Diverse content, innovative pricing: How Netflix plans to rule India market

How Netflix is planning to ensure a permanent place in the Indian viewers' share of wallet?

In the three years since its launch in India, global video streaming giant Netflix has seen the Indian over-the-top (OTT) services landscape undergo a huge spurt in growth — not only in terms of the number of competitors it faces, but also in terms of the scale of consumption of digital video content. So how do Reed Hastings and Co plan to stay in the game, and ensure a permanent place in the Indian viewers’ share of wallet?

Srishti Behl Arya, director, international original film, India, Netflix, says the firm’s focus is to create as diverse and appealing content out of India as possible. 

“Diversity of content is the key," Arya says. “India is a diverse market and it is important we have quality content that can be enjoyed by the various kinds of viewers we have. Of course, it is important to stay true to the concept, and tell the best stories in the best way possible. We have been lucky to have collaborated with some of the best creators.”

To that end, the company is working with various Indian creators across genres to compile a library of original films that can be served to its global audience. 

Netflix’s content partners include Zoya Akhtar, Karan Johar, Farah Khan and Anurag Kashyap, among others. While the company didn’t comment on the matter, media reports suggest that Netflix could be spending around $100 million on originals from India over the next two years.

Apart from ensuring content diversity, the platform has also adapted to the Indian ecosystem in case of pricing. Last week it announced a mobile-first subscription plan at Rs 199 a month. This is the first time that the streaming platform has changed its pricing strategy for an individual market. According to Kalagato, a data intelligence agency, the average order value for Netflix for the month of March 2019 was Rs 640. The number has hovered between Rs 640 and Rs 660 for the period between October 2018 and March 2019.

“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,” said Ajay Arora, Director, Product Innovation, Netflix. 

Netflix’s strident focus on India is understandable. According to study titled “Video on Demand: Entertainment reimagined” released by ASSOCHAM-PwC in May, the Indian video OTT market will be amongst the top 10 markets globally with a market size of $823 million (Rs 5,363 crore) by 2022. 

“The five fundamental drivers of this convergent business model are uninterrupted connectivity, mobile devices becoming the primary source of content consumption, the need to move away from traditional revenue streams, value shifting from content creators to platforms, and ability to provide a personalised offering to the consumer,” the report said.

During the same time, the number of smartphone users in the country is expected to touch 859 million by 2022 from 468 million users in 2017, growing at a compound annual growth rate of 12.9 per cent. This would also explain Netflix’s bet on the mobile platform.

So how does the OTT player decide its content mix?

The key, the team at Netflix realised early on, is to focus on a mix of international originals, Indian entertainment content sourced through output deals, and creating world class original shows and movies. In its first year in India, the streaming platform signed two significant alliances in the country — one with Shah Rukh Khan-promoted Red Chilies entertainment, and the other with what was then called Phantom Films (co-owned and run by four filmmakers including Anurag Kashyap and Vikramaditya Motwane).

Thanks to these collaborations, the platform has churned out a number of films and shows from India. Its first major success came in the form of Saif Ali Khan and Nawazuddin Siddiqui-starrer Sacred Games which premiered last year. It fast became one of its most successful original shows, gaining appreciation not only among Indian audiences, but also internationally. A statistic given out by the platform reveals that one in three viewers of the show was non-Indian.

The streaming platform has produced a number of films in the country through different models of production. In some cases like the Ronnie Screwvala-produced Love Per Square Foot, Netflix shopped for the product when Screwvala’s production house RSVP went to market with it. In other cases like Brahamanam, it picked up titles at various film festivals. Yet another model it has adopted is co-producing films —like Class of 83 in association with Red Chilies.

That apart, in India, and globally, Netflix has given emphasis to local collaborations. This helps the platform in multiple ways. Local partners come with an understanding about the preferences and culture nuances in a market, helping Netflix then choose scripts that will cater to both the local and the global markets. 

Through this strategy, it has managed to create some of the most watched shows in multiple languages, including Korean and Spanish. A local partner also helps with sorting out logistics not only while marketing the products to the native market of the content piece, but also helps getting talent on board at times say experts. “Sometimes, it helps to have a Red Chilies place a call to a talent. The Indian producers have been working with Indian talent for years, and familiarity in this case helps communicate and negotiate,” a film executive observes.

While Netflix has a plethora of series in the pipeline — Sacred Games season two hits the screens in August, followed by Emran Hashmi starrer Bard of the Blood in September — movies have fast become its focus area.

So far, the platform has released nearly 10 original films from India. Among these Lust Stories, which is a compilation of four stories each directed by a different director, has set the record for being the largest-watched original in percentage terms in any individual market in its first month. Other titles include Love Per Square Foot produced by Ronnie Screwvala, and Rajma Chawal starring Rishi Kapoor, among others.

Netflix global peer Amazon Prime Video has employed a similar strategy, though it has been more bullish on acquiring Indian content from local studios (existing libraries). It has also invested in originals, and is now looking at regional adaptations of its reality show Comicstaan.