Online TV/movie streaming service, Netflix entered India as a part of its launch in 130 countries this month. Rising online video consumption is clearly a global trend (see research by our team, TV is Dead. Long Live TV.), but we think secular disruption could take time in India, and wouldn't be without overcoming certain challenges.
We understand the Indian offering only has ~7-13% of the content available in the US , which we think needs to be beefed up for wider acceptance. As things stand, some Netflix original content is already licensed to local broadcasters (e.g. House of Cards on Zee Cafe). We see local content (incl. few movies), but the offering appears very limited.
Netflix India's pricing is marginally lower than the US at Rs500/month (US$7.5) for standard definition, while there are options for
Rs650 (HD, 2 screens) & Rs800 (4K, 4 screens). Plus, consumers need to shell out a lot more for data / bandwidth (1/3GB for an hour of SD/HD content). Such pricing maybe a non-issue only to a miniscule no of consumers; appears much higher than what Indians pay for cable & DTH (avg. ARPU for DTH operators is <US$3-4). Pricing will be important; interestingly, leading Indian vernacular newspapers are
still growing in double digits; one of the key merits is their very low priced offering.
We don?t disagree that online/mobile-based video consumption should pick up ? availability of cheap, good broadband / data connectivity, content and right pricing will be essential before this can reach critical mass in our view. Besides Netflix, we also see a host of similar operators (perhaps lower priced) like HOOQ, Hula, etc. The broadcasters have also launched OTT offerings - Ditto TV by
Zee (paid service featuring other networks also) and varied offerings like Hotstar / SonyLiv / VOOT by Star / Sony / Viacom (many being free of charge). DTH operators too have introduced offerings like TataSky Everywhere / Videocon d2m.
