Netflix thinks India is a goldmine for streaming services
Netflix, the world’s largest streaming video on demand (SVOD) provider, has ambitious plans for India. That might strike some investors as strange – to date, the company only has 1 million subscribers in the country, and even the most optimistic analysts only see it rising to 3 million y 2020. But CEO Reed Hastings thinks otherwise. In a speech given to New Delhi business leaders earlier this year, Hastings said he expects Netflix’s next 100 million customers to be Indian. Given the success he’s already had in growing audiences around the world, Hasting’s optimism can’t simply be dismissed.
Netflix’s share price has risen by more than 105% already this year!
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When it entered the country in January 2016, Netflix wasn’t too excited. Its subscription price (which averages between $7 and $12 in India) was almost double the cost of the average pay-TV options. Of those Indian households that bought on of those options, only 10% were paying more than they’d pay for Netflix. Additionally, very few of Netflix’s titles were in an Indian dialect – something that Indians have shown an extremely strong preference for.
All of this changed, however, over the next two years. Indian telecommunications companies have continued the explosion of internet connectivity in the country, more than doubling the number of people who have access to fixed broadband at home (from 20 million to 50 million). These people are Netflix’s target audience, and there are more of them every day. Discussing the phenomenon, Hastings said: “Even we couldn’t predict the last two years of Indian internet growth. It’s the most phenomenal example anywhere in the world.”
Netflix is no stranger to impressive growth. Its expansion from an American DVD rental service into the world’s most popular SVOD platform has been uncanny. Once, international customers were an afterthought – now, they represent almost half the company’s audience, and, crucially, the area where most growth is still available.
So no Netflix is taking India very seriously indeed. The company is bringing its original content model to the country, hoping to recreate in Indian households the phenomenon it engendered in the west with a slew of popular titles like Stranger Things, House of Cards, and Orange is the New Black. The first step on that journey is taken next month with the debut of Sacred Games, an adaption of Vikram Chandra’s crime thriller starring Bollywood legends Saif Ali Khan and Nawazuddin Siddiqui. Filmed in Mumbai, based on an Indian novel, and with Hindi as its primary language, it’s hard to imagine a more authentically Indian show.
Erik Barmack, Netflix’s head for international original series, described how the company’s expansion into India played into its overarching strategy for worldwide content production: “We’re becoming a global distribution platform for Indian content. The one thing we’ve seen that we want to steer away from is the idea of global TV being a French cop and an Italian cop and having them speak English.”
Barmack is planning to produce a new foreign-language show every day next year. That’s ambitious, to say the least, but it’s also the kind of audience-first strategy that could let Netflix conquer India and then the world.
Dominion holds Netflix in its Global Trends Ecommerce Fund.
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