India is the fastest growing market market in the world for giant streamer Netflix and Monika Shergill, VP, content, for the country, has a clear plan to keep the trajectory going.
“A healthy streaming business, according to us, has to be built on the strong fundamentals of engagement, where we are doing very well, and revenue and profit as a global service. We are a profitable service – in many of our markets, we are on the path to profitability,” Shergill told PvNew.
Earlier this year, Netflix co-CEO Ted Sarandos had said that content watching grew by 30% last year in India and revenue grew by 25%. In a subsequent earnings call, Sarandos addressed the importance of pricing in India, saying: “We’ve got to get pricing and the main payment methods right.”
India is an extremely price-sensitive market and Netflix, being aware of this, drastically slashed its prices in late 2021. Netflix currently has a four-tier pricing plan for the country. The mobile plan costs INR149 ($1.82) per month, the basic plan INR199 per month, the standard plan INR499 per month and premium INR649 per month.
“What we have been seeing with the pricing shift is that we’ve really opened access to a large audience base that is keen to watch Netflix, which is why we have been seeing the kind of momentum that we’ve had over the last year,” Shergill said. “From a revenue standpoint, despite the price recalibration, the fact that our revenue increased by 25% is an indicative factor that we have grown.”
“Addressing pricing constantly is not the way to grow – bettering your content and providing more value by way of the content we create, the content we buy, the different genres, formats, tastes, moods that we program for, also bettering our product features constantly is the way for us to grow the service, which is how we have re-accelerated in the last year. We’ve had a tremendous Q1,” Shergill added.
The executive sites series “Khakee,” “Trial by Fire,” “Rana Naidu” and “The Romantics” and films “Mission Majnu” and “Chor Nikal Ke Bhaga” as key performers for the service.
In addition, the service is also bundled with various telecom or broadband providers including Airtel, JioFiber, ACT and Tata Play, where the Netflix cost is either baked into some of the subscription packages or discounted. Shergill says that unlike some of its local competitors and their bundling packages, Netflix is not heavily discounted by 70-80%.
“Our prices of bundles are very meaningful and we want to get audiences into Netflix, who will be engaged with Netflix, and who will see the value of the content,” Shergill said. “Just having all of this being coordinated together has really set us on a growth trajectory.”
The executive says that heavily-discounted bundling and very low value plans are not healthy in the long term. Nor are they sustainable, because there is a need to invest back in the creative economy. “We are very clear what our model is. And we are seeing a sustained growth through that model. We have to keep bettering our value. That is totally on us,” Shergill said.
There are currently no plans for an ad-supported tier in India, Shergill said, adding that the statement Reed Hastings made in 2018 that the next 100 million subscribers would be “coming from India” had “really chased us.”
“only sub number is not at all indicative of how engaged that base is. It’s not the right way of getting global hits the way Netflix is getting, there is a reason why Netflix is delivering the global hits that it’s delivering,” Shergill said. “We are currently in the most unmatched position of having a service that produces high-quality local content from so many different countries, in so many different languages, that we are poised to make those local hits into global cultural moments. That is only possible because of the engagement that we have, from people to whom having Netflix and watching on Netflix means something. And it’s not just something that came via something or [for] free, that they have no value for. [This] is why we are able to drive those cultural moments and really stay on top of culture with the content and conversations that we have.”
The local-global cultural moments are happening, as evidenced by the international success of three films that were hits worldwide within 14 days of their launch, with “Chor Nikal Ke Bhaga” clocking 29 million viewership hours, “RRR” 25.5 million hours and “Gangubai Kathiawadi” 22.1 million hours. “Chor Nikal Ke Bhaga” made the Top 10 charts of non-English films in more than 60 countries.
“Korea is having a shift, because Korea is a very export-driven culture. India is a very inbound culture, Japan is a very inbound culture. Culturally, [India’s] content is very reflective of our very unique tastes. And then there’ll be some [pieces] which will actually travel because [they are] unique. It’s loud, it’s fun,” Shergill said. “On the service, what we’re seeing is more content is being adopted. Will 100% content be adopted? I’m very sure not, because we are making content for our [local] audience first. But there will be ones that will really travel.”
Within India, Netflix is running promotions in tier two cities and is specifically buying content, particularly films, that will appeal to those markets, Shergill said. She said that the service’s mobile plan had really improved penetration. Commissioning will remain in the primary languages of Hindi, Tamil, Telugu and Malayalam and there are no plans at the moment to compete with the myriad hyperlocal, cheap language services.
“We are very clear that wherever we are entering, we want to go deep there. And we want to build big there. Just spreading ourselves thin and trying to compete with the local players is not our objective at all,” Shergill said. “Subs and dubs in the local languages… is how our roadmap for growth is.”
