ARTICLE 1: NETFLIX VS DISNEY HOTSTAR VS AMAZON PRIME PRICES IN INDIA COMPARED

Article: https://www.indiatoday.in/technology/features/story/netflix-vs-amazon-prime-vs-disney-hotstar-prices-in-
india-compared-1887587-2021-12-14 - [ DATED- 14-DECEMBER_2021]

SUMMARY: The breakout of Covid-19 has accelerated India’s adoption of OTT service. There are three main
streaming players in the OTT market, namely, Netflix, Amazon, and Disney Hot star. There are also other
players in the market such as Mx Player, Sony liv, Zee 5 etc. which are working on subscription models. Despite
strong demand in the market, Netflix has missed the subscriber target by 2 million. The new plan now cost as
low as Rs. 149 per month and Netflix took a 60% reduction in cost compared to its previous plan. Netflix was
one of the international OTT platforms, that decided to enter the Indian market after tasting success at the
international platform. The following table highlights the market share and Market revenue percentage.

Concept: Elasticity of OTT Platform and Perfect Substitution

Perfect Substitutions: Two goods for which an increase in the price of one leads to an increase in quantity
demand of other goods.

The Elasticity of Demand: The elasticity of Demand is defined as a percentage change in quantity demanded
of a good resulting from 1% increase in its Pricing.

Explanation

Perfect Substitution:
Netflix had kept its subscription pricing at Rs 499 per month which is in line with other OTT platforms at Global
levels. However, in India, Hot star and Amazon prime have subscription
plans close to Rs 999 per year. Hot star, Amazon prime are the perfect
substitute for Netflix and the premier rates of Netflix have led to a
decrease in its market demand and an increase of subscriptions of Hot
star. The market share of Hot star in India is close to 50% whereas the
market share of Amazon Prime and Netflix both are at 22% and 5%. By
keeping a price greater than Amazon Prime and Disney Hotstar, Netflix
failed to acquire a greater market share in the Indian OTT market.
Table 1: Market share and Revenue from Mashable
India article
The Elasticity of demand:
It can be observed from data that OTT platforms are highly elastic in nature and hence, they are changing the
pricing scheme for Indian markets.
As per the elasticity definition,
The elasticity of Demand = (Q1-Q2) *P1/(P1-P2) *Q1

Q1 = Quantity demanded at P1 & Q2= Quantity demanded at P2.

As OTT platforms are elastic in nature, the decrease in price will lead
to an increase in demand for OTT platforms. Previously, Netflix was
considered as a luxury instead of a demand, however, due to
pandemic, the subscription to the OTT platforms have become a
necessity, replacing the standard cable expense. Netflix, which
initially entered the Indian market as a premium OTT platform, is
now targeting mass subscribers by offering affordable plans. Netflix
India is now offering a subscription plan at Rs. 149 per month which is almost 60% cut from the previous plan.
This pricing strategy will now attract more subscribers as the price has lowered and will help Netflix to
increase its market share in the Indian market.

Learning:
1. When a perfect substitute of a given product is available in the market, the price should be kept within
the range of the substitute’s price or lower to acquire greater market share.

1
 2. When a commodity is highly elastic, the demand for products will increase if the price decreases.

Revenue and Market Share: https://in.mashable.com/technology/26172/disneyhotstar-becomes-the-

most-subscribed-ott-giant.