Netflix: SVoD entertainment of next gen

Jitender Kumar, Ashish Gupta and Sweta Dixit

Introduction Jitender Kumar is based at

In the November of 2018, a group of enthusiastic marketing students from an eminent B-School of Department of Business Studies,
Delhi who had to pursue an internship with a leading consumer research organization were Sharda University School of
Business Studies, Greater Noida,
discussing the future of streaming videos on demand (SVoD) with their senior executive Amit Dixit
India and Indian Institute of
who would be leading and guiding them through this project. They sat there while sipping on their
Management, Rohtak.
afternoon coffee discussing an article in one of the reputed newspapers of India which said that Ashish Gupta is based at
Netflix’s next 100 million subscribers will be from India (Jonnalagadda, 2018). Amit also referred Department of Marketing,
to a leading online publication which opined, Netflix was getting crushed in India (Bhagia, 2018). Indian Institute of Foreign
In their discussions, the group agreed that the SVoD market in India is price sensitive (Bhushan, Trade, New Delhi, India.
2018) but on November 10, 2018, Chief Executive Reed Hastings of Netflix announced that they Sweta Dixit is based at
had no plans for bringing their prices down even in the fiercely competitive Indian market. Some Department of Human
well- researched students were of the opinion that though the Netflix content was bold and mixed Resources, Sharda
(English and Hindi) but it still had a long way to travel. Netflix faced strong competition from University School of
Business Studies, Greater
Hotstar, which provided streaming videos at low prices and a higher number of regional content
Noida, India.
videos.
The team decided to initiate a survey of subscribers to know the real picture of SVoD players in
general and Netflix in particular. Within a month of the survey on December 11, 2018, CNBC
published a video “Why Netflix is struggling in India” (CNBC, 2018) was published online which
had more than 1 million views. On January 24, 2019, an article “Why was Netflix struggling in
India” was published online. All these recent updates were in line with the findings of the survey
conducted. As per the findings, Netflix did not change its pricing model in the Indian market
which had resulted in losing its ground. Results were getting stronger when on June 23, 2019,
Business today in its article said that Netflix had a way to catch up with rivals in India and the
Over the Top (OTT) (OTT: Over the Top, 2020) market was dominated by Hotstar (Rao, 2019) and
there was intense competition in the country. Though the future of Netflix in India was bright in
terms of revenue, still several significant problems plagued Netflix. During the course of this
project, discussions pertaining to the future of Netflix were getting intense and there were lots of
questions that arose accompanied with numerous challenges in terms of government regulations,
pricing structure and increase in the number of competitive players. Would Netflix be able to build
marketing and growth strategy which can prevent them to lose their market share and revenue?
Should they introduce a new product such as Amazon and MI fire stick in the existing market? Is
The authors want to thank
there a need to search for a new market in India like the rural market, Bottom of the Pyramid market anonymous reviewers and
or the market in Tier II, III and IV cities? Should they also diversify with new products in a editors for their constructive
comments.
new market? How should they plan their market communication to sustain the competition, how
Disclaimer. This case is written
can they increase the number of active customers and market share? Netflix had to redesign their solely for educational purposes
marketing, competitive strategies, counter these issues so that they could travel smoothly on Indian and is not intended to represent
successful or unsuccessful
roads. managerial decision-making. The
authors may have disguised
names; financial and other
recognisable information to
protect confidentiality.

