The Vedica Scholars Programme for Women

Net-Bet Netflix

A report on Netflix in India

Ankapali Mukherjee

Structure of Argumentation

Sandeep Sen

February 5, 2022
Table of Contents

EXECUTIVE SUMMARY ................................................................................................................ 3

INTRODUCTION ........................................................................................................................... 4

CURRENT SCENARIO ................................................................................................................... 6

PROBLEMS AND RECOMMENDATIONS......................................................................................... 8

CONCLUSION ............................................................................................................................ 11

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Executive Summary

In India, OTT platforms have changed the way people think about entertainment. These OTT

platforms' innovative features have shaken Indian television's dominance.

Netflix, headquartered in Los Gatos, California, launched in India on January 6, 2016, with

the goal of expanding its customer base. With nearly 222 million worldwide subscribers,

Netflix is the most popular OTT platform in the world.

Despite the fact that Netflix has never disclosed the number of subscribers in India, market

estimates place the figure between 4.3 million and 4.5 million, placing it below competitors

Disney+Hotstar (36 million) and Amazon Prime Video (17 million).

This report discusses the various factors that contribute to Netflix's low subscription rates in

India. Also provide recommendations on pricing strategies, easier payment methods, content

and cataloguing, marketing strategies, and additional features to bring the OTT giant up to the

mark with competitors in India.

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Introduction

Traditionally, movies and other audio and video content have been consumed through

theatres and television. Unlike traditional media, streaming services tell a diverse range of

stories that are not constrained by censorship, box office, or demographics. It provides a

viewing experience with significantly improved sound and visual quality, provided

consumers have a stable Internet connection. (Sundaravel & Elangovan, 2020)

In recent years, the OTT Platform has empowered customers by providing them with a

variety of entertainment options. Surfing through channels is no longer necessary, and

viewers can now make informed choices about what to watch. Over-the-top television and

video revenue is expected to exceed $80 billion by 2022. (Kwon & Park, 2019)

In India, the overall Video-on-Demand market has been rapidly expanding. Revenue

increased by 62% from $193 million in 2017 to $313 million in 2020. The overall market will

generate $460 million in revenue by 2024, representing a 10% CAGR. (Sundaravel &

Elangovan, 2020)

This is where Netflix enters the picture.

Reed Hastings and Marc Randolph founded Netflix in 1997. Its main line of business was

mail-order DVD rentals. It shifted its primary focus to video-on-demand via the internet in

2007. It now has 222 million active subscribers and a market capitalization of nearly $180.07

billion. (Khanna, 2017)

Netflix debuted in India on January 6, 2016. People were initially very excited about it. Many

people signed up to try out this eagerly anticipated service. However, as the months passed

or the free trial period expired, people unsubscribed from the service. The monthly fee

ranges was from Rs.200 (mobile, single user) to Rs.800 (any four screen). Since its debut in

India, it has struggled to gain attraction with the country's viewing audience. Although

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Netflix is synonymous with streaming media worldwide, it has only acquired 2% of total

viewers in the Indian market, trailing market leader Hotstar, which owns 40% of the

country's market (2018). (Vishwanath, 2021)

At this point, Netflix need to decide which path to take in order to increase its market

capitalization and membership base in India.

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Current Scenario

Since its inception, Netflix India has nearly doubled its revenue to Rs 923.7 crore (FY2019-

20) from Rs 470.5 crore; net profit has also increased to Rs 8.92 crore from Rs 5.16 crore in

the same period. Today, Netflix has 5.4 million subscribers in India's expanding SVOD

market. Despite its strong performance, Netflix – which reported global revenue of $25

billion in FY20 – faces a difficult task in expanding further. It ranks fourth in this segment

with 5.4 million subscribers. The task is difficult because the market leader, Disney+ Hotstar,

has an estimated 34.5 million subscribers, while Amazon Prime Video (19.7 million) and

Zee5 (6.5 million) trail Netflix. Surprisingly, all of them are based on a freemium model.

(Gopalan & Sen, 2020)

The Netflix SWOT analysis will help us to identifies the current scenario more easily.

• Strength:

Netflix's original movies and TV shows offer a plethora of opportunities for aspiring

filmmakers.

The platform's content mode is just as appealing to the audience as their original

content.

Netflix is extremely adaptable, constantly changing its service to meet market demand

and viewer preferences.

It has established a strong brand reputation and has become a household name.

• Weakness:

Netflix has limited copyright, which has a negative impact on their revenue increasing

the debt.

Several countries suffer from a scarcity of original content.

The company is primarily reliant on its North American customer base.

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 Netflix lacks competent customer service executives, which harms customer service

and leads to lower customer satisfaction.

• Opportunity:

Because Netflix has agreed to sign up for exclusive Netflix-only content, they can

introduce additional product lines such as video games, comic books, and so on.

Netflix can increase its subscriber base by forming strategic alliances with local

markets, allowing it to capture the local market.

The company has the option of creating new concepts that outperform other OTT

platforms.

• Threats:

Content piracy has severely harmed Netflix.

