When the COVID-19 lockdown struck in 2020, streaming services like Netflix experienced a significant surge in viewership, benefiting from the increased demand for home entertainment. Yet, despite this boom, Netflix faced a sharp decline in subscribers, with a loss of 2,00,000 customers in the first quarter of 2022, and the potential to lose millions more. The reasons behind this downturn are complex, and the company had to confront multiple challenges in India, one of its largest and most competitive markets.
Why is Netflix failing in India?
CorpIndiaNews investigates the problems Netflix faced in Indian Market.
Sports on OTT
Sports + OTT = Lucrative Revenue. It is a simple formula that most OTTs have applied to streamline their revenues. Who would deny a greater audience for sports in India? India is a land of cricket and has an audience for football. While other OTT platforms such as Sony Liv and Disney + Hotstar own broadcasting rights for the Champions League and IPL, Netflix is yet to join the bandwagon.
Not only do these over-the-top platforms earn huge profits by securing broadcasting rights of such premier games, but also the long-term loyalty of its users. Hence sports is the perfect hook for attracting more subscribers to the platform.
Missing Regional Touch
Netflix is missing out on the regional touch. The company produces/ streams shows that only Tier I and Tier II cities can relate. The shows are mainly for a specific audience and fail on mass appeal. On the other, popular OTT platforms like Amazon Prime produce shows that are more likely to relate to the Indian audience. Although Netflix has a language films category, the company must adopt hardcore regional marketing campaigns to reach out to people beyond select cities.
Cost
Netflix’s pricing structure, notably higher than its competitors, made it unaffordable for many users in India, particularly in smaller towns. The standard plan cost Rs 5000 annually, while other platforms offered similar content at much lower prices. Digital piracy compounded Netflix’s challenges, with losses from piracy expected to reach $3.08 billion in India by 2022, further eroding potential revenue.
Netflix Identity Crisis
While Netflix initially gained traction with original Indian series like Sacred Games and Delhi Crime, it struggled to maintain its unique identity. The rush to produce global content led to criticisms about its lack of focus on what worked locally. Additionally, Netflix’s inability to adapt its content to the mass appeal of popular genres like Indian soap operas (“saas-bahu” shows) also limited its reach.
Netflix’s Strategic Shift
In the face of these challenges, Netflix re-evaluated its strategy and implemented several measures to regain market share.
1. Regional Partnerships
To counter the dominance of regional platforms, Netflix began forming partnerships with regional players like Hoichoi and Sun NXT. These collaborations allowed Netflix to tap into localized content, appealing to audiences across different linguistic and cultural groups. This strategy aimed at bridging the gap between Netflix’s global content and India’s regional preferences.
2. South Indian Cinema
Recognizing the booming interest in South Indian cinema, Netflix started acquiring popular films and series from the South, such as RRR and KGF, which had garnered massive success at the box office. By aligning itself with regional cinema, Netflix aimed to capture a larger portion of the audience that was passionate about these films.
3. Introduction of Ads and Lower-Cost Subscriptions
In response to increasing competition and price sensitivity in the Indian market, Netflix introduced a lower-cost, ad-supported subscription model. This shift aligns Netflix with other OTT platforms, which have long embraced ads to subsidize lower subscription fees. While this move was previously resisted by the company, it was deemed necessary to expand its reach, particularly among price-conscious users.
4. Cracking Down on Password Sharing
To ensure that its revenue model remains sustainable, Netflix began charging extra fees for accounts sharing passwords. This move targeted the large number of free users who accessed the service through shared accounts, ensuring that only paying subscribers were benefiting from Netflix’s offerings.
The Road Ahead
Netflix’s journey in India has been challenging, but the company’s ability to adapt and evolve gives hope for a comeback. The shift towards regional content, the introduction of affordable pricing plans, and the embrace of advertising are all steps in the right direction. As Netflix continues to recalibrate its strategy, its success will depend on its ability to strike the right balance between global content, regional appeal, and competitive pricing.
While it may not reclaim the “untouchable” position it once held, Netflix is better positioned to thrive in India’s crowded OTT market by understanding local nuances and appealing to the diverse tastes of its audience. The road to recovery will be long, but with the right strategies, Netflix can regain its place as a dominant player in India’s entertainment landscape.
