Netflix needs another midstream change in India. Here’s why

But these days, Sharma, a technology professional who lives in Bengaluru, is more interested in the delirious melodrama dished out by the South. In particular, she enjoyed the Tamil film Jigarthanda Double X, the tale of a film-maker who teams up with a notorious gangster in the 1970s. Leo is another favourite. Both films are on Netflix.

Until recently, Singh and Sharma shared a Netflix subscription. That changed after the American streaming platform initiated password-sharing curbs in India, as it had in many other parts of the world. While the two friends now have separate Netflix subscriptions, they have other options, as well—both subscribe to at least three other over-the-top (OTT) platforms.

Indeed, there are weeks when they don’t watch any show on Netflix. While that hasn’t deterred them from renewing their ₹199 monthly subscription, the thought of discontinuing it has crossed their mind.

Like Singh and Sharma, many people across the country have taken to Netflix shows over the last couple of years, and that has helped the streaming platform add subscribers in India’s cluttered OTT market. The growth has been a shot in the arm for Netflix, which had for long been floundering in the country like a rudderless ship, having drawn flak for its niche, upmarket and often confused strategy.

There has been a visible change in Netflix’s India approach over the last couple of years, several media experts told Mint, with the company making a conscious effort to get its act together. For starters, it slashed rates across plans by 18–60% in December 2021, in an attempt to reach more people. Netflix’s mobile-only plan, earlier priced at ₹199 per month, is now at ₹149. The basic plan, which allows access to all content on any one device, is priced at ₹199 versus ₹499 earlier. It has also tied up with mobile operators, who offer their subscribers prepaid, bundled packages.

In addition, the platform says it has made a conscious attempt to bring out content that appeals to a wider audience. Indeed, Netflix has released a bunch of critically acclaimed titles in quick succession over the last year, including Trial by Fire, Scoop, Kohrra, Kathal, Guns & Gulaabs and The Romantics. The latest slate, announced at the end of February, follows a similar template, say Netflix executives. For instance, a comedy special by popular actor Kapil Sharma will premiere along with a high-budget period drama called Heeramandi: The Diamond Bazaar, created by film-maker Sanjay Leela Bhansali.

The company has made great strides to shed the tag of being a niche service, thanks to original movies and shows such as The Railway Men, Kathal, and Mission Majnu last year, which speak to a broad audience, Monika Shergill, vice-president of content at Netflix India, told Mint in an interview.

We could’ve reduced prices at any point in our journey. There was a reason we didn’t do that.

— Monika Shergill

Featuring content that was suitable for a market like India was one prong in a three-pronged strategy Netflix drew up for the country a few years ago, the other two being price cuts and partnerships with telcos allowing prepaid users to access the service via bundled packages.

“We could’ve reduced prices at any point in our journey. There was a reason we didn’t do that—we wanted to have the right slate for the right audience, and once we got that, we brought the two most important levers (price and content) to draw a wider audience. It was done in a planned way,” said Shergill.

The multipronged strategy appears to be paying off to some extent. Netflix’s paid subscriber base has crossed the 10 million mark—it was at 5 million two years ago.

Lagging behind rivals

But the streaming platform’s critics are not convinced, noting that eight years into its India journey, a large chunk of Netflix’s paid subscribers still come from bundled partnerships.

Further, the critics point out that the streamer relies heavily on the acquisition of hit theatrical movies in Hindi and southern languages. That tactic has been termed as lazy by quite a few industry watchers, but in part, it is because Netflix’s originals have not done as well as those backed by rivals such as Prime Video. Even big investments such as The Archies have misfired.

Many content heads point out that Netflix sorely lacks an original Indian show that can garner recall the way those backed by rivals Amazon Prime Video and Disney+ Hotstar do. “While they’ve certainly gotten better at marketing, they still haven’t seen a breakout original since Sacred Games or Delhi Crime, which were all commissioned by older teams,” said a senior producer, declining to be named.

Another senior producer concurred with that assessment. “They are yet to crack that one big-star show the way, say, The Night Manager has delivered for Hotstar. One reason for this is that they are yet to secure relationships with acting talent here and are dependent on writers and directors to get the names,” said the producer, who also declined to be named.

According to an engagement report by the platform for the January–June 2023 period, no Indian show or movie featured in its top 300 most-viewed titles globally. Indeed, Streaming Originals in India: The 2023 Story, a report by media consulting firm Ormax, revealed that the list of most watched Hindi language web shows in India last year was topped by Farzi, a crime drama on Amazon Prime Video starring Shahid Kapoor, which had a viewership of 37.1 million. Next is The Night Manager on Disney+ Hotstar (28.6 million) with Aditya Roy Kapur and Anil Kapoor in the lead. No Netflix show has made it to the top 17 list.

The platform’s third season of Indian Matchmaking made it to the eighth spot in the unscripted show category, while The Romantics, a documentary on film-maker Yash Chopra and his studio, was ranked tenth. As far as original OTT films in Hindi go, Jaane Jaan was ranked seventh with a viewership of 11.6 million, while Bawaal on Prime Video (21.2 million) ranked first and Bloody Daddy on Jio Cinema (17 million) came in second.

Bolstering originals slate

Defending its performance, Netflix is quick to point to the critical acclaim received by its original titles released in 2023, attributing this success to learnings acquired over the years. Other than an International Emmy Award for comedian Vir Das for his stand-up special Vir Das: Landing, there has been a lot of social media chatter and recognition for its talent at film and OTT award ceremonies, the platform says.

