Netflix sets its sights on India
Netflix, the world’s biggest leader in video-streaming is all set to expand to India. According to industry executives, the company’s global expansion is set to reach India where the movie frenzy is at an all time high. With a fifth of the country’s 1.3 billion people going online, it only makes sense for Netflix to start its expansion with India.
With high speed internet becoming affordable, Indians are expected to receive Netflix with open arms. The company can tailor their streaming services around the bollywood crazy population and ensure their robust growth in the country. The decision to go international stemmed from the fact that the company has almost reached a kind of saturation level in the United States. “Netflix is entering India at the right time,” said analyst Tarun Pathak at Counterpoint Technology Research. Most Indian internet users go online via smartphones, which are increasingly capable of connecting to the latest, fourth-generation network (4G) which cuts streaming times considerably. “We expect at least one in two mobile devices sold this year to be 4G equipped,” Pathak said.
With most Indians getting online with smartphones, a telecom partner could speed Netflix’s market entry. The company paired with SoftBank Group for its Japan launch, piggybacking on the one of the country’s mobile network providers for its first foray in Asia in September.
Netflix’s US-listed Indian rival Eros International PLC announced a partnership with Idea Cellular Ltd, the country’s third-biggest mobile carrier with 167 million subscribers. For telecom companies, streaming services increase data consumption which is more lucrative than telephone calls. Moreover, movie subscriber numbers are widely expected to jump with the large scale introduction of 4G services, led by the Jio network of Reliance Industries Ltd. But in price-sensitive India, reaching new customers with big-budget content is likely to prove far easier than fending off the appeal of cheap, easily available pirated copies.
“In India our biggest worry is not Netflix,” said Michael Smith, chief technology officer at startup Hooq, backed by Singapore Telecommunications Ltd, Time Warner and Sony. “It’s the 20 cent copy of a movie that has just been released.”
The main challenge that Netflix is going to face when it arrives is convincing Indians to spend money to subscribe to their services. Netflix’s average revenue per user (ARPU) in the third quarter was $25.29 in the United States and $21.59 abroad. In India, where a movie can cost 29 rupees (44 cents) and monthly subscriptions are as little as 200 rupees. Netflix should come up with an adequate pricing strategy that should attract users as well as generate profits for the company.