Netflix debuted in India on 6 January with packages pegged at Rs 500, Rs 650 and Rs 800. The rates aren’t any cheaper than its American rates as was previously speculated. This raises the question: Will Netflix find similar success in India, where consumers either prefer TV or have access to smaller screens and free pirated content?
Founded in 1997, the company’s rather meteoric rise into socio-cultural consciousness came when in 2007 it transitioned from its original mail-order DVD rental service to online streaming. In Q3 of 2015, Netflix reportedly had a 69.17 million subscriber base and by the end of last year, Neilsen reported that 38 per cent of Americans used Netflix (not in terms of subscribers). But what really catapulted it to rub shoulders with the traditional cable network heavyweights was its original programming of popular shows like Orange Is the New Black and House of Cards.
It is worth remembering is that the popularity of these shows is not limited to Netflix users, simply because of easily accessible and downloadable torrents of complete seasons. So Indians, with easy access to torrent hosting sites, have been watching these shows all along, implying that it’s not necessary that fans of the original programming will automatically sign up for Netflix.
Existing streaming services such as Star India’s Hotstar and Eros Now have seen traction in the market, offering content already available on their network. In fact, the Hotstar mobile application was downloaded 10 million times within 40 days of its February 2015 launch.
The difference between these and Netflix is that of pricing. Hotstar is a free app and Eros Now’s content can be accessed for free or a maximum of
Rs 99 per month.
Another difference is that these streaming services complement their parent companies’ primary television business while Netflix directly competes with traditional television.
“The US cable TV ARPU (average revenue per user) is around $80-100 while Netflix’s subscription rates are in the bracket of $8-10. That is a huge price arbitrage advantage that Netflix had in the US. The Indian cable TV market has one of the lowest ARPUs in the world,” says Gaurav Gandhi, COO, Viacom18 Digital Ventures.
On average, even the most premium packages offered by leading DTH operators such as Tata Sky, DishTV and Reliance Digital TV hover around Rs 500 per month.
What could truly help Netflix is a partnership with some 4G network provider. According to research firm IDC, the third quarter of 2015 saw a three-fold increase in the shipments of 4G enabled devices. If Netflix does manage to leverage the permeation of 4G connectivity and create a compelling habit of streaming among consumers, there might be an eventual domino in the way we Indians entertain ourselves.
(This story was published in BW | Businessworld Issue Dated 25-01-2016)
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Simar Singh is one of the youngest members of the BW team. A fresh graduate from IIMC, she also holds a degree in political science from LSR. She enjoys covering power, startups, lifestyle and a little bit of tech.
