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Case 4.2 Netflix in India

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Case 4.2 Netflix in India

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You are on page 1/ 18

Netflix in India: expanding to success

Lubna Nafees, Mokhalles Mehdi, Rakesh Gupta, Shalini Kalia, Sayan Banerjee and
Shivani Kapoor

1. Context of the case Lubna Nafees is based at


Walker College of Business,
During his visit to India in December 2019, Netflix’s founder and chief executive officer Appalachian State
(CEO) Reed Hastings talked about a series of steps the company had taken in the recent University, Boone, NC,
past to successfully face stiff competition and move towards achieving its stated target of USA. Mokhalles Mehdi is
100 million viewers. These steps involved significant changes in their marketing mix such as based at Kaziranga
reworking their pricing, developing a rich portfolio of Indian content and building various University, Jorhat, India.
partnerships. Since Netflix’s launch in India (December 2016), it faced fierce competition Rakesh Gupta is based at
from players such as Hotstar and Amazon Prime, both of whom had developed a rich Institute of Management
Technology Ghaziabad,
portfolio of Indian content and adopted a very aggressive pricing strategy thus, making
Ghaziabad, India.
these changes essential. At the time of their launch, Netflix had set a very ambitious target
Shalini Kalia is based at the
of gaining 100 million viewers within five years (by 2021) while adopting a premium pricing NMIMS Global Access
strategy and positioning themselves uniquely based on their international content. They School for Continuing
quickly learned that they would have to reevaluate their approach if they wanted to achieve Education, Mumbai, India.
their target on time. The changes announced by Hastings were an effort in that direction. Sayan Banerjee is based at
The moot question was whether these steps would help Netflix India reach its goal. This IMT Nagpur, Nagpur, India.
challenge was further compounded by an almost 40% hike in data tariffs by three major Shivani Kapoor is based at
wireless carriers considering most Indians watched over-the-top (OTT) media content on the New Delhi Institute of
their mobile phones (Manchanda, 2019) [1]. Management, New Delhi,
India.

2. The company
Netflix was established in 1997 as a digital video disc (DVD)-rental-by-mail firm [2]. As of
2019, Netflix was a global streaming entertainment service provider of movies and television
(TV) series. It provided commercial-free content with unlimited viewing to its subscribers on
any internet-connected device or screen for a monthly fee2. It had more than 167 million
paid subscribers in over 190 countries to whom it provided a range of content from TV
series, documentaries, feature films, etc. of diverse genres and languages [3]. It offered
flexibility in viewing content to its members, which they could watch at their convenience on
any screen. Wilmot Reed Hastings and Marc Randolph founded the company, and Reed
Hastings was the Chief Executive Officer and member of the company’s board of directors.
The company began streaming in the US in 2007 and expanded internationally in 2010.
Refer to Table 1 for the key locations of Netflix worldwide. Netflix’s first original series
debuted in 2013, and it became global in 2016 [4]. Netflix milestones over the years that
redefined movie and TV consumption are given in Table 2.
Disclaimer. This case is written
solely for educational purposes
and is not intended to represent
3. The entertainment and media successful or unsuccessful
managerial decision-making.
Entertainment and media (E&M) industry was constantly growing its revenue and share in The authors may have
disguised names; financial and
the global business. Its growth was propelled by internet advertising, live entertainment, other recognizable information
gaming and filmed entertainment [5]. Price Waterhouse Coopers (PwC’s) E&M outlook to protect confidentiality.

DOI 10.1108/EEMCS-10-2019-0285 VOL. 11 NO. 2 2021, pp. 1-31, © Emerald Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
Table 1 Netflix global presence
Asia pacific Europe The USA Latin America

Hsinchu City, Taiwan Amsterdam, The Netherlands Los Angeles, California Alphaville, Brazil
Makati, Philippines Berlin, Germany Los Gatos, California Mexico City, Mexico
Mumbai, India London, UK New York, New York –
Seoul, South Korea Madrid, Spain Salt Lake City, Utah –
Singapore, Singapore Paris, France Washington, DC –
Tokyo, Japan Rome, Italy – –
Source: “Locations across the Globe”, Netflix Jobs, accessed 14th April 2020, Retrieved from https://jobs.netflix.com/locations

Table 2 Netflix timeline


Year Progress of the company

1997 Netflix was founded to offer online movie rentals


1998 Netflix launched the first DVD rental and sales site, “netflix.com”
1999 Netflix introduced a subscription service offering unlimited DVD rentals at fixed monthly price
2000 Netflix introduced a personalized movie recommendation system for its members
2002 Netflix offered an initial public offering (IPO) on Nasdaq
2003 Netflix surpasses one million members for subscription rental service
The US Patent and Trademark Office issues a patent to Netflix for subscription rental service and several extensions
2004 Netflix reached two million members
2006 Netflix surpasses five million members
2007 Netflix introduced streaming service
2008 Netflix partnered with consumer electronics companies
2009 Netflix continued to expand its partnership with consumer electronics companies
Netflix surpasses 10 million members
2010 Netflix became available on the Apple iPad, Apple iPhone and Nintendo Wii
Netflix expands to Canada
2011 Netflix launched throughout Latin America and the Caribbean
2012 Netflix debuts in Europe, the UK, Ireland and the Nordic countries
Netflix won its first Primetime Emmy Engineering Award. Netflix reaches 25 million members
2013 Netflix expands to The Netherlands
Netflix launched “house of cards”, “hemlock grove”, “arrested development” and “orange is the new black”
2014 Netflix launches in six new countries in Europe such as Austria, Belgium, France, Germany, Luxembourg and Switzerland
Netflix surpasses 50 million members
2015 Netflix launches in Australia, New Zealand, Japan, Italy, Spain and Portugal
Netflix premieres its first non-English original series
2016 Netflix expands to 130 countries
Netflix provided service to the members of 190 countries in 21 languages across the world
2017 Netflix surpasses 100 million members globally
2018 Netflix acquires comic book publisher Millarworld
2019 Netflix wins four Academy Awards
Netflix releases its first original animated feature film, “Klaus”
Source: “About Netflix”, Netflix Media Centre, accessed 14th April 2020, Retrieved from: https://media.netflix.com/en/about-netflix

