Could Netflix’s India Strategy Be Derailed by Apple?

Apple may send Netflix (NFLX) back to the drawing board in India. Netflix’s India strategy has long struggled to see success. As the Wall Street Journal reported in June, competitors such as Amazon (AMZN) and Disney have mostly subdued Netflix in India. However, Netflix recently began to try to compete aggressively in the country.

In July, for instance, it introduced a cheaper plan that costs 199 rupees ($2.80) per month for Indian customers. With that move, Netflix narrowed the pricing gap with rivals Amazon Prime Video and Disney-owned Hotstar, both of which cost less than $2 per month.

Apple’s recent move may shake Netflix’s India strategy

However, Apple has made a move that could exert more pricing pressure on Netflix—or even derail Netflix’s India strategy entirely. Apple will sell its Apple TV+ video service for just $1.40 per month in India, Bloomberg reported. That means Apple TV+ will be cheaper than even Netflix’s cheapest plan in India.

As we discussed previously, Netflix finished 2018 with 1.2 million subscribers in India. However, Netflix aims to reach 100 million subscribers. Of course, there’s room for growth. India is home to more than 1.3 billion consumers. However, if Netflix thought that slashing prices a bit would stimulate its growth in India, Apple just reminded it to rethink its India strategy.

Apple and Disney have generally indicated they intend to squeeze Netflix on pricing. Apple TV+, which launches in November, will cost $4.99 per month in the US. That makes it cheaper than even Netflix’s basic plan, which costs $8.99 per month. Netflix’s most popular plan costs $12.99. Disney also plans to launch its Disney+ video service in November and price it at $6.99, also cheaper than Netflix.

However, Netflix’s India strategy has included more than competitive pricing. It also aims to draw customers with original shows, including production in local languages. Original production remains a central piece of Netflix’s business strategy not just in India but also in other markets. For example, Netflix has ordered several original shows in South Korea and is spending big on originals in the United Kingdom. Netflix has found that Korean content also does well abroad.

India presents a lucrative video streaming market

The revenue opportunity for video streaming services such as Netflix is huge in India. As we discussed here, India’s online video market will grow to $5.0 billion in 2023 from $500 million in 2018. Generally, India is a coveted international market for many big tech companies. Cloud computing companies and e-commerce companies such as  Amazon, Alibaba (BABA), and Walmart (WMT) are also betting big on India.