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Home-grown OTT players giving Netflix a run for its money

Despite path-breaking content, deep pockets and global appeal, Netflix is finding it difficult to find a foothold in India. Where does it lack? BestMediaInfo analyses

American over-the-top media services provider Netflix is struggling in India and this admission has come from none other than its Co-Founder, Chairman, President and CEO, Wilmot Reed Hastings.

Home-grown subscription-based video streaming services such as Hotstar, ALTBalaji and many others are adding subscribers at a much faster rate than Netflix, which is still seen as a niche and premium platform in India.

On the content front, the Indian OTT players are much ahead of the international players. While Netflix has just about launched its second series in Hindi, Voot, Sony Liv and Zee5 are already churning out exclusive content in regional languages, including Tamil, Marathi, Bengali and others.

As per a study released by Counterpoint in January this year, Hotstar leads the subscription charts with close to 75 million subscribers, of which about 3-5 are paid subscribers. Voot, at No. 2, has about 22 million subscribers and it is on completely free model. Amazon Prime had 11 million subscribers, all paid ones, while Netflix has by far managed to attract five million subscribers, similar to that of Sony Liv. Liv has only 1% of these as paid subscribers, while for Netflix, about 6-8% are paid ones. Netflix offers the first month of subscription for free. AltBalaji claims to have 3.5 million paying subscribers, while Eros Now claims 7.9 million. Viu India had 9.5 million downloads by October 2017. 

For the live sports offering on OTT, Hotstar had recently claimed to have got 202 million viewers for IPL 11, while Sony Liv claimed to have attracted 70 million viewers for FIFA World Cup.

Tarun Katial

Tarun Katial, CEO, Zee5, said, “I don’t think the international players have understood the consumers as well as we do. We have a very strong consumer connect and consumer proposition."

"The local broadcasters and even OTT players have been in the market for so many years. They understand the consumers’ taste, have a large library of content that appeals to the target audience. Everyone has taken to digital and is planning accordingly, so we also have original series strategy," Katial said.

Netflix is focusing so much in the Indian market is because its next leg of viewer growth would be in India as it is already reaching stagnation in developed markets. As per an estimate, the platform would make annual investment of around Rs 500 crore in India.

India would have more than 350 million OTT viewers in another two years and the revenue from OTT services would be around Rs 5,500 crore by 2021, according to estimates.

Vibrant content library of Indian players

Netflix is now looking at adding more content in different languages. Hastings has already highlighted it in a recent investor call. Netflix also told research agencies that local could be a massive play in India and there was a huge scope to grow in the affluent audience groups.

However, as Indian players understand, language is not the only test that helps you cater to the consumer.

Coming from the Balaji Telefilms’ stable, a production house that has understood the pulse of Indian fiction viewer like no other, AltBalaji has a variety of content within the Hindi language catering to different sets of audiences.

Nachiket Pantvaidya

Nachiket Pantvaidya, CEO, AltBalaji, said, “There is a large mass audience being added to the existing urban audience today and we cater to it. Our shows like Bose: Dead/Alive and The Test Case cater to the urban audience while content like Kehne Ko Humsafar Hai are for the larger mass audience. This make us better off than the players who are not making original Indian content and have an international library. We are making shows in languages, cultural milieu and ethics they can understand.”

Akash Banerji, Senior VP, Head of Marketing, Partnerships, Sales strategy, Growth and Licensing at Voot (Viacom18), Building platforms, said, “What we all are realising from our TV business experience is that the demand for regional content is going through the roof. What we experienced on TV a few years back is now happening to OTT. The businesses that don’t have a significant scale of relevant local content will not survive. It is really cut-throat out here. There is surplus of content but the consumer needs the best.”

Adding to this is the library Indian players bring from TV channels, which is anyday much more valued by Indian consumers than the international content library on Netflix or Amazon Prime Video.

High subscription rates of Netflix keep users at bay

In a value-conscious market like India, pricing becomes the second key factor why the international players are losing the race to the Indian players. Amazon Prime has a price point of Rs 129 per month against a Rs 499 per month for the basic tier package of Netflix. Hotstar is available at Rs 299 per year, wherein it has a huge play on live sports. Prime, which operates in the US at $99 per year, charges close to $16 (Rs 999) for a year’s subscription in India. But Netflix’s India strategy didn’t include revising prices, initially.

Pantvaidya described how important can pricing be and where is AltBalaji on that map. He said, “When you intend to reach a consumer from the mass segment, you need to have a pricing of say, less than a rupee a day, and we are moving our price offering towards that. So, we have Rs 300 per year subscription pricing.” 

It does take time to convince an Indian consumer to pay, says Katial. He added, “Subscription is a journey. People pay for it when you have built the proposition.”

Is the Indian consumer spoilt because he was getting a lot of content on OTT platforms for free before everyone started charging for it? Katial denied. He said, “The content that was being offered for free, continues to be offered for free. The paid content is premium and exclusive and wasn’t available at all before this.”

Netflix said that it would revisit its premium pricing strategy in India and would find ways to acquire more viewers.

Distribution is the mainstay to gain viewers

Distribution of content is another aspect that is crucial for the OTT players. As Pantvaidya explained, “The third very important factor is the distribution partnerships, with telcos or Ola or wallets, which we have quite in place to enable us to push content out. So while the foreign libraries will continue to attract probably two million urban consumers, if you really want to be targeting the 200 million mass consumer market, you will need to produce not only original Indian content but mass original Indian content. The result is, we have upwards of three-and-a-half-million paying subscribers in 14 months, excluding Jio. We believe that we are playing in the affordable price mass content market, which most international libraries cannot.”

Speaking about the scope of growth in OTT space, Pantvaidya estimated that the number of people watching content on internet is almost doubling every year. About those who are paying to watch content, he said, “I think the number of paid consumers is growing at a rate of 2.5X multiple every year. I assume overall, there will be anywhere between 10-15 million paying consumers, every year. This number will also grow by more than double every year, till the inflection point that is expected in 3-4 years.”

Shekhar Banerjee

Shekhar Banerjee, Managing Partner, Wavemaker India, said, “Both the models are distinctly different. SVOD has to depend more on local + international original content to grow whereas AVOD is focusing more on catch-up or extended screen experience. Verdict is still not out on which model is more sustainable because local players are very dominant when it comes to monthly users. However, international players have a strong paid base of users making it a great topline story for them.”

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