India might be the last frontier for Netflix in the global streaming war

Global streaming giants – Netflix, Amazon Prime, and Disney, which owns Hotstar, among others – all have their eyes set on India’s soon-to-be US$5 billion video-on-demand (VOD) market. So, it’s not surprising when Amazon founder and CEO Jeff Bezos, on his three-day visit to India on Thursday, said Amazon will double down on its investment in the country as “there is nowhere that the streaming service is doing better than India.”

To catch up with the competitors, Bezos announced the launch of seven new local content out of 24 new releases that are marked for India.

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While all the companies are fighting for the larger pie of the market share, Netflix has been the most interesting case with its local experiments and India-only strategies, as even after three years of operations in the country, the American media services giant trails behind Hotstar and Amazon Prime. According to data-driven research platform Oddup, as of October 2019, Netflix had about 5% market share, while Hotstar enjoyed a 29% market share, followed by Amazon Prime’s 10%

As the battleground for video-streaming services shifts from the US to the world’s second most populous country, India may turn out to be the last frontier for Netflix, which is already in a dire situation in its home market.

Netflix has been nearing saturation since last year in the US. For the first time in eight years, it lost 126,000 paid American users in the second quarter of 2019. Although the company tried to catch up in the next three months, media pundits believe the 20-year-old streaming platform can lose up to 4 million US subscribers in 2020. Netflix’s fall back home coincides with Hollywood studios such as Disney and WarnerMedia turning rivals from partners as they roll out their own streaming services.

“The company has piggybacked on Hollywood to become world’s biggest streaming service,” Stephen McBride, an investor and chief analyst at research firm RiskHedge wrote in a recent Forbes article. “And now with Hollywood giants waking up and taking their content back, Netflix’s days are numbered.”

Netflix would lose access to blockbuster shows such as Friends and the Marvel series, which it has been licensing for years, as their original creators – HBO and Disney – have also announced their entry in the on-demand video space with HBO Max and Disney+, respectively.

The only saving grace for Netflix is its robust international subscriber growth. For the last quarter of 2019, the company expanded its projection for the overseas subscribers to 7 million compared to 6.2 million in Q3. In the same period, it lowered its projection by 0.2 million for new paid users in the US, its biggest and most lucrative market.

To drive the new growth and grab a bigger piece of the pie of the soon-to-be US$687.2 billion global video-streaming market, Netflix is pinning its hopes on Southeast Asia and India, since it has failed to enter China so far.

“Netflix has exhausted its growth domestically, and with new market entrants in the fray, it is focusing on international growth, especially in India,” said Prabhu Ram, head of Industry Intelligence Group at CyberMedia Research (CMR).

But, it may not be easy to reign. Chinese streaming giants like Baidu’s iQiyi and Tencent’s WeTV have recently begun overseas expansion with an eye on the Asian peninsula. While Southeast Asia is their first stop, due to slightly similar culture, India, where Netflix expects to find its next 100 million users, seems to be next in line. At present, both iQiyi and WeTV are testing the waters in the Asian country.

The India playbook

Originally a DVD renting company, Netflix took the US market by storm when it introduced a video-streaming service in 2007. It changed users’ viewing behavior, as they gained control of what, when, and how they wanted to watch their favorite programs.

One of the main reasons for its early traction was its cheap pricing compared to traditional cable TV. It was priced at about one-tenth of what traditional cable networks charged. However, if Netflix thought its US strategy would work in India, it couldn’t have been more wrong.

The experimentative Netflix

The streaming wars