DOI 10.1108/EEMCS-04-2020-0108 VOL. 10 NO. 3 2020, pp. 1-36, © Emerald Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE
1
 Indian streaming videos on demand market analysis
The Indian SVoD market was the second largest in terms of the subscribers in the TV subscription
market in APR (Asia Pacific Region). However, the OTT (over the top) video was an unusual
alternative that became the mainstream entertainment destination for internet users (Avia, 2019). As
per Statista (Jaganmohan, 2020) in 2015 India had about 199 million smartphone users and by 2019
it reached to 373 million and by 2022 it will reach to 442 million, also India being the second
largest online market in the world only behind China with more than 560 million internet users and
expected to grow over 650 million by 2023 (Statista, 2020), the market was expected to get intense
by the entry of several players such as Amazon, MI, Netflix, etc. In the past six years, the numbers
of players in the Indian OTT market had increased from just nine companies in 2012 to 32 in 2018
(BI, 2018). According to a report, “Entertainment goes online” released by BCG (BCG, 2018), the
OTT content market in India was at a turning point. There were more than 30 OTT apps and over
80% of the people did not use more than three apps as claimed by the study. It also indicated that
there was huge OTT consumption in rural India. Video streaming services market will cross the
milestone of US$4.5 to 5bn in India by 2023 (Singh, 2019). There was great potential for existing
players (Amazon Prime Video, Hotstar and Netflix).
Research agencies such as Statista also reported that in India, revenue from the SVoD market will
be US$239m in 2020 which was expected to grow at (CAGR 2020–2024) 10.4%, which will lead
to a market size of US$355m by 2024 (Statista, 2020). SVoD penetration
among end-users users in 2020 is at 3.7%. It was estimated to grow to 5.8% by 2024. In India,
ARPU (Average Revenue per User) of SVoD amounted to US$3.78 (Statista, 2020) and on average
domestic OTT subscription services have been priced at less than US$1 per month [Exhibit 1(a, b, c
and d)]. The Boston Consulting Group (BCG) also stated that SVoD had made inroads into the
country and would be popularized by moving forward (Singh, 2018). India’s SVOD market will add
25 million subscribers in the coming five years (Hawkes, 2018). Price was the most important factor
while deciding regarding video service in India. When global SVoD revenue was compared, India
contributed US$116m as compared to US$11,420m of the USA, US$975m of the UK. India had
potential where the user penetration of SVoD 3.2% (Statista, 2019) which gave huge scope to SVoD
players to enter in the market also India’s video-streaming market. Subscription-supported video
streaming had been projected to reach US$816m (Singh, 2018) [Exhibit 2 (a, b and c)].

The history of Netflix

Netflix is a video streaming service provider that has given a monthly subscription opportunity to
watch movies from a vast library of films and TV shows. On devices such as smartphones, laptops,
tablets and smart TV Netflix could be viewed. The US streaming service and production company
Netflix Inc. was founded in 1997 in Los Gatos, CA by Reed Hastings and Marc Randolph. The
company’s key activity is its user subscription OTT television service, which includes streaming
films and TV shows. The viewers can also watch in-house TV programs and produced films
(Statista, 2018). As of September 2019, worldwide Netflix had 151 million paid subscriptions, of
which 60 million are billed in the USA. More than 6.55 million customers (Netflix, 2020a) have
been screened online. It can be streamed across the world other than in certain countries such as
Iran, China (local government regulations), North Korea, Syria and Crimea due to US sanctions. It
operates in India, Japan, The Netherlands, Brazil, South Korea and other countries. He was a
member of the American Motion Picture Association (MPAA). Netflix has come a long way from
1997 to 2019 and reached milestones (Netflix, 2020b) [Exhibit 3]. Netflix was responsible for
almost 15% of downlink traffic on the Internet. It also had 26.58% of the global market share across
video streaming services. This was the part of the 58% of downstream traffic on the Internet that
comes from video streaming. Video streaming had been the highest contributor in the global
application category traffic share, with 57.69%. However, As far as global

PAGE 2 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

mobile application traffic share in the social mobile network is concerned it contributed 2.4%
(Sandvine, 2019). [Exhibit 4 (a, b, c, d and e)]

Netflix’s modus operandi (Sandvine, 2019)

In 1997, Netflix initiated with the digital video disc (DVD) rental business. Subscriptions were the
main source of income for Netflix. Access of content was chargeable to subscribers. It continued
with the Video on request (VoD) streaming service. With the advent of streaming media, it
expanded its market in 2010, however, DVD and Bluray rental business continued. In 2010 it joined
Asia, the Caribbean and Latin America. The first Lilyhammer show was released by Netflix in
2012. Since 2012 it had produced and distributed film and TV series actively. Today, through its
extensive online library, it provides a huge range of original content. In September 1999, Netflix
launched the monthly subscription system. In the beginning of 2000, it ended the single rental trend.
It was a leader in the flat rates, unlimited rental terms, late payment and handling and delivery fees
business model. In 2000, Netflix had about 3,00,000 subscribers. He used the US Mailing their
DVDs via Postal Service. Throughout this period, it lost revenue. Blockbuster wanted to buy Netlfix
for US$50m, but Netflix refused the bid. In early 2001, it began to rise. Due to burst of dot com
bubble and the attacks of 11-September forced it to cut its workforce by one-third.
DVD sales from different players slowly increased as they were becoming more affordable. The
player’s US$200. This was a well-known Christmas gift in 2002. In the end, Netflix announced
success in the streaming market. So, on 29th May 2002, Netflix launched its initial public offering
and sold 5.5m shares at a cost of US$15 per share. It issued 825,000 shares also at the same rate on
14 June 2002. It suffered substantial losses during its first few years. In 2003, Netflix registered its
first ever profit. They produced US$6.5m in US
$272m in earnings.

