Decoding Netflix’s new price plan for India
Industry experts talk about Netflix tapping on to the appetite for video in India, it's need for local content and why home-grown OTT players have little to worry
With its exclusive Made-for-India, Rs 199 per month mobile plan, Netflix has announced its intent for the Indian OTT market: India means serious business.
In the past the company had been steadfast in its statements that it would not lower subscription rates for the Indian audiences, fast forward to 2019 and it has launched its cheapest plan available worldwide to fatten its subscriber base.
The lure of the growing smartphone user, deeper internet penetration along with an insatiable appetite for video content in India has become too hard for the company to ignore.
In fact, the day the Rs 199 mobile plan was rolled out, Ajay Arora, Director, Product Innovation, Netflix, had said: “Our members in India watch more on their mobiles than members anywhere else in the world and they love to download our shows and films. We believe this new plan will make Netflix even more accessible and better suit people who like to watch on their smartphones and tablets—both on the go and at home.”
It comes as no surprise that Netflix is looking at India more aggressively. The second quarter results for 2019 did not bring much cheer for the company - 126,000 subscribers lost in the US and even though the worldwide subscriber base grew to 2.8 million it was way below its target of 5 million. For a company that generates its revenue from subscription and not ads, that definitely is not good news.
Meanwhile, the outlook for the OTT industry in India continues to remain positive. The Global Entertainment & Media Outlook 2019–2023 report released last month by PricewaterhouseCoopers (PWC) stated that India’s over the top (OTT) video market is set to grow at 21.82 per cent CAGR and will reach Rs 11,977 crore by 2023. This coupled with India’s internet consumption is a dream team for any OTT player.
Sabyasachi Mitter, Founder & Managing Director at Fulcro, says the mobile plan means a new lease of life for Netflix. “The Indian market is huge, the English content that they have can be consumed amongst the Indian youth, and they are also trying to get into the Indian language content, which will tap into the vast base that they have. So with revenues under pressure for all of them, I think it's a desperate move, but I think it's a move that at least in the short run might get them a lot more trials, how much of that audience they will be able to hold on to in light of competition from the Indian OTT players, only time will say. But at the earlier pricing, it was not really going to make too much of a dent into the large student and youth community.”
Price coupled with content decide the market leaders in India. If Netflix wants its ambitious India plans to succeed it cannot see one in isolation of the other.
If we pause to look at the subscription prices for some of the Indian OTT players in comparison to Netflix, it is clear why the global giant is still out of reach for many. As of now, the monthly subscription rates for Netflix’s basic plan is Rs 499, standard plan is Rs 649 and the premium plan comes at Rs 799. In comparison, the home-grown platform, Hotstar charges Rs 299 per month for a premium account and Rs 999 annually. Zee5’s all access is Rs 999 annually and Rs 99 per month. ALTBalaji yearly subscription costs Rs 300, and both MX Player and VOOT’s content is free of cost.
This pricing strategy with a mix of right content is where local players draw their strength from. Meanwhile, Amazon Prime Video, the other international OTT player, is available for Rs 129 per month and Rs 999 annually. But with its membership comes a host of other goodies like free, faster deliveries on Amazon, ad free music and exclusive access to deals.
Raman Mittal, CMO and Co-founder, TO THE NEW, says that a majority target audience of OTT platforms is still price-sensitive. “Here, VOOT and other home grown OTT players bring an edge by offering prices and deals which suit the audience. This provides intense competition to players such as Netflix or Amazon. The content created by local players is very much in line with what the Indian regional audience would like to watch.”
Industry insiders don’t seem to be overly worried, “because plans like these (Rs199 per month mobile) need to be coupled with local content strategy”.
However, Netflix has been investing in local content. It recently announced five new series that will be developed in collaboration with leading Indian studios from Shah Rukh Khan’s Red Chillies Entertainment, and Anushka Sharma and Karnesh Sharma’s Clean Slate Films to Mutant Films. Also, its most awaited local hit ‘Sacred Games’ is set to return with the second season on August 15.
For now, Netflix has ticked two important boxes in the OTT checklist for success in India - cheaper tariff and local content - but it is still remains a content provider for a niche audience. Home-grown OTT players are already ahead in the race in terms of MAUs and are no mood to stop. Zee5’s mobile plan is also in the pipeline, it has also announced a content partnership with AltBalaji. MXplayer, which has been climbing the popularity charts rapidly, has amped up its regional content to attract more audience.
On the impact of Netflix’s mobile plan on local OTT players, Mitter said: “It will vary from OTT to OTT. Hotstar, for example, with its availability of cricket would continue to be something that will see growth. And there are some others which are more into Indian content. So the likes of SonyLiv and Zee5 won’t get severely affected at this point in time. But I think what it means for Netflix is that they're getting a lease of life.”
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