Monika Shergill, Vice President, Content, Netflix India (top); and Abhishek Nag, Director, Business Development, Netflix India
DELHI CRIME An award-winning series
LUDO A dark comedy
Small is beautiful. That is one of the dominant truths in product positioning in India.
From shampoo sachets at ₹1 in the 1980s to pocket-friendly sachets of practically every consumable over the years to the more modern cryptocurrency investments starting at just ₹100, bite-sized products and services have powerful spend value in this country with relatively low per capita income. So, when global streaming giant Netflix introduced a bite-sized plan in July 2019—a mobile-only plan for ₹199 a month— three years into its India entry, experts and consumers alike nodded their heads in delighted approval.
“The reception [to the ₹199 plan] was amazing,” says Abhishek Nag, Director, Business Development, Netflix India, over a Zoom call, his casual, maroon round-neck tee reflecting the informality of the company’s work ethos. Nag points out that this subscription-plan-tied-to-a-device was a global first, compared to its usual plans based on streaming quality and the number of concurrent streams. The mobile-only plan was subsequently rolled out in countries such as Thailand, the Philippines, Malaysia, and Indonesia. Recently, the plan was rolled out to 78 new countries in Asia and Africa.
A large part of the credit for the bite-sized plan goes to the ubiquitous mobile phone. In its very first year, Netflix allowed content to be downloaded on mobile devices, akin to some of its rivals. “In India, we saw the preference for people to download content on the device, which is watched on the commute back home [from work], completely uninterrupted,” explains Nag. That led to long conversations with consumers, visiting their homes, trying to see how Netflix might be on the mobile, before the full-fledged launch of the ₹199 plan.
The other part of the credit goes to competition and India’s market dynamics. When Netflix launched in India in early 2016, its basic subscription plan was priced at an astronomical ₹500 a month (yes, that’s ₹6,000 a year). By the end-2016, rival Amazon Prime Video rolled out its service in India; it was available as part of the Amazon Prime subscription at a price of ₹499 for a year. It also included free deliveries and other services. Competition aside, there was another challenge. A large chunk of the market was (and still is) driven by advertising-fuelled free viewing, which makes it difficult for a subscription-based product, premium or otherwise, to be mass-adopted (today more than 300 million subscribers—duplicated— watch video content free of cost). Faced with these twin challenges, the ₹199 plan was just what Netflix needed to inject a dose of dash to its India business.
But Netflix’s bite-sized plan was more than just any other OTT subscription plan. It afforded the fence-sitting, wallet-conscious consumer the opportunity to jump on to the Netflix bandwagon, and armed her with flaunting value (the ability to boast “I have a Netflix subscription”), an oft-underestimated sales lever for high-premium products or services. Has it succeeded? The company declined to share numbers, so we looked around for proxies. According to data from the Registrar of Companies (RoC), Netflix India nearly doubled its top line in the year the plan was launched (FY2019-20) to ₹923.7 crore from ₹470.5 crore in the previous fiscal; net profit also climbed to ₹8.92 crores from ₹5.16 crore in the same period. In terms of subscribers, The Ormax OTT Audience Report 2021 estimates Netflix has 5.4 million subscribers in India’s growing subscription video on demand (SVOD) market today; that’s a big jump from an estimated 1.5 million subscribers in 2018. A rival OTT player who requested anonymity says the mobile plan accounts for close to half the subscribers that Netflix has today.
Despite its impressive performance, Netflix— which posted a revenue of $25 billion globally for FY20—has a tall challenge ahead to grow further. The 5.4-million subscriber count places it at No. 4 in this segment of around 96 million subscribers (taken as the number of paid users multiplied by the number of OTT platforms for which they cut a cheque; unique subscribers would be around 40 million). The challenge is tall because market leader Disney+ Hotstar has an estimated 34.5 million subscribers, while Amazon Prime Video (19.7 million) and Zee5 (6.5 million) are also ahead of Netflix. To climb this pecking order, the company needs to go beyond the ₹199 plan and scythe through its premium imagery to broaden its appeal to the mass consumer.
THE SUCCESS OF Netflix and other OTT players marks a sea change in the business model to make money in a dominant free-content marketplace. “For the first time, you have a new technology and a new platform with some very strong pulls,” says serial entrepreneur Ronnie Screwvala, a veteran in the space since the 1990s, and now Co-founder and Executive Chairman of MedTech platform upgrade. “The OTT landscape has done what cable and broadcasting and DTH couldn’t do for 20-25 years—get the consumer to appreciate great and strong storytelling, and pay for it.”
True, consumers are now willing to pay for great content, but how much? In the mind of the average Indian consumer, Netflix is a premium product. But company executives don’t agree. “We are not a premium service in India,” declares Nag emphatically. Monika Shergill, Vice President, Content, Netflix India, is more nuanced, calling it a premium ‘storytelling’ brand. “We are very focussed on bringing value to our consumers. The way we see it, this is a journey of improving that value,” she says.
So, the question is: what defines premium? For entertainment veteran Screwvala, the word premium usually means “the highest subscription [cost] versus anybody else. But somewhere down the line, that equation of premium will come down to FOMO [fear of missing out]”, he says. “And from FOMO will come to a desire for a very different nature. And that’s a corporate strategy for everyone.”
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