highlighted several drivers that reshaped the E&M industry such as omnipresent high-
speed internet connectivity, consumers accessing content, services through mobile
devices and consumers’ preference towards personalized content. Companies focusing on
new revenue growth sources (e.g. gaming), shifted from traditional media to social media
and technology platforms [6]. E&M business saw maturity in the developed countries,
namely, the USA, the UK, Switzerland and started growing in emerging economies such as
India and China. E&M market revenue contributed to about 2.53% share of global gross
domestic product in 2017 [7]. Also, global economic growth led to an increase in overall
consumer spending in the E&M industry. PwC’s Global E&M Outlook 2018–2022, estimated
that spending on the E&M industry was going to increase to US$2.4tn [8] in 2022 from US
$1.9tn in 2017 [9]. Goldstein Research analyst forecasted that the global E&M industry

PAGE 2 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021


would grow at a cumulative annual growth rate of 4.2% between 2017–2025[10]. Table 3
shows the region and country wise E&M industry from 2007 to 2016. The major trends that
affected every company in the E&M industry were convergence 3.0 (the congregation of
technology and telecommunications companies with E&M companies), connectivity with
consumers and earning and retaining consumer trust[11]. Christopher Vollmer, global
advisory leader for E&M, PwC US said,
‘‘To succeed in the future that’s taking shape, companies must revisit every aspect of what they
do and how they do it. This means going above and beyond in how they envision their business,
generate revenues, create and organize their capabilities and build and retain trust’’.[12]

4. The entertainment and media industry in India


The overall E&M industry in India was expected to reach US$64bn by 2023[13]. The top
four segments of the E&M sector were categorized into OTT video, video games and
E-sports, internet advertising, music, radio and podcasts[13]. India’s OTT video market was
expected to grow from US$537m in 2018 to US$1.5bn in 2023[13] and subscription video
on demand (SvOD) was estimated to grow from US$0.52bn in 2018 to US$1.49bn in
2023 [14]. Rajib Basu, Partner and Leader – E&M, PwC India said that India was the fastest-
growing E&M market globally and would continue to keep that momentum, even more so as
talks of launching 5 G networks were in progress. The new-age consumers could control
their own media consumption through an expanding range of smart devices and curate
their channels using OTT services. The content was not being pitched to an audience of
billions but personalized for billions of individual consumers. Personalization of content was
essential to the Indian consumer so much so that companies in this sector would have to
work their strategies accordingly [15]. Long-term players in the E&M space had several
opportunities that they could use to their advantage [15].
India was the fastest-growing internet advertising market backed by rapid growth in internet
and smartphone penetration [16]. The total internet advertising revenue for India was US
$1.2bn in 2018 and PwC projected this to reach US$2.6bn in 2023 [16]. India’s music, radio
and podcasts market was worth US$0.80bn in 2018 [17]. The total music revenue was
forecasted to reach US$1.51bn in 2023 and Podcast listeners were estimated to grow to
176.1 million by 2023 [17]. However, the E-sports market in India was small due to the poor
online infrastructure, but with the improvements there, the e-sports and video games market
was expected to reach US$2.5bn by 2023 [17].
Indian people were expected to spend US$35 per person for media and entertainment in
2021, an increase from US$19 in 2016 (Diwanji, 2019). Some of the key players in India’s
OTT platforms were Netflix, Amazon Prime Video and local players, namely, Reliance JioTV,
Balaji Telefilms’ ALTBalaji, Star India’s Hotstar and Sony Entertainment Television’s
SonyLIV [18]. Moreover, Federation of Indian Chambers of Commerce and Industry and
PwC report highlighted that the key growth drivers of the Indian E&M industry were
television, filmed entertainment, print media, radio, music, live entertainment, out-of-home
advertising and internet advertising. On the other hand, barriers to investment in Indian
E&M industry were content piracy, lack of uniform media policy for foreign investment,
content regulation, price regulation in the television industry, lack of empowered
regulators [19].

5. Brand Netflix
Netflix was positioned as a movie and television entertainment network among the
viewers [20]. It was unique in providing their viewers with ad-free content of their choice and
the flexibility of consumption [20]. Netflix positioned the brand as “Movie Enjoyment Made
Easy [21]”.

VOL. 11 NO. 2 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 3


Table 3 Entertainment and media market by region and country-wise (US$ millions)
Country 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016

North America (NA)


