23 February 2017 13:11:30 IST

Optimising data use will give Netflix an edge


Good way to rope in price-sensitive customers and millennials


In India, Netflix needs to follow a different strategy as compared to the US or it will face the same fate as Uber did in China where Uber’s Chinese operations were acquired by Didi Chuxing.

Netflix in India

Netflix has been a huge success in the US because it has been consistently providing popular content. India is a multi-lingual country with almost 70 per cent of the population residing in semi-urban and rural areas. Given this, Netflix has to bank not just on local content but also take some innovative steps to succeed in India.

Let us divide the challenges into different groups and address them separately.

1) Content-related challenges

~ Tie up with popular TV shows airing on select local channels and stream them on Netflix.

~ Release movies on a pay-per-download basis for regional languages, where a push strategy needs to be used, especially where people who are not ready to invest time in watching movies in the theatres watch them online.

~ Stock popular local movies exclusively on Netflix, similar to what websites such as erosnow.com do.

2) Dealing with competitors

~ Main competitors are Amazon Prime Video, Hotstar, Box TV, Erosnow, Hungama, and the like.

~ Netflix should leverage its brand equity and rope in brand ambassadors

~ Focus and design campaigns around exclusivity and originality, absent in the competitors

~ Choose the right advertising mix that adopts segment-based targeting using analytics

~ Bid to stream popular local TV shows as Netflix has deep pockets and can afford to invest

~ Tie up with telecom providers to provide ‘Netflix minutes’ to consumers at a reduced cost as compared to normal data prices. For instance, a ₹10 data pack would provide 100 minutes of free Netflix browsing on select shows.

~ With Jio providing free 4G services to its customers, this could be a good opportunity for Netflix to gain traction. Additionally, 4G prices are likely to drop due to the price wars among telecom providers, thus increasing demand from customers.

3) Infrastructure for high-speed internet

~ Netflix could come up with an option of providing videos in less resolution than the existing standard version at a lower subscription price. This would mean lower bandwidth usage and, at the same time, decent picture quality when viewed on mobile phones.

This will ensure two things:

-- Capturing price-sensitive customers

-- More subscribers using the website, who would otherwise only use smartphones to access Netflix.

4) Moving people from TV to mobile devices

~ Design advertising campaigns focusing on the exclusivity, originality and ‘binge-watching’ aspects of Netflix, and position the offerings accordingly

~ Provide more exclusive and original content on the website and advertise the same

Other steps that need to taken

~ Provide free streaming content for a month on a trial basis without asking for credit card information so people get the feel of the website

~ Most of the people who are streaming shows are millennials with no earning capacity or a credit card. So Netflix has to innovate ways to reach the main influencers of buying behaviour who, in this case, would be the parents of millennials

~ Design tailor-made campaigns appealing to different customer segments based on their preferences and behaviour

~ Advertise and promote on social media, stressing the value-addition part, which is exclusivity and originality

~ Tie up with popular stand-up and other comedy shows and other regional shows

Pricing strategy:

~ A competitive pricing strategy needs to be adopted to survive in the Indian market as a majority of the target audience are price-sensitive customers or millennials.

~ A pay-per-show or a minutes-based pricing strategy could be also tried out initially to attract the reluctant or less frequent customers and then retain them eventually.

~ Introduce other payment modes, such as debit cards and wallets such as Paytm or Mobikwik

~ Tie up with banks that provide credit cards with promotional offers for corporate employees

By taking these steps to tackle challenges, paired with proper marketing, Netflix should be in a better position to gain more popularity and profitability in India’s growing and lucrative online streaming market.

(The authors are first-year students of the Post-Graduate Programme in Management at IIM Indore)