Netflix is in a lot of pain. And a lot of it has to do with India. Netflix is frustrated with India. Why? Because Netflix’s story in India is a sorry one. It is anything but motivating. Such is Netflix’s condition in India that its top executives find the gigantic market ‘frustrating’. Netflix co-founder, president and co-CEO Reed Hastings said in an investor call on Thursday that the lack of success in the Indian market is “frustrating”. He, however, added that the company is “definitely leaning in there”.
Hastings said, “In every single other major market, we have got the flywheel spinning. The thing that frustrates us is why haven’t we been as successful in India, but we are leaning in there.” He added, “We have been operating there and learning more about Indian consumers’ tastes, et cetera, and that’s broadening the offering of the service across many, many different dimensions.”
A day later, on Friday, Netflix stocks slid nearly 22% after the company quietly admitted in its fourth-quarter earnings that streaming competition is eating into its growth. It marks Netflix’s worst day since July 25, 2012, when shares fell 25%. Netflix has projected adding only about 2.5 million subscribers in the January-March quarter of 2022, down from 4 million it added a year ago—the lowest growth since 2015.
For the October-December 2021 quarter, Netflix had added 8.3 million subscribers. Netflix’s performance in the fourth quarter was led by the Indo Pacific region, where it added 2.6 million new paying subscribers – with India and Japan leading the OTT platform’s growth in the region. But there’s a visible dichotomy here. Netflix has saturated its subscriber base in the West and is on the lookout for new pastures for growth.
Yet, despite the Indo Pacific region leading Netflix’s quarterly subscription additions, the company’s performance has been underwhelming, particularly in India.
What Plagues Netflix’s Growth in India
According to research firm Media Partners Asia, while Netflix doesn’t disclose subscriber figures for India, it currently has a subscriber base of about 5.5 million in the country. This is far lower than Amazon Prime Video and Hotstar, which have around 22 million and 46 million subscribers, respectively. Meanwhile, Netflix is planning to spend close to Rs. 3,000 crores on content in India.
If Netflix is to remain a profitable venture in the near future, it must perform well in India. However, its numbers in the country are hardly motivating. Now, what is the reason behind Netflix’s apparent failure in India? There are many, actually.
- In India, there are many options for audiences to choose from in the OTT space. Amazon, Hotstar, Zee5 and others are giving stiff competition to Netflix.
- Lack of regional content on Netflix is a big reason why the company is not being able to make its mark in the Indian market. Not everyone in India watches English series and films. The absence of a variety of regional offerings on the platform dissuades people from buying a subscription in the first place.
- There is a perception that Netflix is a one-stop-shop for Western content alone. For those in India who do not watch foreign content, this becomes an impediment in clicking the subscription button.
- Affordability issues remain a concern. Netflix has slashed its mobile plans in India, but the general packages remain costlier than what most Indians would want to spend on an OTT platform. In comparison, Amazon Prime and Hotstar are much better options for Indians, as they even have content requiring no subscription at all.
- Lack of diversified content: Indian families are less likely to watch Netflix together, than say, content on Hotstar and Amazon.
- Finally, Netflix’s content is not suited for Indian audiences. The platform lays too much focus on liberal ideas and corresponding content. Netflix is not connected with Indian culture, and instead, repeatedly makes offensive content.
There is another problem that haunts Netflix in India more than it does in any other part of the world, and that is the phenomenon of Indians sharing one subscription among themselves. It is pretty normal for at least three to four people to share one Netflix account and password with each other. For the company, this is a sure-shot way of running into losses, because four people who should have different subscriptions are using one account to stream content on the platform.
India is one of the largest video-streaming markets in the world. Yet, Netflix has not been able to tap into the Indian market, and it has nobody but itself to blame for the same.