USA 479,710 472,278 440,895 450,095 463,863 489,873 508,416 536,667 562,199 597,279
Canada 38,399 40,044 39,504 41,801 44,166 46,868 49,850 53,216 56,696 60,574
NA Total 518,109 512,322 480,399 491,896 508,029 536,741 558,266 589,883 618,895 657,853
EMEA
Western Europe (WE)
Austria 11,201 11,538 11,374 11,621 11,941 12,299 12,683 13,107 13,571 14,113
Belgium 11,437 11,815 11,429 11,808 12,109 12,407 12,856 13,431 13,945 14,498
Denmark 9,785 9,893 9,663 9,801 9,945 10,169 10,428 10,705 10,989 11,272
Finland 6,599 6,729 6,448 6,604 6,864 7,084 7,345 7,653 7,998 8,379
France 68,431 71,013 70,926 73,392 77,098 79,495 82,191 84,831 87,737 91,063
Germany 95,835 96,842 94,975 97,183 99,342 101,857 104,789 107,441 110,242 113,433
Greece 6,511 6,712 6,409 6,083 5,610 5,466 5,517 5,649 5,856 6,087
Ireland 5,272 5,206 5,056 4,944 4,863 4,874 5,016 5,179 5,367 5,568
Italy 46,160 46,422 44,222 45,402 46,099 47,024 47,864 49,577 51,485 53,688
The Netherlands 19,893 20,283 19,433 19,858 20,766 21,287 21,843 22,598 23,417 24,456
Norway 10,534 10,784 10,420 10,628 10,961 11,270 11,643 12,096 12,596 13,160
Portugal 5,240 5,340 5,423 5,702 5,970 6,199 6,491 6,828 7,170 7,503
Spain 32,826 32,444 29,380 28,702 29,412 29,580 30,332 31,071 32,072 33,227
Sweden 13,496 13,785 13,236 13,678 14,032 14,488 14,955 15,558 16,298 17,028
Switzerland 15,232 15,473 14,808 15,286 15,480 15,807 16,255 16,789 17,333 17,954
UK 82,675 84,019 80,709 82,278 83,367 85,225 87,472 90,139 93,563 97,332
WE Total 441,127 448,298 433,911 442,970 453,859 464,531 477,680 492,652 509,639 528,761
Central and Eastern Europe (CEE)
Czech Republic 5,372 5,879 5,774 6,103 6,247 6,444 6,935 7,116 7,479 7,891
Hungary 3,221 3,375 3,210 3,268 3,316 3,444 3,635 3,845 4,043 4,256
Poland 8,660 9,524 9,213 9,609 9,950 10,332 10,825 11,395 11,993 12,668
Romania 2,164 2,603 2,753 2,598 2,642 2,758 2,914 3,076 3,242 3,419
Russia 19,766 21,508 19,282 21,523 24,140 26,437 29,087 32,284 35,591 38,996
Turkey 5,179 5,564 5,367 6,249 10,131 11,242 12,473 13,774 15,048 16,159
CEE Total 44,362 48,453 45,599 49,350 56,426 60,657 65,869 71,490 77,396 83,389
Middle East/Africa
Israel 3,778 3,874 3,822 3,868 3,900 4,010 4,181 4,359 4,550 4,748

MENA 11,515 14,050 15,096 17,300 25,412 28,516 31,698 34,983 39,064 43,622
South Africa 7,338 7,819 8,031 9,340 10,270 11,563 12,912 14,347 15,753 17,227
MEA Total 22,631 25,743 26,949 30,508 39,582 44,089 48,791 53,689 59,367 65,597
EMEA total 508,120 522,494 506,459 522,828 549,867 569,277 592,340 617,831 646,402 677,747
Asia Pacific (AP)
Australia 29,954 32,903 32,803 34,264 35,021 37,003 39,162 40,925 43,078 45,029
China 63,667 73,845 81,194 95,702 109,059 120,948 137,458 154,940 173,449 192,516
Hong Kong 5,728 5,969 5,777 6,452 7,013 7,500 7,965 8,504 9,035 9,607
India 13,480 14,947 15,490 17,264 21,628 24,778 28,671 32,948 37,642 42,226
Indonesia 6,359 7,737 9,010 10,655 12,062 13,646 16,059 18,636 21,683 25,228
Japan 195,808 200,147 193,627 195,667 192,796 198,938 204,913 210,424 215,876 221,630
Malaysia 4,209 4,676 5,081 5,612 6,039 6,544 7,052 7,756 8,534 9,345
New Zealand 4,513 4,586 4,401 4,528 4,694 4,975 5,202 5,440 5,662 5,859
Pakistan 1,269 1,467 1,756 1,931 2,060 2,300 2,577 2,920 3,334 3,817
Philippines 2,598 3,104 3,374 3,783 4,150 4,617 5,216 5,862 6,529 7,547
Singapore 3,315 3,488 3,584 3,860 4,038 4,280 4,542 4,790 5,070 5,347
South Korea 31,050 33,088 34,265 36,289 38,562 40,191 41,926 43,644 45,497 47,455
Taiwan 9,024 8,960 9,452 10,006 10,454 10,667 11,086 11,700 12,447 13,334
Thailand 6,719 6,950 8,825 9,927 11,273 12,315 13,195 14,135 14,995 15,901
Vietnam 757 1,016 1,499 2,411 3,383 3,953 4,489 4,902 5,297 5,681
AP Total 378,450 402,883 410,138 438,351 462,232 492,655 529,513 567,526 608,128 650,522
(continued)

PAGE 4 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021


Table 3
Country 2007 2008 2009 2010 2011p 2012 2013 2014 2015 2016

Latin America (LA)


Argentina 5,545 6,265 6,831 7,857 8,649 9,361 10,360 11,548 12,459 13,669
Brazil 25,055 28,032 30,125 35,379 39,168 43,307 48,255 55,519 57,781 64,823
Chile 2,783 2,947 3,034 3,357 3,660 3,953 4,289 4,724 5,024 5,458
Colombia 9,020 10,464 11,213 12,305 13,043 13,910 15,020 16,410 17,674 19,343
Mexico 13,672 14,941 15,277 17,180 18,777 20,385 22,119 24,858 26,082 28,693
Venezuela 799 910 976 1,044 1,158 1,282 1,431 1,624 1,760 1,962
LA Total 56,874 63,559 67,456 77,122 84,455 92,198 101,474 114,683 120,780 133,948
Notes:  MENA Comprises Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria and the
United Arab Emirates. P = projected
Source: PwC (2012)

Netflix used its logo to promote their intentions of “[creating] a premium cinematic feel as
[they] continue to set the industry standard for original content [22]”. Worldwide, in
comparison to Hulu, Home Box Office (HBO) and Amazon Prime – people generally
associated movies and quality originals when they thought of Netflix (Levenson and
Kennemer, 2020) (https://brand.netflix.com/en/assets/brand-logo/) [23].
What made these originals high quality is that Netflix had delved into creating relatable and
emotionally intelligent content. One way they had done this was by writing character-driven
storylines, rather than plot-driven. This had intensified with exploring topics that have
recently become more socially acceptable to create a more dynamic conversation around –
including love, disability, class, sexual preferences and political stances (Vogels, 2019).
Another form of storytelling that made Netflix more pioneering and experimental than other
streaming services was interactive storytelling, which prompted the viewers to decide the
direction of the show. An example of this was You vs Wild, a spin-off of Man vs Wild, where
the viewer-turned-player decided what actions were needed to survive (Vogels, 2019).
Because of the increasingly socially progressive themes appearing in Netflix’s renowned
original content, a good portion of their user base was young adults who were more open-
minded to the ideas being introduced in some of these shows – along with the other titles
they provided. However, with such a wide range of titles ranging from artisan reality TV
shows to sitcoms to drama and crime series, Netflix’s demographic was vast. This was
shown in its home market with 60% of US adults subscribing to Netflix and 77% of Video
on Demand customers subscribing to Netflix. This was the culture that Netflix created and
took to the new markets where they launched (Vogels, 2019).

