Digital streaming service Netflix boasts phenomenal success in expanding its footprint in the US, Europe and many other developed parts of the world. But for developing countries like India, Netflix still lacks a strategy that could help it transform itself from a first-world luxury, to a service within reach.
Netflix, which launched its services in India in January last year, announced on Monday that it had joined hands with Airtel, Videocon d2h, and Vodafone, in India as part of its expansion plans in the country.
If everything goes according to plan, the California-based entertainment company's latest move could help it surmount some of its biggest roadblocks in India, including competitive pricing and quality of service issues.
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"India is one of the most important [markets] and we are delighted to be teaming up with three of India's leading companies. The partnerships with Airtel and Videocon d2h is for set-top boxes while the Vodafone partnership is for payment integration," Reed Hastings, Netflix's co-founder and CEO, told reporters on Monday.
Hastings was also hopeful about India's growing Internet consumption, especially after the introduction of the free data offering from Reliance Jio.
Adding that Netflix is in talks with many other players in India for potential partnerships, Hastings said the company would set-up a new office in Mumbai and would likely double its content over the next year.
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Ever since Netflix set foot in India, it has been facing stiff competition from local rivals like HotStar, a streaming service run by STAR India, and Eros, a company that produces and distributes Bollywood movies and Indian TV shows online.
Amazon has also been trying to get a piece of the pie with its subscription-based streaming service Prime Video.
What Netflix needs to do to get some significant traction in the Indian market is to cater to local tastes with a better understanding of the region's socioeconomic expectations – something that local players like HotStar and Eros have already tried and tested.
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It is still early to predict whether Netflix can find a winning formula in its collaborations with Airtel, Videocon d2h and Vodafone. However, there are a few areas that these partnerships can help Netflix exploit to solidify its presence in the South-Asian country.
Embracing the Set Top Box
In the US and Europe, Netflix is available with smart TVs, Set Top Boxes, gaming consoles and streaming media players. The company can also implement a similar tactic in India by introducing packaged low-cost deals along with Set-Top Boxes in partnership with direct broadcast satellite service providers.
Better pricing with broadband
Internet subscription in India is dominated by mobile Internet users that are expected to grow even further with the arrival of faster 4G LTE service by network providers like Reliance Jio and Airtel.
Netflix can utilise this scenario by introducing a bundled service, incorporating both broadband connection and its own streaming services without any consumption ceiling or with a subsidized offer.
Netflix definitely needs an innovative pricing model for its services to reach Indian masses. Currently, Netflix charges Rs500 for the basic subscription (no HD) and Rs650 for the standard subscription (HD). Its premium subscription is even a tougher sale with a price tag of Rs800.
Catering to a regional audience
In addition to affordable pricing, Netflix also needs to have a better understanding of India, which is made up of numerous cultures within itself.
The company needs to cater to different audiences with different tastes across the region.
Although India's multilingual setup can be a big challenge, it also offers an opportunity to come up with a mix of regional and pan-India content.
Out of 94 million global Netflix users, 40 million are outside the US and this number is poised to grow if the company finds success in emerging markets like India.
Although Netflix has not made anything official about its investment plans in India, Hastings did express his intention to improve services in the country later this year.
"In 2017, we'll be working on making our Indian service better in every dimension. We are keen on bringing more locally-produced series and films to our more than 93 million members households globally," Hastings said.