Why is Netflix betting big on India?

Reports about markets like America hitting a saturation point may prove to be a boon as players like Netflix are turning towards India with big investments

e4m by Tasmayee Laha Roy
Updated: Dec 9, 2019 8:19 AM

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Netflix

If Emmy nominations were not proof enough, Netflix Founder and CEO Reed Hastings’ recent announcements of plans for India will surely create the right buzz for the booming entertainment market in the country.

Gaining prominence by the day, India is on the radar for global content business as one of the key profit making markets. Looks like, for Netflix the journey to invest and earn out of the Indian market has already begun. The American online streaming giant’s announcement to invest Rs 3,000 crore towards creating Indian content for the world in 2019-2020 is a clear indication towards the potential of growing entertainment market here in India.

The country’s OTT industry is poised to reach $5 billion by 2023, according to data provided by a study from Boston Consulting Group (BCG). The report also mentions that the numbers of players in the Indian OTT market have witnessed a 3.5x increase in the last six years, growing from just nine players in 2012 to 32 in 2018.

However, how big is OTT when compared to Bollywood? According to Statisa, the Indian film industry was valued at over Rs 180 billion for FY 2019, and it was estimated to reach up to Rs 260 billion by the end of FY 2024. Out of this, the highest earnings came from domestic theatrical revenues, worth almost Rs 125 billion. In fact, the country's film industry recorded a 15.3 per cent growth in revenue in FY 2019 compared to the previous financial year. One of the main reasons for this growth has been the revived focus on regional cinema, along with revenue from other sources like in-cinema advertising, and digital rights for distribution and music use.

Given the numbers provided by Hastings, it looks like the OTT industry too is heading towards a high ROI-driven model in India. After all as Hastings said, during his short trip to India last week, there is competition from other players too like the regional brands in the business and global ones like YouTube, Amazon Prime and others. For Netflix, the Rs 3,000 crore-investment is just to start with.

Cut to Netflix India. Hastings not just sounded upbeat about the market but also announced plans for the company to ‘become more Indian’ when it comes to their content offering.

Netflix gave broadcasters a run for their money with their English GEC offerings when it was launched in India in 2016. It was popular for their English line-up but soon their content library was replenished with several options for the Indian viewers in their native languages. Starting with Hindi, Netflix’s current line-up of original Indian content for India includes 16 series and 24 films, including Marathi films like 15 August and Firebrand.

At a recent media conclave, Hastings also spoke highly of shows like Sacred Games, Little Things and Delhi Crime and assured that there are more such power-packed shows in the pipeline for the Indian market.

For the first time in many quarters, according to reports in international journals, Netflix lost roughly 100,000 subscribers in America in 2019. What almost looks like a saturation point in mature markets like America turns out to be a boon for the Indian market as players like Netflix are turning towards us to make big investments.

Netflix took off in India with a Rs 500 plan but to popularise the online streaming platform it came up with a Rs199 basic plan as part of India-first innovations in 2019. The plan also allowed users to download content to be watched later. While Hastings did not disclose the kind of uptick the user base recorder post the announcement, he sure mentioned being ‘very pleased’ with the offering that has worked wonders both for the price conscious market and the brand.

The Rs 3,000 crore investment that has been making headlines ever since it has been announced by Hastings on Friday is being put to use in acquiring talent, producing original content and making the offerings from the brand more accessible to the Indian market.

In return, the market is being trusted to be giving good returns. And why not? After all, the Indian audience has ensured good returns for the brand in the past. With a net profit of Rs 20.2 lakh for 2017-18, Netflix’s Indian arm became profitable in its first year of operations in the country.

The brand is also actively engaging with the Information and Broadcasting Ministry to work on all aspects of regulations. Netflix is a signatory in the self-regulatory mandate that the OTT industry works on at the moment.

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