6. Value proposition and consumer value proposition


Randolph and Hastings started selling DVDs and picked online movie rentals for their business.
They found a gap in the market and consumer desires about movie watching. Netflix positioned
itself from DVD rentals to streaming and original content provider in the online platform. As a
streaming entertainment service provider, Netflix telecasted TV series, documentaries and
feature films across a wide variety of types and languages. It provided the freedom to its
subscribers (members) to consume at their own pace [24]. The company website included:
[. . .] watch as much as they want, anytime, anywhere, on any internet-connected screen, play,
and pause and resume watching, all without commercials or commitments [24].

Netflix further added:


We are about the freedom of on-demand and the fun of binge viewing. We are about the
flexibility of any screen at any time. We are about a personal experience that finds for each
person the most pleasing titles from around the world [25].

VOL. 11 NO. 2 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 5


Netflix’s value proposition was that it provided their customers with 24/7 access to
streaming a wide variety of shows and movies with no ads. This was significant compared
to the cable and movie theatre industries, both of which had scheduled shows with ads and
a generally limited selection to what was currently airing.
Netflix created value for its customers by thoroughly understanding them through
observation and research, customized solutions for every customer, an automated movie
recommendation programme and freedom in selecting and watching movies (Shah,
2019).
Netflix kept in mind the differences in culture between the countries they entered. For
instance, the US and India are culturally very different. According to Hofstede’s six cultural
dimensions, India scored high on Power Distance (77) compared to the US (44). India is
more tolerant of unequal rights between the privileged and the less privileged. Hierarchy
systems exist, power is centralized and control systems are there, which is not the case in
the US. On individualism, the US is very high with a score of 91 compared to 48 points of
India. In the US, people are expected to focus and take care of themselves and their
immediate family. In contrast, India is a more close-knit society where the extended family
and community come before “the self”. The two countries are more or less similar on the
dimension of Masculinity with India having a score of 56 and the US, 62. So, both societies
are driven by competition, achievement and success. Winning is the criteria for success.
Both countries have a medium-low preference for uncertainty avoidance with India having a
slightly low score of 40 compared to the US has a 46. This means that both India and the US
are not too comfortable with uncertainty and ambiguity. India has an intermediate score of
51 on the dimension of long-term orientation while the US being a normative society score a
low 26 points on this dimension.
Contrary to the US, societies such as India that lean towards the higher score are more
forgiving for lack of punctuality, a changing game-plan based on changing reality and
general comfort with discovering the fated path as one goes along rather than playing to an
exact plan. India and the US also differ significantly in indulgence with the former believing
in restraint. In contrast to indulgent societies, restrained societies look down upon
individuals who indulge themselves and control their desires’ gratification. Leisure time and
entertainment are considered lavish, and a waste of resources and people indulging are
labelled selfish and irresponsible (Hofstede Insights, 2021). This cultural difference could
prove to be a major challenge for Netflix in India as Netflix was in the business of
entertainment and indulgence.
Netflix was initially targeting the 100 million people in India who spoke some English and
could afford Netflix. However, with initial hiccups, they realized they would need to make
some changes and started testing a lower-priced version of its film and television
streaming service in some markets to boost sales (Shaw, 2018). When Netflix entered
India in 2016, the Indian content library was limited compared to the US, with
approximately 7% of the US content available in India [26]. This continued until the
beginning of 2018, and the reason for this non-availability of content was attributed to
copyright issues, content exclusivity, language barriers and other right management
complication (Husain, 2018). However, with a better understanding of the diversity in the
Indian market, Netflix made changes to its content strategy. The content was significantly
tailored to each market and not an extension of the home market. Netflix was no longer
exclusively focusing on the English-speaking population who could afford them. Instead,
with more regional content, they were now targeting mobile users who were watching
Netflix. In July 2019, Netflix launched a mobile-only version of its streaming service in
India with a lower-priced plan that would cost Rs 199 (US$2.80) per month with the
restriction that it would work on a single mobile device with standard 480p streams
(Warren, 2019).

PAGE 6 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021


7. The marketing mix in India
7.1 Product/service (content)
Netflix created value for its customers by providing emotionally stimulating and captivating
titles for a relatively cheap monthly subscription. In its home market US, although the
streaming service was more expensive than HULU, depending on the version – it was still
perceived as vastly cheaper than services such as HBO, Disney+ and Amazon Prime.
Netflix had several popular titles such as Orange Is the New Black, Stranger Things and
House of Cards – compared to Game of Thrones on HBO. Many streaming service
customers would instead opt to subscribe to Netflix to choose one streaming service. The
popularity of these originals allowed Netflix’s subscribers to stay up-to-date on social
trends.
A significant reason for this was the innovative form of storytelling Netflix was rolling out, all
on the same platform. As mentioned in Netflix’s positioning, their original series had
cultivated a reputation for being quality and engaging. With so much that was ongoing and
being produced, there was something for everyone.
More specifically, they guaranteed roughly 13,900 different titles from which the audiences
could choose. Viewing these titles changed based on the level of a subscription a customer
opted for. Netflix had three subscription plans listed on its website, namely, Basic Plan lets
the audience stream TV shows and movies from Netflix on one device at a time in standard
definition (SD). This plan also lets them download titles to one phone or tablet; Standard
Plan lets the audience stream TV shows and movies from Netflix on two devices
simultaneously and in high definition (HD) when available. This plan also lets the audience
download titles to two phones or tablets; Premium Plan lets the audience stream TV shows
and movies from Netflix on four devices simultaneously and in HD and ultra-HD when
available. This plan also lets the audience download titles to four phones or tablets.
Netflix in India initially marketed its global English content but very quickly realized that it
would not cut ice with a diverse audience such as India. They started working on the Indian
content. Netflix ensured a constant supply of new content and focused on the
personalization of content to make it relevant to India’s target audience. Netflix balanced the
local and regional content demands investing in Hindi-English crossover content to target
India’s users and the significantly sizeable Indian diaspora and South Asian population of
the UK, Canada US, the Middle East and Africa (Thomas, 2018). Hastings said:
We launched in 2016 and we have continued to invest. So we have a lot of content from the
United States, the UK and Spain. We are developing our Indian content here. This year and next
year, we will spend about Rs 3000 crore developing content and you will start to see a lot of stuff
hit the screens. We got about 100 employees in Mumbai and a couple thousand working on
different productions. So we are trying to become more Indian in the content offering (PTI,
2019a).

