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Netflix is frustrated, but Why?

Netflix recently held its earnings call where its CEO said that he is frustrated. Here’s why.

Netflix is one of the major players in the OTT (Over The Top) space globally, and when it entered the Indian market back in 2016, it was expecting a grand welcome by the Indian audience. Which incidentally didn’t happen to date.

When entering the Indian market, Netflix CEO Reed Hastings was asked who does he it their biggest competitor in India? He said, “You know, think about it, when you watch a show from Netflix and you get addicted to it, you stay up at night. We’re competing with sleep, on the margin”. The statement breached the thing line between confidence and overconfidence.

Move forward to 2022. A few days ago, during Netflix’ earnings call, Hastings responded to a query about some grate of Netflix in India said, “The great news is 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”.

If we look at the number of Netflix compared to Disney Hotstar and Amazon Prime, there is a huge gap. Netflix currently has 50 lakh subscribers in India, Disney+ Hotstar has around 4.6 crore subscribers, followed by Amazon Prime Video with 2.2 crore subscribers. So what could be the bottlenecks that are hampering the growth of Netflix in India?

Focus on Elite Class, Less Quality Regional Content

Netflix seems to have focused mainly on the Elite class since the start and not the masses. Moreover, it lacks regional content on which Disney+ Hotstar and Prime Video have focused from the beginning. Disney+ Hotstar and Prime Video also Livestream cricket on their platform, which the Indians follow with their passion and is not a sport but a religion in this part of the world.

Netflix plans

Expensive pricing

Back in 2016, Netflix came up with an annual base plan of Rs 6,000, whereas its top tier plan costed Rs 10,200 annually. In that same year, an average Indian used to earn around Rs 1 lakh per annum. So an average India earning around Rs 8,000 a month needed to pay Rs 500 for a Netflix along with data charges of Rs 700 for a high-speed connection. It doesn’t seem like a great move to onboard new subscribers.

Focus on Revenue over Growth

Netflix might be under the impression that people would jump over on the streaming platform even though a premium price tag was attached to its services. As a matter of fact, it never happened! Shockingly it took 6 Years for Netflix to realise, as now they have reduced the entry-level plan to Rs 199.

Read More: Netflix announces new plans for Indian market, better than the competition?

Amazon Prime Video vs Netflix vs Disney+ Hotstar

Talking about the competitors, Amazon Prime Video was launched for Rs 499 a year in India, later increasing to Rs 999 per year. Breaking this down, we see that the service costs around Rs 42 per month. Moreover, it became an even better offering because Amazon was also offering a Prime subscription using which you can waive off the delivery charges on products on Amazon and get exclusive deals.

prime membership

Coming to Disney+ Hotstar, its VIP plan costs Rs 399 a year, down to Rs 47 a month. With this plan, even though Hotstar shows ads, it had a stronghold over the Indian audience because of its grasp on the Indian cricket streaming, including the World Cup matches.

Another OTT Player, Zee5, seems to be doing better than Netflix. It charges Rs 365 as an annual subscription fee, translating into Rs 30 a month.

ZEE5 launches ZEE5 Club at Rs 365 per year

As the data suggests, all major OTT platforms except Netflix charge below Rs 50 a month in India. As a result, they are able to attract subscribers to their platform. Moreover, they offered a variety of content at low prices in the beginning to capture the market, whereas Netflix straightaway entered the market with a profit-minded approach.

Missed Opportunity

Netflix has launched around 80 Netflix Original titles in the past six years, which seems like a small number. This is because as per a study, an Indian spends around 11 hours a week on average for OTT consumption compared to 8 hours of OTT consumption on average internationally.

Secondly, Netflix hasn’t come up with a compelling arrangement with operators like Jio, Airtel or Vodafone Idea, which could have made a difference as the operators are sitting on a gold mine of subscribers.

Can Netflix overcome frustration and make it big in India’s OTT space? Yes, it can bounce back, but for that, it will have to work on the 3 Ps – Price, Product offering and Placement.

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