“We’ve been refining our content strategy year on year. What you saw last year was programmed two years before and today, we’re programming for 2025 and 2026. It’s our responsibility to programme forward, for an audience that we know we will be touching (by then) because of the choices we make in any given year or month,” Shergill said. “We have to see what can resonate with a large enough audience (at that time).”

Shergill insisted that local language originals are a priority for the company and that the number of originals currently being shot across the country for Netflix India is higher than for any other service.

“Netflix is excelling in capturing India’s affluent market, with over 10 million subscribers who consistently pay more than three times the average industry Arpu (average revenue per user) every month,” said Mihir Shah, vice-president, Media Partners Asia. “Its success in acquiring new subscribers is fuelled by a combination of local original shows, digital premieres of blockbuster movies, and expanded telco partnerships, which have driven new additions. However, it’s the platform’s international content that enhances user retention,” he added.

Media Partners Asia is an independent provider of research, advisory and consulting services across the media and telecoms sectors in the Asia-Pacific. In 2023, around 70% of content consumption on the platform stemmed from international offerings, Shah said.

Netflix is excelling in capturing India’s affluent market. Subscribers consistently pay more than three times the average industry ARPU every month.
—Mihir Shah

A separate challenge with production of OTT originals in India is the dipping enthusiasm for new names. After an initial rush of bullish spending when they looked to consolidate their presence in India, streaming platforms have been slowing investments in the country. Spending has dipped by 50% in many cases, and anybody who isn’t a marquee producer is finding it difficult even to make a pitch. Content studio heads are waiting for things to ease, as most platforms take a long time to get back on scripts and ideas. Moreover, there has been much uncertainty in the air because of the Disney-Reliance and Zee-Sony mergers.

Film acquisition strategy

Netflix is as new to the streaming game in India as any other platform, media industry experts point out, so the low success rate on commissioned originals is a matter of trial and error. However, the unenviable track record has led to the company playing safe by shifting to heavy licensing of big-star theatrical films.

Over the past few months, Netflix has premiered movies such as Shah Rukh Khan’s Jawan and Dunki, Vijay’s Tamil film Leo, Mahesh Babu’s Guntur Kaaram and Ranbir Kapoor-starrer Animal. The acquisition rates for these star vehicles are estimated to be upwards of ₹100 crore.

The platform is betting aggressively on Tamil and Telugu movies, in particular, and has roped in Abhishek Goradia, former head of acquisition for south Indian movie content at Amazon, as head of south content. Vibha Chopra, previously in charge of content acquisition at Amazon Prime Video India, has also joined as head of Hindi film licensing.

Upcoming titles set to premiere on the service include Pushpa 2, a sequel to Allu Arjun’s Telugu blockbuster; Vijay’s Greatest Of All Time, and Jr NTR’s Devara.

The risk with such a strategy, a studio head pointed out, is that top actors and directors will not dish out slates to meet the whims and demands of OTT platforms. In fact, 2024 is set to be a lean year, with the likes of Shah Rukh Khan, Salman Khan and Ranbir Kapoor unlikely to have a theatrical release.

The audience doesn’t over-intellectualize—half the time, they won’t even know the difference between a theatrical film and an OTT original. If excited by a title, they’ll watch it.

“Netflix takes pride in its originals—we launched 26 (in India) last year—but we are an entertainment platform. And theatrical cinema, not just in India but across the world, is a part of what people want to watch. Not everyone gets to go to theatres. We are living in a world where somebody who has missed a film can actually find it,” Shergill said.

The audience doesn’t over-intellectualize—half the time, they won’t even know the difference (between a theatrical film and an OTT original), and if excited by a title, they’ll watch it, she added. In fact, a lot of people who subscribe to the service to watch a film, may end up watching a series or vice versa, she said. But, she added, they are harsher critics because they have other content options.

What next?

To be sure, things are set to heat up in India’s video streaming market, which has seen early signs of consolidation with Reliance Industries and The Walt Disney Co. having joined forces to create an entertainment giant with enough muscle to take on Netflix and Amazon. The combined Reliance-Disney streaming entity will be three-four times bigger in terms of total hours of programming than the likes of Netflix, and may even look at acquiring niche language-specific entities that are struggling to survive, according to industry experts. The deal will give Reliance access to Disney’s massive libraries across the English language, including its Marvel catalogue, giving Netflix some tough competition.

Reliance already has content from HBO, Peacock and Paramount+, and is bullish on regional languages, including the four major south Indian languages, as well as Marathi and Bengali.

As far as free options go, Amazon also operates miniTV, which is focused on young-adult shows. Netflix is yet to introduce its ad-supported tier in India. The way ahead for the company lies in making its local slate seem worthy of even the mobile-only ₹149 monthly plan, which is still more expensive than those offered by many of its rivals. Since the urban, well-paying market has reached the point of saturation, Netflix will need to do more to lure mass-market viewers into its fold at a time when rival Jio is offering the Indian Premier League (IPL), a popular men’s Twenty20 cricket league, for free.

“The challenge for Netflix is that everything they’ve done so far in India has been a version of what someone else has done, be it hiring people or trying to cater to the lowest common denominator (through big films),” said the first senior producer cited earlier.

While the platform is striving hard to build its subscriber base, the changed media landscape in India will only make the going harder for the American company, the producer added.