Netflix India had successful shows such as “sacred games”, “little things”, “Delhi crime”
and the animated series “mighty little Bheem”. Hastings added,
In the last one year, 27 million households outside of India have started watching ’Mighty Little
Bheem’. So, Indian ideas and characters are spreading. We got one eye on being very local and
authentic and one eye on what will be shared around the world [26].

Netflix’s critical challenges in India were internet issues and market competition. Internet
issues especially had a direct impact on its offerings. Netflix’s shows were known for its high
quality, but a slow internet connection would just be the perfect spoiler. In India, the internet
was still at a very nascent stage and people were still learning the process. Internet
bandwidth was the biggest issue in India, and most of the users were on 2 G or 3 G. To add
fuel to the fire in the internet situation, Netflix had stiff competition in that limited bandwidth

VOL. 11 NO. 2 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 7


and data plans. The Indian viewers watched shows on linear TV, movie theatres, YouTube,
Amazon Prime, Hotstar and JioTV (Thomas, 2018).

7.2 Price
Initially, Netflix launched its services in the Indian market with its global subscription pricing.
However, in its rendezvous with the Indian audience, the price was the mountain that was
not coming to Mohammed. India was a price-sensitive market; a fact, which Netflix
overlooked or not paid enough attention to. In India, the price of a cable TV subscription
was less than US$5 per month, which was 20 times less than the US market (US$99 per
month). Netflix’s services were priced around US$8–US$12 in India where the premium
cable subscription channels were available at a much lower price and provided a much
larger basket of offerings. Therefore, Netflix introduced a differential pricing strategy to
penetrate the Indian market. Netflix offered a monthly mobile-only plan of US$2.63 for users
to access the content in competition to Amazon Prime Video (US$1.70 per month) and
Hotstar (US$3.95 per month) [27]. At the same time, it continued to offer the three original
pricing slabs of US$6.59, US$8.57 and US$10.55, respectively [27]. Baptiste said, “the
mobile plan for Rs 199 (the US$2.63) a month is made for India. Users will have access to
the same unlimited SD, ad-free content under this plan” [27].

7.3 Promotions (advertising)


Netflix entered the Indian market without much fanfare, no mega launch or an aggressive
public relations team. This left the competitors perplexed. Netflix reached out to social
media users and adopted customized communication for the Indian market through social
media campaigns almost six months after their entry into the Indian market. Their first
campaign was by tagging social media influencers using #TheNetflixLife. It was followed by
the first digital brand film #LifeWithoutNetflix, launched on July 21, 2016. Both the hashtags
created a lot of buzz on Twitter and Facebook [28]. Quoting a Netflix official:
Studying the market and spotting the real problems that are native to the audience was a part of
the reason for keeping a low profile before taking a plunge. After all, a campaign gone wrong is
probably worse than no campaign at all [29].

Netflix’s social media growth had been phenomenal; they had majorly relied on social
media to promote its content. Netflix’s competitors such as Hotstar had a strong TV
presence in India through Star TV, so it used these interactive social media posts to
highlight the advantages Netflix had over TV, such as advertisement free entertainment and
time flexibility. They roped in micro-celebrities such as TV stars, Alok Nath, stand-up
comedians, the cast of popular web series, Tanmay Bhatt, for promotion [30].
Their active interaction started to show results, and in the year 2018–2019, Netflix’s fan
growth was 10 times more than Amazon Prime Video and 19 times more than Hulu and
Hotstar (a popular streaming rival in India) (Ramakrishnan, 2019). Netflix’s active
conversations with the audience had helped them build a captivating social presence
(Table 4).
When Netflix entered the Indian market, their content was international, but their campaign
was total “desi” (local) and with a lot of humour. They used the Indian stuff to promote
international content such as the henna design for “Narcos” characters (Figure 1). To
leverage the craze of Indians for Bollywood in July 2019, the brand started a series of
tweets where Bollywood actors were compared with food items. Indians enjoyed it and were
engaged to the extent that they started sending their names with food items. Netflix
engaged the target audience well (Gupta, 2019).
The brand took feedback from the audience very seriously and used social media to
communicate with them. One thing that was at the core while connecting with the audience

PAGE 8 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021


Table 4 Netflix social media status from 1st April 2018–1st April 2019
1 Social media Followers Growth (%) No of post
2 Facebook 57 million 25.9 1,022 times
3 Instagram 15 million 92 NA
Twitter 6 million 20.5 5,227 (52% of it were replies, average 14 post per day)

Source: Ramakrishnan (2019)

Figure 1 Netflix Narcos design in henna for communication in social media

was humour and wittiness. They converted controversy to humour too. For instance, in
August 2018, netizens started trolling Radhika Apte for being a part of almost all Netflix’s
series; the company was quick to respond by developing a campaign (Figure 2). It
converted trolling into appreciation and gained a lot of popularity[31].
Another promotion that Netflix did could be seen on its Twitter account that displayed the
most popular releases of 2019 for India. It defines popularity “by the number of accounts
choosing to watch at least 2 min of a series, movie or special during its first 28 days of
release on the platform” (Mitter, 2019). Top of the list was one of the most popular Indian
series Sacred Games S2, followed by the movie Kabir Singh (film). The remaining in the
order of their popularity were Article 15 (film), Bard of Blood (series), Drive (film) Badla
(film), House Arrest (film), 6 Underground (film), Delhi Crime (series), Chopsticks (film)
(Figure 3) (Ghosh, 2019). The craze of Indians for movies can be seen in the list as 7 out of
10 are movies and only three are series. Netflix also released a separate list of series and
movies (Figure 4).

