India on their minds
Netflix, now three years old in India, has spent more on local content here than anywhere else in the world, except the US. That’s given us the stellar Sacred Games. But is it enough to score over other streaming services?Updated: Jan 06, 2019 11:52 IST
On January 6, Netflix, the popular American streaming service, completes three years in India. The date marks a turning point for the company, as in 2016, Netflix added to its kitty new countries such as India, Russia, South Korea and Turkey, bringing its total tally after eight years – Netflix was launched in 2011 – to 190.
Three years back, India had about 300 million odd Internet users and India’s telecom sector witnessed a shakeup with the entry of a new service provider that further fuelled data consumption in a country still plagued by “no network zones” and “deadspots”. Today, over 250 million Indians watch video online.
Headquartered in Los Gatos, California, Netflix first started its international journey with Canada and Latin America. It entered the UK in 2012 and other European markets such as France and Germany by 2014. In its final phase of expansion in January 2016, the service went live across 130 countries including India.
When India joined the Netflix club three years back, the company had changed. Its user base was no longer restricted to only English-speaking subscribers. Nor was it just American. It began to produce multi-lingual content from all over the world.
“As Netflix expanded internationally, the user base that speaks English as its primary language is decreasing. More and more of the Netflix population is watching its content with dubs or subtitles,” says Erik Barmack, its vice-president, international originals. International shows such as Suburra, an Italian political drama, 3%, a Brazilian dystopian thriller and Dark, a German thriller, among others, have gained popularity on Netflix across the world, including India.
“We started our international business in Latin America,” recalls Ted Sarandos, the chief content officer of Netflix, “and both Mexico and Brazil were expensive markets. So, we took time to figure out the different specificities of these markets.” This is the strategy for India too, it seems.
In India, Netflix has approximately 2 million viewers (the number of viewers doesn’t equate to the number of paid subscribers), less than 1 per cent of India’s total internet user base of 500 million.
Last year, Netflix was ranked No. 8 among video-streaming apps in terms of monthly active usage on the basis of data collected across Android phones by the app analytics firm, App Annie Inc. Netflix’s viewership number compares favourably with the overall viewership for premium English language TV channels like Star World and Colors Infinity in India, which have a similar audience profile.
“Netflix has done one thing very well. They have identified their audience, the high-end Indian user, and are addressing their needs both in terms of quality of content and the volume of new content being released on the service. They are not bothered about the masses,” says Ashish Pherwani, partner, media and entertainment, at consulting firm, EY.
Downloading, which is driving Netflix consumption, is also a much more popular feature in India than it is in the US or Europe. Netflix usage here is higher on mobile devices and laptops compared to television; globally, around two-thirds of Netflix viewing is on a TV.
“In India, our viewers love mobile viewing while commuting to and from office. So, the viewership at 9 am and 5 pm is pretty high,” says Sarandos, who watches about four hours of Netflix a day.
The average revenue per user (ARPU) extracted from India indicates the importance of India in the global scheme of things for most international companies, says Sameer Nair, who heads the Aditya Birla Group’s entertainment business at Applause Entertainment. “Given our population numbers, India tends to be a volume rather than value market, so it becomes a combination of ARPU x Number of Users that will determine how critical India is or will become.” A key to Netflix’s popularity in India, as elsewhere, however, has to be about content.
After Sacred Games
Six months ago, Netflix’s hit shows, House of Cards and Narcos released in India and hoardings were plastered across the country. Its big Indian show, Sacred Games, too, got substantial media coverage.
“Shows like Rain out of Denmark or Dark out of Germany have travelled all over the world as did Sacred Games. So you are just seeing this mixing of cultures that is unprecedented. In India, Sacred Games has created a level of awareness for Netflix that didn’t exist before,” says Barmack. “It demystifies the notion that shows that are a hit with people have to come out of Hollywood.” Just like House of Cards was that first big moment for Netflix globally, Sacred Games was that moment for Netflix in India – and abroad. “Two out of three of our viewers who watched Sacred Games were outside of India,” said Todd Yellin, Netflix’s vice president, product innovation, in an earlier HT report.
As traditional barriers to distribution disappear thanks to the internet, the likelihood of Indians loving sci-fi thrillers like Stranger Things is just as high as Americans taking to crime dramas such as Sacred Games. “Content from India will have more global reach than it’s ever had before,” says Sarandos, who has worked at Netflix for over 18 years since 2000.
In India, so far, Netflix has developed measured content relationships, commissioned shows and indulged in selective acquisition of licensed content. But a quick glance through their home page shows Indian films and originals in local languages have gained prominence over the last 6-8 months.
In the Indian streaming ecosystem, both Amazon Prime and Hotstar, however, have a vast library of Malayalam, Tamil and other south Indian films, points out entertainment writer Aseem Chhabra. “Amazon Prime also gets the leg up for the pace at which they manage to get new releases on to the service quickly.”
Netflix launched in India with limited Indian content with a movie catalogue of 75 film titles in Hindi and some in Tamil. The company claims it has since doubled its India catalogue every year.
Arch rivals Netflix and Amazon have extended their battle to the Indian market, where they have set aside ~2,000 crore each for acquiring content to attract subscribers. Amazon Prime ranks number four in terms of monthly active users on the basis of data collected across Android phones by app analytics firm App Annie Inc.
India is Netflix’s fastest growing market in terms of the investment towards local content. Less than six months after Sacred Games, cricket drama Selection Day, based on Arvind Adiga’s book, shot in Mumbai, released on Netflix on 28 December to mixed reviews. Chhabra, however, summarises Netflix’s Indian content library as a disappointing mixed bag where Sacred Games was the only bright spot. “Ghoul, to my mind, was flat and weak. Little Things has not generated much curiosity or buzz,” he says.
Netflix has earmarked over Rs 600 crore for original content in India. It has announced 14 India originals, the highest number of shows commissioned outside the US, UK and Japan at budgets similar to that of Bollywood films. Last year saw the first chunk of big money being deployed behind Indian content on streaming services.
The rising cost of content doesn’t worry Sarandos. “In the case of The Crown, everyone talks about how much it cost but so many people signed up to Netflix to watch it all over the world. It’s a great use of money,” says Sarandos.
Eighty-two percent of the users in the Indian market are currently engaged on advertising-led video-on-demand platforms (AVoD) versus 18% who pay for content on subscription-led (SVoD) services, according to a report published by Boston Consulting Group titled Entertainment Goes Online, released in November.
The report estimates that by 2023, there will be 40-50 million users paying for SVoD content while 600 million will be engaged on AVoD platforms.
At present, Hotstar, part of Rupert Murdoch’s 21st Century Fox Inc., is the market leader, with between 75 million and 100 million active users a month, helped by rights to key cricket broadcasts including the popular Indian Premier League.
At one point, paid subscription to watch streaming content used to be very niche. It’s very mainstream now. “Netflix is on that same trajectory. Over time, we will get bigger and bigger,” says Sarandos.
Three years might sound like a long time but the company is “still very new” in the country, says Sarandos. “When we started the business in the US, most of our early programming was liked on the coast, basically in California and New York. Then we just programmed to the middle. That’s what we are doing here in India,” he explains.
It remains to be seen if Netflix can go beyond the top metro cities like Mumbai and New Delhi.
It’s hard to critique the leader, says Nair. “They’ve chosen to move at their own pace and operate on their own terms... Having understood the market, I guess they will up the ante when they need to.”