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Is the stage set for Netflix to come to India?

Is the stage set for Netflix to come to India?

Author | Collin Furtado | Monday, Jun 29,2015 8:34 AM

Is the stage set for Netflix to come to India?

Netflix, a pioneer of video-on-demand television services, is expected to enter India by 2016. According to recent media reports the US-based company has firmed up plans to enter into the country.Netflix is one of largest on-demand content streaming company in the world with around 62 million subscribers out of which more than 40 million are in the US. The company’s growth in the US also resulted in ‘cord-cutting’ (a term used where viewers chose to unsubscribe from cable and satellite TV services) which is increasing in numbers steadily to opt for Netflix and other online video streaming services. 

Considering that the video-on-demand space is growing in India with players such as Big Flix, Spuul, Zenga, NexGTV, Ogle, Sony Liv, Hotstar, etc. and more recently one of the newest editions being Singapore-based Hooq, the arrival of Netflix to India seemed only a matter of time. Even Amazon is looking to make its entry into video content streaming services in India. The entry of Netflix is expected to give competition not only to many video-on-demand players but also is expected to give competition to DTH and MSO players. So what is the effect Netflix will have when it comes to India?

Its entrance is expected to see many in the TV broadcast industry preparing to plan for their own online video streaming services. As cable and satellite (C&S) players were affected largely in the US by Netflix’s growth, the C&S players in India are not leaving anything to chance and preparing to launch their own digital video service platforms some media reports say. For instance Tata Sky and some of the other DTH players looking at the option of launch such platforms themselves say media reports. Similarly, there are some other MSOs that are approaching technology companies to help them in creating their own digital internet video platforms.

Netflix has gone beyond being a streaming platform to currently producing their own series/shows in the US. Some of the most popular being ‘House of Cards’ and ‘Orange is the New Black’. TV broadcasters too will have to watch out as it could also look at creating their own content in India or choose to partner with production houses for original content. 

There was speculation since 2013 regarding Netflix entering into India, however there were many deterrents such as licensing costs, internet infrastructure, diversity of genres, etc. from the company entering into India. But given the launch of 4G services on mobiles in India and higher broadband connectivity, the infrastructure seems to at a rightstage for it to enter.

Though this may be so, a few senior industry experts we spoke to say that it won’t be that easy for Netflix in India. According to one industry expert, some of the hurdles other than licensing of content would be on the local content front. Though viewers for English content are there quite prominently, the critical mass of viewers in India lies in the Hindi, regional content and in the sports space.Though 4G services have been introduced, it will take a while for it to reach critical mass, as 3G users too are only a small percentage of internet users on mobile in India and are more concentrated in urban metros.

Shabir Momin, MD & CTO, Zenga TV said, “It is a very different market compared to the west and all the other places it has been operating. India is a different market, people behave differently and people’s expectations are different. It is the only country which has 26 to 30 languages and is as good as launching in 30 countries at one go when it comes to content. Within these languages there are further dialects in which content has to be produced. For a territory like this it is one of the toughest territories to launch when it comes to content.” He further added that the problems with infrastructure is only in the last mile connectivity which he said was a minor problem and is improving steadily, although not at the pace that they would like it to.

Another issue is the pricing of services as Netflix follows a business model of pure subscription and completely devoidof any advertising or brand integration. India being a price sensitive market has seen many internet content streaming players tinkeringto finda viable business model. While some go for pure advertising other chose a freemium model, while some even try a pay per view model. When asked about this Momin said, “It has to be very different. It can’t have the same price tag as the US. I still believe that India has not reached the stage of paying subscription and maybe until 3-4 years from now when people will value content and pay money. One of the biggest reasons why subscription does not work in India is because the respect for copyrights is not there in India.”One industry expert who wished to remain anonymous said that it could also choose the option of tying up with mobile and internet service providers, in order for it to understand the market dynamics first before entering completely.

Uday Sodhi, EVP & Head, Digital Businesses, MSM said, “We haven’t heard what the details of their plans are in India. In the US it’s more do with the American content and the content is more localised there. I think they will have to adapt their strategy for India and come with a different strategy to India. They haven’t given any more details on their plans in terms of what the content strategy would be in India. Only then would be able to figure out as to what would be the market like. I would imagine with these big players coming into the market, it would significantly expand for consumption on digital.”

Though media reports stated the online video streaming giant to enter the country in 2016, an official statement from a Netflix spokesperson in a media report did not specifically mention their entry into India and said that they plan to be nearly global by the end of 2016, adding that they had nothing to share at this point. “I think it is too early to comment on specifics on impact on anything, but my guess is for digital businesses and markets this would be a great impetus because it would help people consume more and more content on digital,” said Sodhi.  

One thingmost of the senior industry experts agree isthat when Netflix enters into India it is definitely expected to bring in more consumption of online video content by raising the bar on standards.

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