VOL. 11 NO. 2 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 9


Figure 2 Netflix promotion campaign by Radhika Apte

Figure 3 Top 10 most popular releases of 2019

Figure 4 Top 10 most popular series releases of 2019

PAGE 10 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021


Apart from the social media promotions, Netflix India’s advertisements included hoardings,
banners, pop-up ads and static ads. Quarter ending March 2020, Netflix had added 3.6
million paid subscribers in the Asia Pacific region and 15.8 million worldwide (Vikas, 2020).

7.4 Partnerships

7.4.1 Partnership with direct to home providers. Netflix entered India in 2016, forming
partnerships with several companies such as Bharti Airtel, Atria Convergence Technologies
(ACT) Fibernet and Hathway [32]. Nigel Baptiste, Netflix’s Director of Partner Engagement,
said that partnerships were so crucial to the company’s long-term success that they wanted
to iron out every possible bit of friction between their members and content.
Every bit of friction between our members and content, we want to eliminate. So, whether it is
increasing payment methods, different price plans, working with different partners, we will get
there. Where we are is a far cry from where we want to be, and we continue to be on that
journey [32].

Netflix considered expanding business in India through a strategic partnership with


Airtel [33]. Headquartered in New Delhi (India) Bharti Airtel was a global telecommunications
company with over 394 million customers at the end of December 2017 [33]. The company
collaborated with Airtel to promote Netflix’s content through Airtel TV, Airtel TV app, the My
Airtel app, etc [33]. Bill Holmes, Global Head of Business Development for Netflix said,
We are delighted to expand our partnership with Airtel and combine the latest technologies and
the best of entertainment. Be it Sacred Games, Ghoul or Stranger Things, more and more fans
are watching on mobile, so we’re bringing together Netflix’s award-winning TV shows and
movies with Airtel’s amazing mobile and broadband networks. Airtel customers will enjoy the
simplicity of one monthly bill for their Netflix subscription and Airtel postpaid/home broadband
bill [33].

Netflix had a strategic partnership with Tata Sky [a Direct to Home (DTH) provider], Airtel
and Videocon d2h in India (Ray, 2018). Tata Sky and Netflix had a strategic alliance to
increase its presence among the Indian audience. The strategic partnership benefitted Tata
Sky and Netflix’s subscribers to access the global content of Netflix (including TV shows,
films, documentaries, stand-up comedy and kid’s titles) through Tata Sky platform [34].
Moreover, in March 2018, Netflix collaborated with Airtel and Videocon d2h to add the
Netflix app to these two companies’ set-top boxes [35]. Harit Nagpal (Managing Director
and Chief Executive Officer of Tata Sky Limited) said,
Tata Sky’s partnership with Netflix adds another dimension to providing worldwide quality
content On-Demand for our subscribers. Keeping up with our promise of pioneering innovation,
we will soon announce the possible offering with this partnership. We are glad to include Netflix
in our family and look forward to keep offering an extraordinary entertainment experience to all
our subscribers [36].

Bill Holmes (Global Head of Business Development for Netflix) said:


We are delighted to partner with Tata Sky to bring great content under the same roof. With this
new partnership and Netflix’s stellar line up of original content from across the world, Tata Sky’s
customers will be able to seamlessly access and enjoy all the best entertainment they love in one
place [36].

Netflix’s partnership with Tata Sky had emerged because of subscribers’ interest in viewing
the shows on connected televisions in India. Netflix’s subscribers who viewed the shows in
India’s connected TV accounted for 34% of subscriber’s viewing hours as of October 2017
(Vikas, 2018).

VOL. 11 NO. 2 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 11


Netflix also planned to collaborate with cable TV operators and DTH players in India to
increase its presence in the market. Netflix planned to connect with subscribers who did not
have connected devices such as Smart TVs, Chromecasts and game consoles [36].
7.4.2 Partnership with Indian production houses. Netflix started building Indian content
such as Sacred Games, Bard of Blood through its partnership with production houses and
local studios in India (Malvania, 2019). The company had partnered with Red Chilies
Entertainment (owned by Shah Rukh Khan) [36].
Netflix entered a long-term partnership with Dharmatic Entertainment (owned by Karan
Johar, an Indian film producer) (PTI, 2019b). The company aimed to create diverse content
across categories to engage viewers from Asian countries. The content was in the new
format of storytelling in India with a new fiction and non-fiction series. Netflix India would
present Karan Johar, a well-known face in the Indian film industry, in a new “streaming”
avatar. Monika Shergill (Head, Series, International Originals and Netflix India) said,
It will be a brand new sort of storytelling - long format, multi-seasons, across scripted and
unscripted. We have seen Karan in a lot of unscripted avatars on linear TV, but his version of
unscripted on streaming will be something to watch out for. (PTI, 2019b)

Moreover, Netflix started working to enhance viewer experience across the screens such as
mobile, tablet, laptops and TV. Netflix invested in the entire ecosystem to provide originals
and licensed content in different categories and languages for India. Nigel Baptiste set a
goal in 2019:
Our goal is to get Netflix on as many devices as we can. Today, Netflix is present on 1,700-plus
device models. [37]

8. Competition
Netflix competed with linear networks, pay-per-view content, DVD watching, other internet
networks, video gaming, web browsing, magazine reading, video piracy, etc. for a share of
member’s time and amount spent on relaxation and entertainment. The company said,
We strive to win more of our members’ "moments of truth". Those decision points are, say, at 7:15
pm when a member wants to relax, enjoy a shared experience with friends and family, or is
bored. The member could choose Netflix or a multitude of other options [38]

