IHS: Netflix Needs More Than ‘Sacred Games’ to Drive Consumer Adoption in India

There’s a reason Netflix is emphasizing localized content and talent when expanding service abroad: Consumer adoption.

With over-the-top video by nature offering loss-leader pricing, services such as Netflix and Amazon Prime Video haven’t yet engaged in price warfare against regional competitors.

But simply regurgitating Hollywood movies and TV shows is a strategy of the past in markets such as India and China – two regions of the world Netflix and Amazon want to establish significant presence in.

In India, OTT video services will add 25 million subscriptions over the next five years, three million more new subs than pay-TV. It will exceed 35 million OTT video subs by the end of 2022, according to new data from IHS Markit.

When it comes to choosing connected video services, IHS found that more than 76% of connected consumers in India feel local content is important – with 74% citing the importance of quality subtitling and dubbing. Pricing also remained important across all markets surveyed.

As Netflix & Co. increase their focus on the Indian video market, including investment in local content, they continue to face competition from India’s well-established local OTT players.

The country’s successful domestic film and network TV markets pose challenges for newcomers lacking local content libraries. Despite launching “Sacred Games” this year, featuring Bollywood star Saif Ali Khan, IHS says Netflix still has a long way to go to grow its Indian subscriber base.

Star India launched Hotstar, an ad-supported video-on-demand (AVOD) service in 2015, followed by SVOD service, Hotstar Premium, in 2016. The service is forecast to grow its Indian subscriber base 60% this year, accounting for 25% of all online video subscriptions in the market.

Its success has largely been supported by content investments, including premium sports, local-language content and international content from HBO, Disney and Fox.

Although pricing is the most important factor in a video service across all country markets surveyed by IHS, Indian consumers were most likely to cite price as an important factor in their video service decisions.

Average revenue per user (ARPU) among pay-TV subs in India reached $4 monthly in the satellite heavy market, while local OTT subscription services cost less than $1 per month. In comparison, the basic Netflix subscription in India costs $7.

To succeed and grow in India’s content-hungry market, IHS says global OTT video players need to provide the correct mix of content at the right price.