California-based OTT (over-the-top) media services provider Netflix has reportedly added 7 Mn new streaming subscribers globally in Q3 2018, thereby exceeding even its own expectations.
For Q3, the company had set a target of 5 Mn total member additions for the quarter, while Wall Street had expected an addition of 5.2 Mn members. The premium only services provider Netflix now boasts of a global user base of 137 Mn.
The company’s net income rose to $402.8 Mn in the third quarter ended on September 30, up from $129.6 Mn in the same quarter, a year earlier. The total revenue has gone up to $4 Bn from $2.98 Bn a year earlier.
The company has now set a new target to add 9.4 Mn new members in the fourth quarter of 2018.
The Q3 results for Netflix came as a breather for its investors and the team after facing a slow down in the last quarter. Earlier in July, it had attracted 1 Mn fewer subscribers than expected, with net membership additions coming in at 5.15 Mn versus 5.2 Mn from the year-ago quarter.
When contacted by Inc42, a Netflix spokesperson denied sharing information around India-specific financials citing company policies as the reason.
Related Article: No Cheap Subscription Plans For India, Says Netflix CEO
Asia: Rising High On Netflix Charts
In a letter to shareholders, Netflix said, “We saw strong growth broadly across all our markets including Asia.” The bright spot here is India.
As suggested by analysts in a Yahoo Finance report, Netflix is quietly gaining its foothold in the Indian market. Now ranked as the third market with most subscribers after the US and Brazil, its market share grew more rapidly than either country during the third quarter, the report added.
With the India-focused series like ‘Sacred Games’, ‘Ghoul’ and ‘Lust Stories’ among others, Netflix has touched upon a number of new consumers, despite having a marginally higher price bandwidth than its arch-rival Amazon Prime in the country.
Netflix also plans on hiring another 30 or so employees in its Mumbai offices, Netflix Chief Talent Officer Jennifer Neal told the Times of India earlier this month.
Possible Strategies To Boost Growth In India
Despite having made some India-centric web contents/series, Netflix, which entered the country in 2016, remains far behind Hotstar and Amazon Prime.
According to a report, in the first quarter of 2018, Hotstar enjoyed 70% of video streaming app downloads. SonyLIV doubled its share from 5.9% three months earlier, to 13%. Viacom 18’s Voot was in third place with 11%, while Amazon Prime Video had a 5% share and Netflix 1.4%.
In the last two quarters, Netflix has bridged the gap. However, it is still behind Amazon Prime which offers much cheaper subscription model and Hotstar which offers a number hit American TV series like Game of Thrones and Homeland. The Hotstar also offers live broadcasting of sports, especially cricket which helps maintain its popularity.
In an earlier media statement, Company’s co-founder Reed Hastings also agreed to the fact that Netflix lags behind the likes of Google-owned free content provider YouTube, especially Star India-owned Hotstar, which charges only for premium contents, in terms of its viewership in India.
While tweaking its premium strategy a bit can be a strategy Netflix may try its hands on, it is also looking to harness the potential offered by vernacular content in India.
In a study conducted by Google-KPMG, it was found that India today has 234 Mn Indian language users online, compared to 175 Mn English users. Further, local language Internet users are expected to account for nearly 75% of India’s Internet user base by 2021.
India is estimated to emerge in the top 10 lists in the global OTT market by 2022 with revenue of with over $803Mn (INR 5,500 Cr), according to the latest report by PwC, an audit and consultancy firm. There are nearly 30 OTT companies running OTT service in India.
Update: On October 30, 2018, Inc42 received the MCA filing of Netflix Entertainment Services India LLP. Netflix India had a profitable FY18 for the period ending March 2018, with a net profit of INR 20.2 lakh. Netflix India also reported a total revenue of INR 58 Cr and a total expense of INR 57.6 Cr for FY18.