Netflix provided on-demand, personalized and available on any screen streaming


entertainment to the subscribers. It provided flexibility and ubiquity over the internet to its
customers. Netflix’s facilities challenged the existence of linear TV networks in the
market [38]. On competition from streaming entertainment, companies such as Netflix and
linear TV networks started programming on-demand through apps, such as Disney+,
Columbia Broadcasting System All Access, the British Broadcasting Corporation i-Player
and HBO Now. It enabled viewers to install apps and generated more viewing. However,
streaming entertainment expanded for several reasons, namely, growth in the ecosystem
(e.g. penetration of internet and internet devices, smart TVs and smartphones),
personalized on-demand, on-screen content and fast innovation in the market [38].
Moreover, Netflix’s Open Connect programme supported several internet service provider
(ISP) subscribers’ to directly interconnect with Netflix’s network free in regional locations
lowering both Netflix and ISP’s costs [38].
Netflix was a dominant player in the subscription streaming, but with the entry of Disney,
Apple and Sitcom (owner Warner Media), they were going to enter a new phase in SvOD
(Pallotta, 2019). Hastings said,
While we’ve been competing with many people in the last decade, it’s a whole new world starting
in November [. . .] between Apple launching and Disney launching, and of course, Amazon’s

PAGE 12 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021


ramping up, and NBC Universal’s coming Peacock service. It’ll be a tough competition. Direct-
to-consumer [customers] will have a lot of choices. (Chu, 2019)

Hastings stated that Netflix would continue with its core strategy of offering content for
binge viewing. Netflix was not a movie production company and would not go for buying
production or post-production companies. Hastings was clear that they were not in the
acquisition business (Chu, 2019).
The competitors of Netflix were TV shows, streaming service providers, video games,
YouTube and even sleep. According to Hastings, subscribers’ numbers were not the right
measurement technique to understand the competition. On competition, Hastings said,
“time will be the real competition” (Sherman, 2019). He further added:
The key to us is to focus on our customers and how do we produce amazing stories for them. You
can learn things by looking at competitors, but you don’t want to get focused on them. All we
have to do to succeed is continue to do amazing content, stream it, make it personalized and
relevant (Pallotta, 2019)

8.1 Key players in India


The key players in India’s digital streaming industry were Amazon Prime Video, Hotstar, Jio
Cinema, ErosNow, Hooq, Hungama, Spuul, MX Player, Vudu, Apple TV+ and Disney Plus
(Rajawat, 2020). Amazon Prime Video had an exclusive collection of Amazon original
shows, Hollywood, Bollywood and Tollywood movies. Hotstar (owned by Walt Disney) had a
collection of content that included originals shows, an exclusive movie catalogue, live
streaming of TV channels, major sports events (such as Indian Premier League, Cricket
series and International Cricket Council event, formula one races). Sony Liv (Sony Pictures
Networks), offered web series, Popular Hollywood movies, Bollywood Movies, Live
broadcast of sporting events and TV channels streaming (Rajawat, 2020).
Jio Cinema (Jio telecom) offered movies in English and Hindi, Music Videos, web series
(Rajawat, 2020). JioTV was introduced on 15th August 2018, in India and provided over 600
free live TV channels (Bhattacharya, 2019). Reliance Jio offered movies and web series on
Jio Cinema and offered original web series in partnership with studios such as ALT Balaji
and Eros [39]. Moreover, customer adoption of JioTV was high in tier 3 cities due to scarcity
of smartphone penetration and low network in rural India [40]. Aman Kumar, Chief Business
Officer at Kalagato, said,
JioTV has been able to penetrate so much of the market because it “comes pre-bundled with
Jio’s devices and SIMs. It’s (JioTV’s) perhaps a bigger threat to Hotstar than an Amazon or
Netflix because its distribution network is very strong [40].

ErosNow (a digital arm of Eros International Plc) shows Bollywood classics and movies in
vernacular languages, TV shows of Hum TV and Abdul Razzak Yaqoob Digital (Pakistan-
based TV Channels). Hooq provided the latest Bollywood blockbusters, Hollywood movies,
foreign language movies, popular TV series (Big Bang Theory and Detective Comics, Inc.
superhero), TV shows (Arrow, The Flash, Legends of Tomorrow and Supergirl). Hungama
offered free music streaming services in different languages. Movies in 12 other languages
included English, Hindi, Bengali, Telugu, Malayalam, Tamil and Punjabi. Spuul (a
Singapore-based company) offered Bollywood movies and classical Indian TV shows such
as Fauji, Malgudi Days, Dekh Bhai Dekh. MX Player (owned by Times Group) had popular
Hindi and English language shows and videos in regional language included in Tamil,
Telugu, Urdu, Kannada, Malayalam, Bangla, Marathi, Bhojpuri and Odia. Vudu owned by
Walmart was yet another option for the audience. Apple TV+ had original shows, movies
and documentaries made JJ Abrams, Steven Spielberg and M. Night Shyamalan. Disney
Plus (an OTT platform) planned to introduce Disney-owned movies and shows included the
Star Wars franchise, Marvel Cinematic Universe, Pixar and the Simpsons in India [41].

VOL. 11 NO. 2 2021 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 13


The competition was aggressive not only in the content offered to the audience but also in
pricing. JioCinema was a part of Reliance Jio, including other services such as JioTV and
JioMusic. Jio had an extensive collection of local content. All the subscribers of Reliance Jio
had free access to these apps, and the cheapest subscription for JioCinema was at US
$23.74 per annum (Shepel, 2019a). JioCinema planned for a partnership with Sun NXT (the
online video streaming platform from Sun Television Network) for movies on four languages,
namely, Tamil, Telugu, Kannada and Malayalam of over 4,000 movies (PTI, 2019c).
Eros Now Premium had a content collection of 11,000 titles including TV series, movies,
music videos and 250,000 music tracks (Shepe, 2019b). Eros Now had three streaming

Table 5 Price comparison of streaming services in India


Name Price in US$a (per month or equivalent) Free trial?

