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Netflix's conundrum: How to succeed in India's price-sensitive market

The world's most successful OTT platform is pumping in hundreds of crores in India but success is still eluding it in the price-sensitive market. BestMediaInfo.com spoke to market experts and rival players to understand the future of the international giant in India's exploding internet video streaming market

For Netflix, the world's largest over-the-top (OTT) player, the US and Europe markets are nearly saturated. The platform cannot launch in China and the growth hasn't been as per expectations in the world's most populous country India, where it had launched a couple of years ago. In a recent investor’s call, Netflix Co-Founder, Chairman, President and CEO, Wilmot Reed Hastings, had mentioned that the company was looking at revising its pricing strategy for India.

Also read: Can OTT platforms really scale up content initiatives of brands?

The platform has amazing international content and is gradually upping its local content in the country but it is still finding it extremely difficult to attract more and consistent subscribers in India. In a market where thereare players offering content for as low as Rs 25 to Rs 300 a month, Netflix has three packages ranging between Rs 500 and Rs 800 a month. In this scenario, it is all the more difficult and crucial for the company to decide where it wants to stand in the competitive range of subscription fees.

What could be the ideal pricing for India?

In India,where the consumer is used to paying a very nominal price for content, the ‘Jio’ strategy can play the right trick. For long-term mass sustainability of business and to gather huge amount of market share, particularly in the crowded OTT space, perhaps one will have to go for a significantly low pricing.In TV, India has the cheapest monthly subscription packages. Likewise, the cover price of a newspaper doesn’t even cover a fraction of its printing cost.

Ashish Bhasin

"India is used to having content very cheap. Now, a very small fraction of the population has started paying but the real India story lies in the hundreds of millions of consumers out there. To get these, the pricing has to be competitive. What is the right price? Hard to say, it’s trial and error. But much lower than what the market expects,” said Ashish Bhasin, Chairman and CEO, South Asia, Dentsu Aegis Network.

In one of the earlier interviews with BestMediaInfo.com, AltBalaji CEO Nachiket Pantvaidya had mentioned that to be attractive to Indian consumers, the pricing has to be in the range of Re 1 per day and that AltBalaji is inching towards that. This has come from a player that has heavy library of mass content in multiple Indian languages.

Asteady pipeline of local content

While all the major OTT players are adding more content in regional languages, Netflix is still trying and slowly adding Indian local content in Hinglish (a mix of Hindi and English). On the one hand, where the other OTT players are announcing and launching at least eight to 10 web series a year, Netflix is just about launching its second series and has announced one more in this year.

“A major part of the strategy to ‘attract users’ depends upon sustainable consistent production ofgood content. A one-off good series will not help. For example, when IPL runs on Hotstar, people are willing to pay upto a certain level to watch it. If the content clicks with the consumer, only then will they pay any price for content. Otherwise, they are used to having it for free/ near free. It is also a function of the sustainable quality of the content in a big way,” added Bhasin.

Pool always works in India

Another unique issue with Netflix, which was observed and pointed out by many – a group of four consumers (mostly students) pool in to buy the 'four devices subscription package' of Netflix for Rs 800. However, Netflix by all means is capturing this subscription as ‘one subscriber’, which is in turn suppressing its numbers unknowingly. Is there any technical or strategic solution to this problem?

To this unique Indian phenomenon, Bhasin said, “Indians are the best at ‘jugaad’ and getting people to pay for content in India is much harder than it appears to be. However, I don’t think how many numbers are being suppressed is an issue right now. The major hurdle for them is land grab. How many users can they get and how much can they sustain? The market share battle is on right now. Once you get that volume, then better policing can always be done. That is an on-going process. Anyway, the only solution to handling all of this is technology.”

Will this also impact behaviour mapping, consumer data gathering and the measurement of viewership then? Or, on the other side of the coin, can Netflix look at pooling to make a breakthrough in the price-sensitive Indian market?

Ali Hussein

Ali Hussein, COO, Eros Now, said, “As for Netflix, I think they will be able to correctly pull out from the data set based on the watch patterns, as to whether one registration is being exploited for multiple users. Hypothetically speaking, within a certain time frame, if you are getting binge viewership happening for ‘A’ series on four different devices, then, by tracking device IDs, you automatically know that there are more than one person.”

Eros Now gets to the deeper levels of data to understand consumer behaviour. They get into a lot of data sciences and Hussein believes that everyone does, in terms of how many devices, unique device IDs, what's the viewership pattern and other such things. Netflix must also be doing it for the India market too, which will bring the truth to them.

Hussein feels that Netflix India can actually use this phenomenon to its benefit. “In this scenario, they can move to the next step to figure how they can look at pricing and giving those four customers enough value so that they are able to define their own Netflix accounts, instead of sharing. So the problem is not about four people watching it on one account, the problem is in the intrinsic business model where the customer himself is telling you it is too expensive. The question for them should be who is their target audience in India? What is the pricing strategyand what is hence the content strategy in India? These are the parts which I, as a consumer, am slightly clueless about,” he added.

Hussein said, “It is a step better than piracy because at least these people are watching online with a legit registered email ID on the registered price. We are headed in the right direction because they are able to track it down to device ID level.”

The number of users will keep going up simply because of the easy availability of cheap data. If data was expensive, what Netflix charges would have been completely irrelevant. The data prices are going down, so, whoever has to succeed, has to replicate a similar strategy for content pricing. Ultimately, if you are aiming to get a large number of Indians onboard, along with pricing, the English communication alone would not help,” explained Bhasin.

Could ads be an option?

World over, Netflix is a completely ad-free model. However, they charge a lot from their subscribers everywhere else in the world. If they decrease their prices in India, would they be forced to change their business model? Would Indians be the first ones to see ads on Netflix? Will it try the transactional video-on-demand (TVOD) model?

“I don’t think so. Then the whole game will change. Globally, they are an ad-free, SVOD model. That’s the precise reason why their pricing is at the topmost level and subscription charges are not subsidised. With decreasing prices, they will have to have hundreds of millions of numbers. India is one such market, where volume potential is huge,” concluded Bhasin.


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