 118 million streaming subscribers
globally. Retrieved May 11, 2018.
 ComScore MMX Multi-Platform Report, March 2018
 Complete List of Netflix India TV Shows (updated daily). (2018, April 16). Retrieved
May 11, 2018.
 Netflix India: List of Movies and TV Shows. (n.d.). Retrieved May 11, 2018.
 Clark, Travis. “Netflix Is Still Growing Wildly, but Its Market Share Has Fallen to an
Estimated 19% as New Competitors Emerge.” Business Insider, 24 Jan. 2020
 He, Amy. “Netflix's Competition in India, Youtube's Growing Share of Digital Video
Viewers.” EMarketer, Sept. 2019, www.emarketer.com/content/netflix-struggles-to-gain-
foothold-in-indian-market-youtube-benefits-from-increasing-digital-video-viewers.
 “Netflix Launches Mobile Plan for India at INR 199/Month.” Netflix Media Center, 24
July 2019, media.netflix.com/en/press-releases/netflix-launches-mobile-plan-for-india.
 Pti. “Netflix to Spend Rs 3000 Crore on Content in India.” The Economic Times,
Economic Times, 7 Dec. 2019,
economictimes.indiatimes.com/industry/media/entertainment/we-are-trying-to-become-
more-indian-in-content-offering-netflix-ceo-reed-hastings/articleshow/72400109.cms.
 Singh, Jitendra, et al. “MX Player's Reach Declined by 17% in First 15 Months of TIL
Takeover.” Entrackr, 1 Aug. 2019, entrackr.com/2019/07/mx-players-market-share-
witness-downfall/.
 Singh, Jitendra, et al. “MX Player's Reach Declined by 17% in First 15 Months of TIL
Takeover.” Entrackr, 1 Aug. 2019, entrackr.com/2019/07/mx-players-market-share-
witness-downfall/.
 Singh, Manish. “Netflix and Amazon Are Struggling to Win over the World's Second-
Largest Internet Market.” CNBC, CNBC, 4 Dec. 2018,
www.cnbc.com/2018/07/05/netflix-and-amazon-are-struggling-to-win-over-indian-
viewers.html.
 Verma, Hansa. “Netflix, Hotstar, Amazon Prime Video, SonyLIV, Voot, Zee5: Prices,
Download Options, Streaming Quality Comparison.” The Indian Express, 9 July 2019,
indianexpress.com/article/technology/social/hotstar-amazon-prime-video-sonyliv-netflix-
voot-zee5-prices-streaming-quality-download-options-compared-5814474/.
 Trivedi, Darshan, and Chirag Dagli. Indian OTT Platforms. MICA CMES, 2018, Indian
OTT Platforms.

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