Shares of the world’s largest streaming service Netflix plunged 22% last Friday, after fourth-quarter subscriber addition fell slightly short of its own target. It added 8.28 million customers in the October-December period, ending the year with nearly 222 million subscribers.
In its home turf of the US, Netflix’s growth has been stagnant for long now. And it has been eyeing other big markets.
Netflix was launched in India in January, 2016. And after over six years of streaming, it is distant third in the country. Although the streaming company doesn’t reveal the number of subscribers, a research firm recently claimed that it has around 5.5 million subscribers in India.
Its competitors, Amazon Prime and Hotstar, are way ahead with 22 million and 46 million subscribers respectively, the firm claimed.
Netflix co-CEO Reed Hastings highlighted the company’s struggle in the Indian market, whose 1.3 billion population offers a huge growth potential. This is what he said.
Analysts say Netflix did not get its content strategy right. Going by the Ormax Media data of the top 15 series on subscription-driven streaming video brands, only one is from Netflix.
Of the top 100 theatrical films based on domestic box office in Hindi since 2018, Amazon Prime Video bought 48 while Netflix picked up only 20. In Telugu, Netflix bought just nine titles, against 40 by Amazon Prime Video.
Zee5 bought twice that number.
For some years now, analysts have been questioning Netflix’s strategy about non-Hindi programming.
While content is only one aspect, Netflix had failed to hit the mark on pricing and distribution. To talk more about this, we have with us Karan Taurani of Elara Capital
A week ago, Netflix raised prices in the US. But in December, it slashed prices in India by up to 60% across plans as it tries to catch up with its rivals in a price-sensitive geography. It has already invested $400 million in Indian content.
Hastings compared India to the Brazil market where, according to him, it was brutal in the first couple of years. A country where he thought Netflix would never break even, it is now its second biggest market with around 18 million subscribers.
The competitive intensity in the Indian OTT market is also heating up. Regional streaming platforms have been giving tough competition to the big players. Yet, Netflix says the Indian market isn’t that difficult to figure out and hopes it can do another Brazil here. Pandemic helped Netflix gain a foothold in India and several other countries too. The streaming giant now stares at a tough road ahead, where quality content and reasonable prices will decide its fate.