ALTBalaji 0.42 FVA


ALTBalaji 0.35 FVA
ALTBalaji 0.46 FVA
Prime Video 1.80 30 days
Annual Premium (BIG FLIX) 0.70 FVA
Premium (BIG FLIX) 0.70 FVA
Disney+ Hotstar Premium Monthly 4.18 N/A
Eros Now Plus 0.68 14 days
Eros Now Premium 1.38 14 days
Hoichoi Annual 11.16 Yes
HOOQ 1.24 30 days
Hotstar All Sports 0.35 Seven days
Hotstar Premium 2.78 Seven days
Entertainment Unlimited Annual (Hungama) 27.93 No
Music Pro 3-month (Hungama) 3.76 No
Movies and TV Shows Annual (Hungama) 20.94 No
Entertainment Unlimited monthly (Hungama) 3.48 No
Entertainment Unlimited 3-month (Hungama) 7.67 No
Hungama Music Pro Annual 12.56 No
Movies and TV Shows 3-month (Hungama) 6.97 No
Music Pro monthly (Hungama) 1.38 No
Movies and TV Shows Monthly (Hungama) 2.78 No
JioCinema Included with Jio No
Kanopy Free Free
MUBI 6.99 Seven days
Muvizz Monthly 1.12 Yes
Muvizz Annual 11.18 Yes
Netflix Basic 6.99 One month
Netflix Premium 11.18 One month
Netflix Ultra 13.27 One month
Netflix Standard 9.08 One month
SonyLIV Premium one month 1.38 No
SonyLIV Premium 12 months 0.59 No
SonyLIV Super Sports six months 2.78 No
SonyLIV Premium three months 0.70 No
Spuul Premium 2.10 FVA
Tubi TV Free Free
Viu Premium 0.68 FVA
Voot Free Free
Zee5 All Access 0.70 FVA
Zee5 All Access 1.38 FVA
Zee5 Telugu 0.68 FVA
Zee5 Telugu 0.73 FVA
Zee5 Tamil 0.68 FVA
Zee5 Tamil 0.73 FVA
Notes: Free Version Available = FVA. aUS$1 = INR 71.57 as on 11 November 2019
Source: Shepel (2019b)

PAGE 14 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021


membership plans. These were the Basic plan (US$0.68), Plus plan (US$1.38) and the
premium route for international viewers (Shepe, 2019b). Table 5 shows the pricing plans for
all the streaming service providers’ in India.

9. The company dilemma


The challenges posed by stiff competition, rising data costs by mobile operators and
slowing the Indian economy indicate what lay ahead for Netflix. Since their entry in 2016, the
company had made many changes to their strategy and marketing mix, which reflected a
far better understanding of the Indian market. These changes had helped them strengthen
Netflix’s connection with the audience, which reflected in their increase in customer base
and better financial performance in the financial year 2019–2020. The company had placed
a big bet on the Indian market as reflected in their decision to invest US$39.6m for Keywords:
developing Indian content that would also be available in their world market. Hastings was Global marketing strategy,
still convinced that Netflix had the potential to become a significant player in the Indian Value creation,
market. Whether Netflix succeeds in achieving the target, they set for themselves, of Marketing mix,
International branding
reaching 100 million viewers by 2021, only time would tell.

Notes
1. This case is written purely based on secondary sources.
2. “Long-Term View”, Netflix Investors, accessed 14th April 2020, www.netflixinvestor.com/ir-
overview/long-term-view/default.aspx
3. “Company Profile”, Netflix Investors, accessed 14th April 2020, www.netflixinvestor.com/ir-
overview/profile/default.aspx
4. “Long-Term View”, Netflix Investors, accessed 14th April 2020, www.netflixinvestor.com/ir-
overview/long-term-view/default.aspx
5. “Global E&M Industry 2017–2025”, Goldstein Research, 18th June 2019, accessed 14th April 2020,
www.goldsteinresearch.com/report/global-entertainment-and-media-industry-analysis
6. “E&M industry to be revolutionized by technology and telecommunication players”, mynewsdesk,
06th June 2018, accessed 14th April 2020, www.mynewsdesk.com/sg/pwc-singapore/press
releases/e-and-m-industry-to-be-revolutionised-by-technology-and-telecommunication-players-
2530397
7. “Global E&M Industry 2017–2025”, Goldstein Research, 18th June 2019, accessed 14th April 2020,
www.goldsteinresearch.com/report/global-entertainment-and-media-industry-analysis
8. 1 US Dollar = 75.74 Indian Rupee as on 1st April 2020.
9. “E&M industry to be revolutionized by technology and telecommunication players”, mynewsdesk,
06th June 2018, accessed 14th April 2020, www.mynewsdesk.com/sg/pwc-singapore/pressr
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2530397.
10. “Global E&M Industry 2017–2025”, Goldstein Research, 18th June 2019, accessed 14th April 2020,
www.goldsteinresearch.com/report/global-entertainment-and-media-industry-analysis
11. “E&M industry to be revolutionized by technology and telecommunication players”, mynewsdesk,
06th June 2018, accessed 14th April 2020, www.mynewsdesk.com/sg/pwc-singapore/press
releases/e-and-m-industry-to-be-revolutionised-by-technology-and-telecommunication-players-
2530397
12. “Indian E&M industry to reach Rs 3.5L cr by 2022; to emerge as one of the top 10 largest OTT video
markets: PwC report”, medianews4u, 7th June 2018, accessed 14th April 2020, www.media
news4u.com/indian-e-to-emerge-as-one-of-the-top-10-largest-ott-video-markets-pwc-report/
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www.pwc.in/assets/pdfs/ficci-pwc-indian-entertainment-and-media-industry.pdf www.pwc.in/
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21. “The Three Tools Netflix Used to Build Its World-Class Brand”, First Round Review, accessed 19
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26. Netflix India Catalogue Only 7 Percent of What is Available in the US?, Gadgets 360 Staff, 8 January
2016, accessed on 31 July 2020, https://gadgets.ndtv.com/tv/features/netflix-india-catalogue-only-
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40. “Netflix and Amazon Prime are not the main contenders in India’s streaming wars”, op. cit.
41. “Top 12 Best Netflix Alternatives In India in 2020”, op. cit.

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Corresponding author
Lubna Nafees can be contacted at: [email protected]

PAGE 18 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 11 NO. 2 2021

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