Microeconomic Analysis of Netflix
in India
Name Roll No.
Abhinav Goyal 19P121
Divyanshu Swami 19P136
Nancy Patodi 19P145
Nitesh Kumar Kashyap 19P150
Avinash Sachdev 19P164
Vivek M Kumar 19P178
Research Objective:
Why Netflix despite being the global leader has not been able to capture Indian market?
Research Questions:
How Netflix came to limelight?
1.
How it couldn’t gain competitive
advantage to Hotstar in India?
2.
What is the future ?
3.
How Netflix came to limelight:
Internationally:
Best series came out on Netflix instead of the established networks
Created a loyal user base
Original content - a key strength of Netflix
Created binge watching atmosphere
Data driven recommendations
Strong entry – “Sacred Games” turned out to be a huge hit
Data Boom – Data usage and penetration has increased exponentially
Stronger anti-piracy laws
After capturing the US market, Netflix’s growth is
now fuelled by international markets
Current Market analysis:
Netflix has currently amassed more than 150 million subscribers world-wide, giving it the
largest paid customer base
However, Netflix Inc. shares plunged after it reported the worst drop in US users after 2011
In order to grow Netflix bets its money on expanding in its next big market India
But the OTT giant faces intense competition from international power houses and local
Indian player
Currently Netflix is the third largest Indian OTT player (active monthly users) in India behind
Hotstar and Amazon Prime
In terms of smartphone app installs, its market share is just around 10 percent
What Hotstar did better?
Hotstar offers a subscription pack for Live sports at just Rs.299 which is the major driver of
growth of Hotstar
With an exclusive contract with HBO, Hotstar streamed Game of Thrones, which was
another driver of its growth
Coming to Bollywood and Regional films with Indian TV shows and movies, Hotstar offers the
most stretched out assortment as far as Indian content goes
How Netflix is not just in crossroads with
other OTT service providers but also
Torrent:
The interest in torrent from 36 in 2016 has reduced to 8
Factors responsible for it:
Ban of torrent in India
Availability of alternate content
Ease of usage and no download requirement for viewing
Personalized content available, no need to search the content that suits your preferences
No piracy issues
Interest over ti me
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20
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9/ 11/ 1/1 3/1 5/1 7/1 9/2 1/2 1/2 3/2 5/2 7/3 10/ 12/ 2/ 4/ 6/1 8/1 0/1 2/1 2/1 4/2 6/2 8/2 0/2 2/3 3/ 5/ 7/
1 1 1 1 1
Netflix: (India) Hulu: (India) Amazon Prime Video: (India)
hotstar: (India) torrent: (India)
The Netflix Torrent relationship:
The rise of Netflix has coincided with the fall of Torrent group
Why did users switch from Torrent to Netflix?
Is Piracy a matter of convenience or impatience?
If the Netflix effect is significant, it implies that pirates might reduce their illegal
downloading because they find it easier to watch a movie on a service they are already
paying for than to find it online and download it.
If piracy is not a problem of convenience, then it might be a philosophical question of
morals. Do pirates view their acts as legitimate theft? Surely, most of these pirates would
not steal $20 from a production company’s cash register.
Future of Netflix:
With major production and media houses planning to release their own OTT services, Netflix
would lose a major chunk of the content that it provides today.
Disney, NBC, Apple and Warner Media are all set to launch their own streaming platforms by
2020, giving a direct competition to Netflix.
Netflix will lose out on the shows which they had licensed from these brands, which will
push Netflix more towards creating their own content.
With the streaming wars heating up, competitive monthly price demand might force them to
rethink their stand on refusing to advertise at all.
So, they will be forced to choose between “premium subscription with no ads” or a “cheaper
subscription with ads.”
Disney Plus will be offering shows which would be targeting more family shows rather than
the higher age group content created by Netflix, meaning it would capture an opportunity
area of Netflix altogether.
Content creation
Therefore, Netflix is focussing on creating more “Original” shows. Netflix will spend
between $12 and $13 billion on content on a cash basis this year. 85% of new spending is
earmarked for original series and movies
This is more than any Hollywood studio will spend on a slate of movies this year. With this
price tag, Netflix subscribers will get 82 new feature films to binge. In comparison, the studio
with the biggest slate, Warner Brothers, will put out just 23 films and Disney will only release
10.
Netflix has been able to ensure a high engagement rate with its original content, such that
90 percent of Netflix users have engaged with its original content.
Netflix’s big data approach to content is so successful that, compared to the TV industry,
where just 35 percent of shows are renewed past their first season, Netflix renews 93
percent of its original series.
Future of Netflix in India:
Netflix is launching a mobile-only version of its streaming service in India
The lower-priced plan will cost only Rs 199 ($2.80) per month
It is in line with the policy of other streaming service providers which play in lower cost
segment
Netflix can also enter in the Live streaming of sports for Indian market as that is one of the
primary reason of how Hotstar has captured Indian market.
