After lowering its subscription prices for India in 2021, global streaming platform, Netflix saw a 30% growth in customer engagement in the country with 24% year-on-year revenue growth in 2022. The company’s co-CEO, Ted Sarandos during his February visit to India, termed it as the ‘fastest-growing market’ and observed that better pricing could help further boost theplatform’s revenues.
Netflix had lowered its pricing for India across all its plans in the range of 20-60%, offering its lowest plan at Rs 149 a month on mobile only and going up to Rs 649 a month for the premium plan, supporting four connected devices. Following its success in India, the firm went on to slash subscription rates in 116 countries.
As per Elara Capital estimates, the OTT (over-the-top) segment is a $2 billion dollar market, of which about $800 million is YouTube’s share. The rest of the market is taken up by over 40 players, with Disney+ Hotstar commanding an estimated 20% of the market, followed by Netflix with 15% share.
Netflix competes not just with international platforms but also domestic players such as ZEE5 and the cash rich JioCinema, which has been making a series of disruptive moves in the content space. In this scenario, can reduced pricing alone maintain its growth momentum?
According to independent business strategy and growth advisor, Divya Dixit, the Netflix price drop was in response to the rising democracy of OTT entertainment. “However, to keep the traction going, sustain business and arrest churn especially when competition is upping its game, Netflix will have to create a better connection with local audiences via content resonance,” she says.
In the past, experts have pointed out that Netflix hasn’t stressed enough on creating local content for India, unlike its competition. However, the platform has seen success among Indian and global audiences for some of its recent originals like Rana Naidu, Mission Majnu and Chor Nikal Ke Bhaga. Further, Trial By Fire is the only Indian series to be on IMDb’s Global TV Meter alongside global successes like Chernobyl and Breaking Bad. RRR and Gangubai Kathiawadi, have also done well, with the former even picking up an Oscar.
On the regional front, the platform has announced 16 films in the Telugu content slate and 18 in its Tamil content slate for 2023.
While content is undoubtedly a differentiator for OTT platforms, Maanesh Vasudeo, SVP-media operations at LS Digital, adds that brands also need to work on enhancing customer experience. This involves improving recommendation engines, ensuring easy discoverability of content, and other customer-first initiatives. “To succeed in this landscape, OTT players must master the art of yield management, considering the various modes of distribution (which could be advertiser, subscription or transaction-led),” says Vasudeo.
Last year, Netflix also announced its ad-supported plans for 12 markets, including the US, Australia and Canada, which have attracted almost 5 million users so far. India is not among these, though Dixit sees no reason why such offerings would not be successful here. Noting that platforms like SonyLIV and Disney+ Hotstar have performed well with ad-supported plans, she says, “India has showcased that TV and digital can grow side by side, albeit at a different pace and audiences still watch TV with ads. They will have no issues watching ads, as long as they are spaced well and on free or very low subscription tier models,” she states.
Keerat Grewal, partner at Ormax Media offers a slightly different take on the Indian OTT market. She notes that the average penetration across the six key metro markets has already touched 79%. Considering that the average number of subscriptions has stayed at 2.4 for almost two years, any sharp growth in subscriber base for an SVOD platform looks unlikely.
