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.”
- 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 day 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,” 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) 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. ................
Digital/Online Video Streaming Market in India
India is a fast-growing economy with a huge population of educated, tech-savvy youth with increasing income levels. As of December 31st 2015, in India, there were 1,036.41 million telephone subscribers of which 1,010.89 million were mobile users. It was also estimated that by June 2016, the number of mobile internet subscribers would reach 371 million – 80% of the overall internet subscribers in India (Exhibit II)..........
Netflix Market Entry into India
Netflix, a global service provider of streaming movies and TV series online, was founded by Marc Randolph and Reed Hastings in 1997 in Scotts Valley, California, US. In April 1998, it launched its website and operated as a traditional pay-per-rental model but in September 1999 it introduced monthly subscription model and built its reputation on its flat-fee unlimited rentals business model. Though Netflix started as a DVD-by-mail service, in 2007 it started streaming videos online and has
never looked back. By 2015, Netflix was present in 60 countries and had posted revenues of $6.77 billion and net profit of $122 million during the financial year............
Netflix’s Challenges in India
Netflix finally launched its global expansion with a borrowed capital of $1 billion, but not everything was as rosy as it seemed, especially with the Indian market. Undoubtedly though, Netflix has an advantage of being the largest player in online video streaming by its sheer size and presence in a number of countries.............
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. ..................
Exhibits
Exhibit I: Response to Business Line's Poll on 'Netflix in India'
Exhibit II: Growth of Internet Subscribers in India
Exhibit III: Mobile Data Consumption in India (in Petabytes)
Exhibit IV: Online Video Viewership in India (March 2011 vs March 2013)
Exhibit V: Netflix's Growth and Competitors in India
Exhibit VI: Netflix's Subscription Rates in India
Exhibit VII: Video Consumption Behavior of Indian Users
Exhibit VIII: Netflix's Flexible Data Plan
Exhibit IX: Competitors in the Indian OTT-VOD Market