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Netflix’s Entry into India

CASE STUDY, STRATEGIC MANAGEMENT
ET Cases, 12 Pages

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Netflix’s Entry into India

 

“India being such a great production hub (for films), this is something we can look for sure. In terms of Indian content, we’re looking at a new wave of Indian independent cinema that’s really exciting us. What’s really important is, now that we’ve launched, we get to see what people are engaging with. We’ll add more of what people want to see.”1

- Chitavan Patel, Director, Content Acquisition, Netflix


The trivial search for a Yoga instructional video on YouTube led to a video by Rajshri Entertainment Private Limited (Rajshri). Free video content from a production house like Rajshri was a surprise as Rajshri was one of the oldest players in the Indian film industry and had produced blockbuster Hindi movies like Dosti (1964),  Maine Pyar Kiya (1989), Hum Aapke Hain Kaun (1994), etc. In depth internet search confirmed that, while Rajshri makes and distributes movies, it also produces 200 minutes of web-only video per day2 and offers it on ad-based video streaming sites like YouTube at no cost. Though Rajshri believes that the future is in online  streaming, it also agrees to the fact that free video is the norm in India. “The Indian consumer is just not willing to pay for content,”3 said Rajjat A. Barjatya, CEO, Rajshri. Not just Rajshri, but stalwart like 21st Century Fox, through its Star India, offers free online access to sports broadcasts, movies and TV shows through a website and  mobile app called Hotstar. While free streaming, low-cost cable or pirated content happens to be the norm in India, few local and international players, like Netflix, are  currently persuading to change this habit of Indian consumers and get them to pay for online video content.

Netflix is a monthly subscription-based Over-The-Top (OTT)4 video streaming service provider that launched its services in India (along with 129 other countries) as a part of its international expansion strategy on January 6th 2016. The news of its launch was received with pessimism by the industry experts because of its high monthly subscription rates and the numerous hurdles – like price sensitivity of consumers, poor data connectivity, multitude of languages, competitors, etc. .................................... ...................................

 


  • 1 “Netflix content in India may very well double in a year”, http://articles.economictimes.indiatimes.com/2016-01-08/news/69615281_1_content-user-better-call-saul, January 8th 2016 (accessed date: March 18th 2016)
  • 2 Vindu Goel, “India Offers Atypical Video Challenges”, http://www.nytimes.com/2015/12/28/technology/bollywood-and-usmedia-giants-try-to-induce-indians-to-pay-for-video.html, December 27th 2015 (accessed date March 18th 2016)
  • 3 Ibid.
  • 4 Over-The-Top (OTT) refers to video, television, and other services provided over the Internet rather than via a service provider’s own dedicated, managed IPTV network.

Teaching Note Preview

Netflix’s Entry into India

 

Synopsis

The Indian Over-The-Top (OTT) Video-On-Demand (VOD) market got its biggest competitor, Netflix, in January 2016. Netflix is the world’s largest OTT player and its entry threatens the already existing players in the Indian personal entertainment market including the OTT players and the pirates of the industry. But in a market where ‘Free’ is the norm, and even big production houses offer free (ad-based) video content on streaming platforms like Youtube or their own OTT platforms, will Netflix be successful with its high-priced subscription-only model? Will it be able to lure the Indian consumer to change their habits and pay for the offered  content? Will it be able to overcome the infrastructural hurdles like low internet speeds, challenging business environment rampant with piracy and competitors  offering low-cost alternatives?

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

The students/participants should be asked to be prepared with the theoretical concepts of Market Entry Strategy, Pricing Strategy, Revenue model and Customer Value Proposition.

Case Positioning and Setting

This case study can be used in the MBA program for the following:

  • Strategy Course – Market Entry Strategy; Pricing Strategy; Customer Value Proposition; Revenue Model

 

Assignment Questions

  • I. Analyze the nature of India’s Over-The-Top (OTT) Video-On-Demand (VOD) market and discuss Netflix’s market entry strategy into Indian OTT market. Will a one-size-fits-all pricing strategy of Netflix work in India?
  • II. Analyze the efficacy of Netflix’s customer value proposition with respect to its strategy compared to its competitors’ strategies. Given the low costs of other OTT players and other personal entertainment modes, can Netflix put a compelling cost-benefit proposition for mass adoption in India? Will Netflix sustain in a market that has a substantial base of illegally-accessed and pirated online content?
  • III.......................................................

 

Preamble to the Case Study Analysis and Suggested Orchestration

This case study provides an opportunity to understand the reasons for Netflix’s global expansion, its entry into the Indian OTT-VOD market and the nature,  characteristics and competitive scenario of the Indian OTT market. It also helps in understanding the pricing strategies and revenue model of Netflix. It also analyses challenges that Netflix would be facing in the Indian market. It also allows a discussion on the possible strategies that Netflix should adopt to  overcome the hurdles posed by the Indian OTT market. The case study analysis was carried out as presented in Exhibit (TN)-I.................

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Abstract

Amidst prevalent piracy, low internet connection speeds and availability of full-length movies and television episodes at very low-costs (or free) on cable TV and several websites, Netflix launched its video streaming service in India in January 2016. However, its ‘subscription-only’ model’s pricing was not adjusted to the Indian market but was maintained at the global standards, which was very high compared to that of the existing competitors. With its strategies, would Netflix be successful in such  business environment? This case study can be used to learn about market entry strategy of Netflix, its revenue model and pricing strategy vis-à-vis its competitors in India. This case study enables a discussion on whether Netflix’s market entry into India would be successful in the long-run given the highly price-sensitive nature of the Indian consumer and other infrastructural challenges in the country.



Pedagogical Objectives

  • To understand Netflix’s market entry strategy into India’s OTT (Over-The-Top) personal entertainment category and analyze the efficacy of its customer value proposition
  • To analyze Netflix’s pricing strategy, based on its ‘subscription-only’ model vis-à-vis the competitors’ pricing strategies
  • To discuss and debate on the challenges that Netflix would be facing in India’s highly price-sensitive personal entertainment market and explore the possible and workable solutions for the same

Case Positioning and Setting
This case study can be used in the MBA program for the following:

Strategy Course – Market Entry Strategy; Pricing Strategy; Customer Value Proposition; Revenue Model



This Case Pack Includes:
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- Case Study
- Teaching Note (**ONLY for Academicians)
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