‘Still Figuring Out India’, Says Netflix CEO Reed Hastings

Reed Hastings, the cofounder and co-CEO of global streaming giant Netflix, during the company’s Q1 2021 earnings call, admitted that the company was still figuring out the Indian market. Reed said that the company’s investment in the country — in 2019 it announced that it would invest INR 3,000 Cr over the next two years to create content in Indian languages — took some guts and belief in the potential of the market.

In the first quarter of this year, ended March, Netflix added 4 Mn new subscribers globally, against the forecast figure of 6 Mn. In the quarter ended December 2020, Netflix had added 8.5 Mn new subscribers globally to take its tally to 203 Mn. The company expects to add just 1 Mn new subscribers globally in the second quarter of this year, owing to the disruption caused by the pandemic.

Notably, Netflix added 1.36 Mn new paid subscribers in the first quarter of the current year in the Asia-Pacific region or APAC (which includes India). It added 0.36 Mn new subscribers in Latin America (LATAM), 1.81 Mn in Europe and the Middle East (EMEA) and 0.45 Mn in the US and Canada (UCAN). 

During the earnings call, the company acknowledged that while countrywide lockdowns across the world meant increased growth in subscribers for Netflix through 2020, it also delayed the production of its original shows and movies across regions. The company is looking at a lighter content slate for the first half of 2021, hence the modest forecast for new subscribers. Although, in India, Netflix will release 41 locally produced titles this year, which will include new seasons of existing shows as well as fresh titles. 

Hastings added that over the last year, Netflix had been doing some pricing experiments in India, but called the country a ‘speculative investment’, comparing it to the Japanese and South Korean markets from five years ago.

Gregory K Peters, COO and chief product officer at Netflix, explained that in regions across the world, the company had benefited from its partnerships with go-to-market partners with an existing relationship with consumers. This helps expose new users to the Netflix service and makes it easier to acquire customers.

Peters cited the example of Reliance Jio, one of its partners in India, with whom Netflix last year launched a bundled offering to take the product to a new demographic at a low price associated with low-cost mobile plans.

“It’s constantly just trying to push on all those different engines and figure out what is that right price point, the right offering and the right way that works for the local members and consumers,” Peters said during the call. 

In India, users who’ve purchased Reliance Jio’s postpaid plans, get complimentary access to Netflix, Amazon Prime and Disney+ Hotstar. 

In terms of pricing, Netflix will continue to face increasing competition from Amazon Prime and Disney+ Hotstar, the former having recently launched mobile-only subscription plans starting at INR 89 for 28 days, cheaper than Netflix’s mobile-only plan which costs INR 199 per month. 

Moreover, the subscription cost for Disney+ in India is among the lowest in the world at INR 1499/year or $20. Further, an even cheaper subscription model, priced at INR 399/year or roughly $5.5 exists with limited offerings in terms of content available on the platform.

The overall OTT market in India is expected to grow at 21.8% CAGR from INR 4,464 Cr in 2018 to INR 11,976 Cr in 2023, according to PwC’s Global Entertainment & Media Outlook 2019–2023. A September 2019 report by KPMG predicts that India will have more than 500 Mn online video subscribers by FY2023. This would make it the second-largest market after China.