Netflix, the US-based online video streaming network is operating successfully in some countries. By 2017, it plans to expand its services to 200 countries, and as part of this global expansion strategy, it launched its services in India in January 2016.
India can be a major market for the streaming network because:
~ Increasing internet penetration with 462 million active internet users, of which 371 million browse on mobiles.
~ Increasing 4G penetration, data-consumption and falling prices.
~ Young demographic profile looking for alternative sources of entertainment beyond TV; 46 per cent of internet traffic is through videos.
Despite the huge potential, capturing the Indian market will not be a cakewalk for Netflix. The country is unique in terms of customer requirements and challenges.
Here are some challenges it is facing, and the possible ways to overcome them:
Internet speeds and data caps :
Netflix currently offers three different types of data usage — low (0.3 GB per hour), medium (0.7 GB per hour) and high (up to 3 GB per hour for HD video streaming). The bandwidth offered by service providers is miserably insufficient, since the average speed offered by ISPs in India is between 1 and 2 mbps, with a cap of 40-50 GB.
Solution :
~ The streaming service provider can tie up with ISPs to exclude it from “Fair usage policy” — that is, the customer pays an upfront amount apart from his normal charges exclusively for “Netflix data” and gets unlimited high-speed internet.
~ Providing ‘save and watch-offline’ option for select content on its mobile app allows users to download content when high-speed or unlimited internet is available. This helps overcome the FUP barrier. The feature should be extended to the website as well.
Competition
Netflix faces competition on multiple fronts:
~ The biggest hurdle is piracy, thanks to hundreds of websites and torrents.
~ DTH Integration : Players like TataSky have their own Video-on-Demand platform and mobile apps, where users can purchase content individually.
~ Other players like Amazon Prime Video, Hotstar, Bigflix, movies section from Google Play, YouTube’s movie rentals, and Eros Now, are tough competition for Netflix.
To see how, let us compare Netflix, Amazon Prime and Hotstar’s features.
Solution :
~ To counter competition, Netflix must bring in more original content, which is its strength (shows like House of Cards and Narcos have a huge fan base). The Indian arm of the service provider offers 373 movies, 213 TV shows and 149 documentaries, while in the US, it offers 4,042 movies and 1,138 TV shows. This means around 90 per cent of content available in the US isn’t on offer in India.
By increasing the catalogue, customers can be convinced that they are getting a bigger bang for their buck.
~ Piracy is a universal problem faced by the movie and TV industries across the world. Governments, the TV and film industries must join hands to make the internet infrastructure more robust by using better technologies.
Pricing
As mentioned in the Table, Netflix is the costliest among its competitors. Netflix India’s monthly subscription charges are equal to that being charged in the US, despite the fact that the Indian catalogue has limited options. And Indians are price-sensitive.
Solution :
~ Explore innovative pricing strategies, such as an advertisement-based video on demand (AVOD) at ₹99, apart from existing plans.
~ Pay-per-use: Users can choose shows and pay accordingly, instead of unlimited usage.
Limited Regional Content
Netflix has less than 80 Indian titles, and most of them are Hindi soaps. More than 10 regional languages are completely ignored. This makes it difficult to attract both traditional TV viewers and customers of competitors like Hotstar, which offer wide-ranging local content.
Solution :
~ Segment customers and offer differentiated content for each target segment. Tie up with content creators like AIB (available on Amazon Prime), TVF, and TV serial production houses.
~ Increase the titles of regional and Hindi movies. Also include classics.
Payment Options :
Currently, payment is allowed only through credit card. Because of low penetration and high scepticism, this would put off a lot of potential consumers.
Solution :
Include wide range of payment options, such as debit cards and wallets.
(The first runner-up is a second-year student of PGPM at IIM Indore)