In India, Netflix is not merely a video streaming platform; it's a marker of privilege. If you have a Netflix subscription, you're considered to be a part of top 5 per cent of the country's earning population. This is certainly not good news for a company betting on India for its next 100 million subscribers. And thus, Netflix cofounder Reed Hastings' "frustration" is understandable. In a recent earnings call he said, "In every single other major market, we've got the flywheel spinning. The thing that frustrates us is why haven't we been as successful in India. But we're definitely leaning in there." This begs the question: Does Netflix need to rethink its content and pricing strategy in India? India has an average monthly wage of Rs 32,800 which makes it one of the lowest-ranking countries when it comes to take-home income. A study by the Centre for Sustainable Employment (CSE) at Azim Premji University studied the impact of the pandemic on jobs, incomes, inequality, and poverty in India. It found that an additional 23 crore Indians fell below the national minimum wage poverty line (which is Rs 375 per day) one year after the COVID-19 pandemic. But this is hardly the India that Netflix is targeting. Netflix seems to be stuck between a rock and a hard place when it comes to getting the mix of price and premiumness right. Experts feel that Netflix has not taken into account the purchasing power parity in India where the richest 98 Indians own the same wealth as the bottom 552 million people, according to Oxfam. If Netflix wants to lure more Indian masses, it'll have to give up on its premium pricing. Both Netflix and Prime Video in the US are priced around $8.99 (around Rs 669) per month. In 2016, Netflix entered India with annual subscription plans between Rs 6,000 and Rs 10,200, making it amply clear that it's not eyeing the masses. In contrast, Prime Video entered India in the same year with an introductory price of Rs 499 per year.
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"Netflix strategy has not worked in India as of now. They were never going for the masses, the pricing was very premium," Karan Taurani, senior vice president at Elara Capital, said. Even after slashing its prices by almost 60 per cent in December 2021, it is still not at par with other popular streaming services. Its mobile-only plan costs Rs 149 per month, while its basic subscription prices start from Rs 199 (Rs 2,388 annually) and its most expensive plan is now for Rs 649 per month (Rs 7,788 annually) from the earlier Rs 799.
While Netflix is slashing prices, others are increasing it. Amazon Prime Video announced a 50 per cent hike in its subscription prices from Rs 999 a year to Rs 1,499 annually. Experts say it's about value packaging. While Prime Video comes with a bundle offering to Prime Music and free delivery on Amazon, Walt Disney's Disney+Hotstar, which sell yearly plans for Rs 1,499, has Hotstar VIP, which is a more-affordable version of Hotstar Premium for regional Indian audiences. Not to forget its lineup of sports, news and other massy television offerings. This is why Netflix in India is considered to be nothing but a luxury by many. Global giants like Amazon, Disney and Netflix, along with homegrown OTT (Over The Top) players like Zee5 and AltBalaji, are battling it out for a larger chunk in the pie of a market expected to grow to 224 million by 2026, according to Media Partners Asia. While Netflix has only 5 per cent of the total 102 million subscription video-on-demand (SVoD) subscribers in India, its premium pricing allows it to boast of a 29 per cent share in terms of revenues. But is there a redeeming factor? Experts say that regional content is the key to India's masses. "Going forward, three things will play out: one is the pricing part. Price cut will help them penetrate deeper into the market because India is a price sensitive market so they will definitely see a spike in subscriptions," Taurani says. Dubbed foreign content into regional languages, he says, will see a lot of traction. "And the third part is that they will have to invest into originals in regional content, especially South Indian and Bengali. These are two large genres which are unavoidable apart from Hindi and English. They need to build a nice catalogue around regional content which will drive some consumption for them over near-medium term," he said. Until then, from 4.4 million to 100 million subscribers in India is still a long way to go.
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