Thread by @MotwaniSuhas

Just been thinking about a platform I spend quite some time on, please feel free to critique, add your thoughts and chip in :)

#india #ott #netflixandchill

A little bit (longish) background check:

- In historic terms, definitely has had a dream run but the recent performance of Netflix stocks have been volatile at best with a number of factors are causing investors to be extra cautious when it comes to investing in Netflix.

Most recently, Disney’s latest announcement of Disney+ sent Netflix shares tumbling by 4.5%

investors.com/news/technolog…

The increased subscription rates, already in effect for US subscribers has resulted in slowed growth figures & customer churn.

vox.com/2019/4/16/1841…

Low subscription growth figures in the US has led experts to call out the apparent saturation of the US SVOD market

wsj.com/articles/netfl…

With Netflix cash burn peaking during January 2019, the long term debt of the company comes in at $12.3 billion. However, this is not surprising given the fact that Netflix is a “Content First” company
with a strategy of investing heavily into own content to reduce dependencies

Ted Sarandos, Netflix’s content chief said that they are expected to spend $15 billion in content. Netflix also stated that it expects a free cash flow deficit of negative $3.5 billion in 2019. Steady subscription growth figures are key to the success of this business model imo

With slowed growth figures within the US, it’s no wonder that Reed
Hastings, CEO Netflix is pivoting focus towards developing growing markets
such as Asia. Netflix gained 9.1 million subscribers in 2019 but 7.9 million of those are
international. Here's what India is watching:

Reaffirming the International focus:

(more on India and Netflix coming up)

And again: “Netflix’s next 100 million users are from India.”

- Reed Hastings, CEO, Netflix

Coming back to the India boom:

India’s is slated to continue on its path of double-digit growth of internet users

● These growth figures are fuelled by rapid internet adoption in rural.
● India’s total internet users are projected to reach 650 million by the end of 2023

Some more facts:

● An average Indian user spends 6.2 hours daily consuming content online
● Social Media and entertainment (music & video) are the two activities that Indians spend most of their time on

And some more:

● Spending per month on digital media content is expected to grow 2.5 times by 2020
● Similar trends are expected for time spent consuming digital media services.

Source: Deloitte Digital OD

With this comes India’s growing appetite for content

● India’s TV industry grew 12% in 2018 from ₹660 billion to ₹740 billion
● India’s movie industry grew 12.2% in
2018 to touch ₹174.5 billion.

● 16% of all media consumption in India is
digital and more importantly 25% of all
content consumed by Indian youth is
digital

● Coupled with rapid high speed internet adoption, these figures present a great opportunity for growth in the OTT space.
● Strong digital media content growth led to video subscription revenue to triple
in 2018 peaking at ₹13.4 billion.

● The revenue from the Indian OTT market $500 million in 2018, of which 82% was from AVOD or advertising revenue and the remaining 18% was from user subscriptions (SVOD)

Brilliant resource and numbers here: afaqs.com/all/news/image…

● The Indian OTT market is driven by consumer demand and reflects the price conscious nature of Indian consumers.
● Though advertising revenue represents a large chunk of overall OTT revenues, spending per month on digital media is expected to grow by 2.5
times by 2020

And yes you guessed right: The burgeoning middle class with larger disposable incomes are expected to
lead the increased customer subscriptions.

Now digging deeper into the Indian OTT Space. The Indian OTT space is highly competitive with different players vying for the attention of consumers using different packages and business models. Here's a snapshot:

Netflix entered the Indian market in early January 2016. With over 500k subscribers as of 2018, Netflix has built a loyal subscriber base in India. Despite relatively higher subscriptions rates, region-specific content worked
well to increase the paid subscriber count in India.

Netflix India’s target audience are definitely high-income consumers from primarily urban areas.
And with Netflix pivoting towards Asia and India in particular, the larger market should be addressed if sustained growth figures are to be maintained.

Just thinking out loud on what they _can_ do from here keeping in mind the India focus

1. TVOD - Transactional Video On Demand

Leverage the hugely popular activity of binge-watching by offering subscribers the opportunity to purchase a 24 hour binge pass which grants access to a particular tv show/ set of tv shows for exactly 24 hours.

This could also be in alternate formats:

- Content bundles offered to subscribers to limit the access to a curated set of content.

- Mobile phone only subscription of reduced video quality and stream rate offered at a lower subscription price. (already in talks)

Why this might work?

Well, these strategies work well with onboarding customers interested in regional content or genre-specific content. And India, as you would have already discovered is not a one-for-all market

Moving on to content:

A number of local OTT players have rapidly scaled their customer base in a short period of time by utilizing their keen understanding of the Indian entertainment market.

Original content has been Netflix’s strongest tool and I'm 100% sure they're doubling down on this while adding the next 100 million user subscriptions. Fairly good job on getting the India team in place, and getting regional content going strong. Need to see how this plays out

Lastly, the market positioning:

- Netflix subscriptions can be marketed by positioning the quality of a Netflix subscription in comparison to the cost of alternate entertainment options that offer similar service (movie ticket costs, TV series subscriptions and NOT other OTTs).

The experience of a cinema theatre plays an important role in the entertainment of millions of Indians - marketing the idea of “Bringing the cinema home” will not only capture the mind of the people but suddenly make the idea of a Netflix subscription very "affordable"