In the previous article, we discussed whether Netflix is a success in India or not. While it is too early to be definitive, Netflix landed in India in search of its next 100 million customers, Basis reports, Netflix has only acquired 11 Million customers in India, so far. Netflix being written off by most because of this reason.
India has always presented a great opportunity for any business since there has been enough target audience for most businesses. Netflix has had a decent start in India and could reach its target to acquire all of its 100 million customers in India itself. It will now depend on the course they take further, which will define if they grow exponentially or not. Let’s analyze and look at possible avenues for Netflix to acquire more customers.
What Netflix could have done better?
Some of the popular reasons why Netflix has failed in India have been around steep pricing, tough competition and not enough control on content replication. Let’s look at how Netflix could fix them.
Fix Pricing Strategy
When it comes to steep pricing, Netflix undoubtedly is expensive. With this pricing, Netflix also imposed device restrictions like mobile devices only or maximum devices allowed. Four out of five Indian users admitted to sharing their OTT credentials with friends or family as per Vidooly’s “Indian OTT Landscape” report. Netflix IDs being shared easily in such a competitive market, adds to the pain.
However, when it comes to paying for a subscription, Netflix may not be the obvious choice for many. Rs 200 plan has helped to some extent, but there is no evidence to support whether this plan worked. Digital markets in India are heavily crowded with deals. Amazon, Flipkart, etc have made extensive use of discounting and cash-backs as a mechanism to win market share in India. Clearly, discounting is one method that has worked well for the Indian markets. Netflix could run campaigns that would trigger the psychological urgency to buy.
Stop Piracy !!
On top of pricing restrictions, content on Netflix is easily replicated on various content sharing sites (Torrents, etc). When you have stringent device-based restrictions, you cannot allow easy content replication. Easy access alternatives to content reduces the motivation to pay for Netflix subscription. Netflix could have controlled the content replication by putting strong checks. Bollywood movie ‘ URI – the surgical strike’ did put up a great example to stop piracy using a video that would get downloaded on torrent websites. They used this video downloaded from Torrents as a medium to demote piracy.
Fixing content replication and pricing may bring some short term respite for Netflix. In the longer run, Netflix needs to identify where can it look for growth for the longer horizon in India.
Does Netflix have enough Customer base in India?
Netflix has always positioned itself as being the premium content distributor. Considering this, we can equate that Netflix would want to target the affluent and soon to be the affluent class of India. Considering that the top 10% of Indians hold 77% of total wealth, we can assume that this 10% is easily the target audience. Assuming that Netflix acquires even 20% of these 10% affluent members, the number would mean, crossing the 200 million mark easily. So Netflix has an abundance in terms of the total target audience. However, Netflix also has to produce something that Indians connect well with.
Quality v/s Quantity?
An obvious question when it comes to what Netflix should opt for, quality or quantity. Being positioned as a premium player and targeting the affluent, Netflix would want to continue its focus on good quality content. However, very few India specific shows will not support the cause either. Indian markets, undoubtedly are complex and have multiple classifications. It is not easy to segment India with a simple binary tree. Hence they will have to invest heavily in Indian markets to produce various genres to cater to a larger audience.
Is Netflix content Made for India?
Most Indians have watched television serials and drama in the last few decades. There has always been a need for that fresh touch and hence series like FRIENDS, Big bang theory, Game of Thrones, have been popular in India, showing similar trends like the rest of the world. Thus reflecting many Indians have a similar taste as that of the world.
However, if Netflix were to glue all Indians to its platform, it needs to understand trends that develop in India. While Sacred Games and Lust stories were India based and had success, they were not in line with Indian trends. India has had a gradual shift from over the top and unrealistic plots to realistic plots. Some have still stuck to the unrealistic plots and done a great job too. Netflix cannot be on either side and will have to go deep in various genres. They will have to develop content that is not only realistic but connects masses in India. Likes of Subway and McDonald’s had to tweak their models to succeed in India. Similarly , Netflix might have to build content, that might not do well in other markets, but it will help gain the much-required market share in India.
Netflix while focusing on the market share should also aim for high stickiness, which is a highly untapped opportunity. Indians currently are watching only 4.6 hours of content daily, which is far behind the American average. By focusing on high stickiness, Netflix will have a clear advantage in the longer run, ensuring a strong stream of revenue.
Is Cricket an answer to all questions?
Whenever it is India and the entertainment industry, Cricket cannot be ignored. Hotstar has had some amazing success post rights to broadcast live cricket games. Netflix could use cricket games to gain market share. However, Netflix has never been into live streaming of games and hence they might absolutely stay away from such an option.
Tie-Ups / Ads?
Netflix also recently announced a tie-up with Samsung for exclusive content. Though this may help them get a few more customers globally, not many would be keen with exclusives. With the tie-up, Netflix could have offered to say cheaper plans or higher resolution or early access. Netflix may not want to shell out heavily for a Samsung only shows. Though, some more tie-ups like this which help them gain in Indian markets might be a great advantage. They soon need to identify if they can explore similar tie-up or other avenues to grow.
Closing Notes
Effectively, Netflix needs that sense of urgency to win Indian markets. With the stiff competition and even Disney+ entering Indian markets, Indian markets will become tougher to win. Covid-19 lockdown situation might help gain some eyeballs, but that in all probability will be a flash in the pan. Netflix needs to do address market needs with the right content and also maintain a healthy pace to win complex Indian Market.
Also Read – Why Disney decided to start their own streaming service
Reference
https://www.oxfam.org/en/india-extreme-inequality-numbers
https://techcrunch.com/2020/02/13/netflix-fends-off-new-streaming-rivals-by-way-of-samsung-partnership/
https://www.cnbc.com/2018/07/05/netflix-and-amazon-are-struggling-to-win-over-indian-viewers.html
https://www.livemint.com/industry/media/netflix-s-next-big-market-is-crowded-with-cheaper-rivals-1563469842864.html
https://www.bbc.com/news/world-asia-india-49109007
https://inc42.com/features/heres-what-india-binge-watched-in-2019-in-ott-video-streaming/
Great analysis Nikhil. Quite comprehensive.
Thank you Shardool !!