Another reason for fewer Netflix subscribers is that many people use the same

account at the same time.

Government regulations in some countries may prevent them from expanding.

The presence of several traditional OTT platforms.

COVID-19 has had an impact on the production of new original shows and films.

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Problems and Recommendations

• The Price Debate

So far, Netflix has maintained its position as a flagship service, charging exorbitant

prices. Netflix's most basic plan, which costs INR 149 per month, only allows for one

user account on a single device. With the INR 649 per month premium plan, it also

supports 4K streaming across four concurrent streams. (Mundhra & Staff, 2022)

In the absence of context, these figures appear adequate, if not reasonable. After all, when

compared to its foreign pricing [$10-20 (INR 750 – INR 1500) in the United States and

£6 – £14 (INR 600 – INR 1400) in the United Kingdom], Netflix provides the cheapest

service in India. However, when certain macroeconomic metrics are considered, it is clear

why Netflix does not appeal to the average Indian as a viable option, despite India being

one of the world's largest content markets. (Mundhra & Staff, 2022)

In India, where the average monthly wage is INR 32,800, Netflix is simply not an option.

As things stand, while Netflix may feel cheated, it needs to reconsider its pricing strategy

in order to compete with cable, which costs an average of INR 300 – INR 350 per month

in India, compared to $64.41 in the United States (INR 4,830). (Mundhra & Staff, 2022)

• Bundled Services Or Ad-Supported OTTs

Netflix does not provide any additional benefits. Its competitors, on the other hand, are

not making the same mistake.

Amazon Prime subscribers also get free delivery and exclusive deals on Amazon and its

services. Disney+Hotstar has partnership agreements with television broadcasters. It has

the rights to stream multiple Indian channels, as well as the entire Disney+ and HBO

libraries.

In addition, the streaming service has exclusive rights to the IPL and EPL. Furthermore,

both have bundle agreements with all three of India's telecoms, making them far more

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 accessible to users. Netflix, on the other hand, is only available through Vodafone's

postpaid plans worth INR 1,099 and above.

Now is the time for Netflix to begin offering additional services and products with their

subscriptions, such as exclusive merchandise, games, music, or possibly an editing

platform. They can also partner with other telecoms to entice more people to subscribe.

• The Content Conundrum Plagued

Netflix has spent approximately $3 billion on original and licenced local content, but

has spent money promoting 'foreign' original content to Indians. (Socha, 2020)

One of the most vexing aspects of Netflix in the Indian market is its lack of localisation

and indigenisation. Netflix must recognise that categorising content for Indians, such as

love triangles, explicitness, nudity, and not generalising 'masala' content, is not the best

approach.

Netflix needs to be a welcoming environment for the 'non-elite,' who want to end the

weekend by watching something that can be consumed quickly. Furthermore, experts

predict that growth in the OTT market (particularly in India) will be fueled by a demand

for content localisation via appropriate cultural references and vernacular content in local

languages. Services such as dubbing, subtitling, translation, and audio descriptions can

help with this.

• Update Payment

Bank cards penetration in India is very low, but e-wallets penetration is very high. Giving

people the option of paying with cards only creates a negative perception in their minds,

and they do not find it convenient. Providing payment options via e-wallets will increase

the consumers base in the pan India.

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• Freemium Strategy

While Netflix offers a free trial for a month to its users, this service is only available to

subscribers and thus requires a card, which causes users to be hesitant. Making some

content free to avail anytime without requesting confidential information can increase

awareness and thus penetration among the target audience.

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Conclusion

Without a doubt, the Corona crisis fueled significant growth in the video OTT space.

Netflix is expensive, but it simply does not provide enough value for the money that users

are currently paying. 74% of Indian subscribers believe the content they pay for is

overpriced.

Back in the day, Netflix was able to see the writing on the wall and successfully transition

from a DVD rental service to a streaming platform. As competition heats up and

technology evolves at a rapid pace, it will need to demonstrate similar agility. Netflix's

next five years will undoubtedly be very different from the previous five. Hastings'

philosophy of keeping things as simple as pasta and tomatoes will be put to the ultimate

test here.

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Reference:

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model, success of Netflix. Business Today. Available at:

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india/ [Accessed February 5, 2022].

2. Khanna, V., 2017. A study on factors affecting subscription rates of Netflix in India an

empirical approach. Delhi Business Review, 18(1), pp.83–100.

3. Kwon, Y. & Park, S., 2019. Research on the relationship between the growth of Ott

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https://ideas.repec.org/p/zbw/itse19/205203.html [Accessed February 3, 2022].

4. Mundhra, L. & Staff, I., 2022. Why Netflix is failing in India? the reason is more than

just its pricing. Inc42 Media. Available at: https://inc42.com/features/why-netflix-is-

failing-in-india-much-more-than-just-a-pricing-strategy/ [Accessed February 5, 2022].

5. Socha, G., 2020. Strategic analysis of Netflix in India. possible strategies and

recommendations. GRIN. Available at: https://www.grin.com/document/908830

[Accessed February 5, 2022].

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