Netflix’s (NFLX) Indian arm posted a whopping 700% YoY (year-over-year) revenue growth in 2018 to 2019, per a company filing. India’s Economic Times reported the news wherein Veratech Intelligence sourced the filing. Netflix India’s revenue surged from $466.8 crores rupees or nearly $65.3 million in fiscal 2019 from $58 crore rupees or about $8.1 million in fiscal 2018. Notably, fiscal 2018 contains only seven months of reporting starting from last year’s September. This is the period after the transfer to a local entity for distribution from that of Singapore.
Competitive price gives Netflix an edge in India
In the same article, Mohit Yadav, founder of Veratech, cited reasons for the upbeat performance of Netflix in India. He said, “A combination of factors including original content for India, partnership with Airtel for better access to market and fixing payment issues helped Netflix.” He added, “All this combined with new low cost-based variants for a price-sensitive Indian market is the reason behind Netflix’s phenomenal growth.”
Netflix doesn’t report region-wise numbers yet. Hence, this information is vital in gauging the popularity of the company in India. Its mobile-only plan starting this July has done wonders for the streaming giant. The package at $199 rupees or $3 a month struck a chord with Indian viewers. Since last year, Netflix drew a lot of criticism for its high subscription costs. However, for India, the world’s second-largest smartphone base, Netflix adopted a smart pricing strategy, and it paid off.
Adding local flavors and telecom partnerships pay off
Besides pricing, the focus on local and regional content upped the game for Netflix in India. Audiences lauded originals such as Sacred Games, Leila, Crocodile, and Ghoul. Its Indian movie Love Per Square Feet also impressed viewers.
Besides Hindi, the company also worked towards vernacular content to spread its footprint in India. In September, Monika Shergill, director of international originals for Netflix India, spoke to the Financial Express on this. She said, “Netflix currently has a library comprising over 10 regional languages (including Hindi).”
Since its entry into the Indian markets in 2016, Netflix joined forces with Hathway, Bharti Airtel Limited, Fibernet Corp., and ACT. Telcos have a vast network and formidable infrastructure across the country. Thus, bundling their offering with the telcos has helped the streaming giant grow its reach.
Why is India crucial for Netflix?
A September 9 article in Entrackr cites a report from KPMG India. According to the report, India’s online subscribers for video will grow from the current base of 300 million to 500 million by 2023. This makes it second only to China. Also, the report shows that cheaper data, increasing rural internet penetration, and improved mobile download speed as the key growth drivers.
Netflix has been upbeat about India for a long time. In 2018, at the Economic Times Global Business Summit in New Delhi, CEO Reed Hastings said, “India is a prominent market for Netflix.” Hastings added, “given the consumer base, the next 100 million for us is coming from India.” As we mentioned, Netflix doesn’t mention its subscriber data by countries. However, research firm Media Partners Asia estimates that the company has “a million subscribers in India,” reported Financial Express in September.
Netflix has a single-minded focus on international markets
Netflix’s US subscriber growth is already saturated. Therefore, the company must focus more on global markets, and it has concrete plans to do that. In the Q3 earnings release, the company stated, “To date, we have globally released 100 seasons of the local language, original scripted series from 17 countries and have plans for over 130 more in 2020. We also plan to expand our investment in local language original films and unscripted series.”
Meanwhile, encouraged by its success in India, Netflix launched a mobile-only plan for Malaysia this October. As per the policy, viewers in Malaysia can access mobile-only Netflix for nearly $4 per month, stated Tech Crunch.
In its Q3 release, the company indicated that it expects to add 7 million subscribers in global markets. From the next quarter, it will disclose its revenue and alliances by region. We are curious to see the countries that contribute the most to Netflix. As Disney+ debuts on November 12, the streaming giant has to gear up for more competition. It needs to strategize well and leverage its growth opportunities to the fullest.