India is one of the world’s fastest-growing markets for OTT or video-on-demand platforms, a space currently seeing intense competition. But it has proved to be a tough market to crack for streaming giant Netflix.
“In every single other major market, we have got the flywheel spinning. The thing that frustrates us is why haven’t we been as successful in India, but we are leaning in there,” Netflix CEO Reed Hastings said in an earnings call for the fourth quarter of 2021.
For the October-December 2021 quarter, Netflix added 8.3 million subscribers. But it projected adding only 2.5 million subscribers in the January-March quarter of 2022, down from 4 million it added a year ago—the lowest growth since 2015.
This also led the streaming giant’s stock to plummet as much as 24 percent Friday.
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Netflix’s performance in the fourth quarter was led by the Asia Pacific region, where it added 2.6 million new paying subscribers, led by solid growth in India and Japan.
However, in India’s fast-growing OTT market, Netflix is still a distant third. According to research firm Media Partners Asia, while Netflix doesn’t disclose subscriber figures for India, Netflix has a current subscriber base of about 5.5 million in the country.
This is far lower than Amazon Prime Video and Hotstar, which have around 22 million and 46 million subscribers, respectively. This even as Netflix looks to spend Rs 3,000 crore on content in India.
Netflix also had to slash pricing in India by nearly 60 percent to keep up with other pricing of other platforms. Until then, Netflix’s basic plan started at Rs 500 a month while the likes of Amazon were charging Rs 999 for the entire year.
“We felt it was the right time to decrease our prices, to increase accessibility to all of that sort of those incremental value or features that we have been trying to deliver to the market to more Indian consumers,” Greg Peters, COO and Chief Product Officer of Netflix said. He added the price slash followed a whole set of activities Netflix has been doing in India and learning more about Indian consumers tastes.
So why is the Indian market ‘frustrating’ for Netflix, and will a price slash suffice?