Videos on demand, declining DVD sales and global expansion

With the improvement of data speed and reduction of bandwidth costs, Netflix business started
growing rapidly. Customers were able to download the movie quickly. Around 35,000 films were
made available by 2005. Netflix also delivered 1 million DVDs every day (Raj, 2019). With the
introduction of YouTube and video streaming services it also started focusing on streaming
concepts. It also introduced a personalized video recommendation system based on customer ratings
and reviews. Netflix offered a US$1m reward to the first developer of a video recommendation
algorithm. On October 1, 2006, better than its existing algorithm Cinematch (Deoras, 2017). In
February 2007, Netflix released its billionth (Uenlue, 2019) DVD. It was time to get out of the main
DVD distribution business model. VoD was launched over the internet. Though DVD sales
dropped, Netflix grew. The success of Netflix has continued to increase and by June 2009 it was
able to offer 12,000 films and TV shows (Weekedstar, 2019).

Subscription fee as revenue source

Netflix’s three plans were focused on streaming content quality, namely, basic, standard and
premium. If the customers agreed to “basic” the streaming content could be viewed in “standard
definition.” In “high definition” the consumer with the standard subscription will view the content.
The video can be downloaded into ultra high definition’ in the premium subscription. The cost of
these projects varied between countries (Netflix, 2020c) [Exhibit 5]. The number of discs out at
a time and discs per week per month for DVD rental service will depend on the monthly members
membership subscriptions. Two separate services provided by Netflix were DVD rental and
streaming membership. It cannot be presented as an income model separately.

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 3

 Cost center (Pahwa, 2019) [Exhibit 6]

Licensing cost
Netflix pays to acquire the license and quality content. It avoids illegal content on its platform.

Production cost
Netflix started producing original content in 2013 to save licensing costs. These contents involve
huge production expenditures. The production of original content as a marketing strategy made
Netflix a strong player in this category. Now, it was one of the biggest spenders on original content
productions.

Marketing cost
Due to new entrants and existing players (Amazon prime, Hotstar) in the market, Netflix had stiff
competition. It had to bail out huge marketing costs. The company had to pay for marketing
activities such as advertisements, the commissioning of affiliates and the device partners and
suppliers, including the CE, MVPD, mobile service operators and ISP costs. This also includes each
new user that comes on board for the first time the first month charge. In 2018, Netflix spent
US$1.808m on marketing. Marketing costs also included the company’s employees and other
marketing expenses (Annual report).

Research and development

Netflix invested heavily in its R&D division especially in personalization algorithms, content
valuation, and streaming optimization. It had given an edge over its rivals in the subscription-based
business model. Millions of users view content on Netflix in real-time. Netflix had partnered with
hundreds of service providers to make its services seamless and congestion-free. It had invested
heavily in streaming delivery technology, creating an application for the latest devices and several
other infrastructural improvements.

General and administrative cost

Netflix does not only spend generously on its employees’ payroll but also pays for partnership and
professional fees with respect to the company’s administration. Netflix incurs many miscellaneous
expenses such as payment processing fees, DVD shipping costs and payment for the streaming
content library.

The expansion in India

Netflix ventured into the Indian market in January 2016 with pompous promotion campaigns, as
part of its global expansion plan (130 countries). Sooner it spread out to the markets such as South
Korea, Nigeria and Russia. It registered as a limited liability partnership in India (Sagar Malviya,
2018). It had started streaming content here since 2017. It became profitable in India in its first
year of launch. It recorded a net profit of US
$28,000 in the year 2017–2018. Netflix declared revenues of US$81m for FY18, as per the
record of the Registrar of Companies. It was a cash-rich company with a huge budget for
promotional activities. Netflix believes that Indian audiences enjoy lavish ‘Bollywood’ film
productions but watch low quality soap operas content on television. Television audiences were a
massive untapped market for its brand of original exclusively produced content (Stacey, 2018).
There were 1.6 billion mobile phone subscribers in India. India had around 300 million households.
Netflix was slowly strengthening its position in the Indian market and

PAGE 4 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

challenging local players such as Hotstar. In India, there were 66 million VOD/OTT users who grew
beyond 150 million (Vdocipher, 2018). Netflix believed that now content was king. These
streaming platforms have their mobile applications and the companies were focusing upon
maximum downloads and maximum viewership (Statista, 2015). High marketing budget and
aggressive promotions helped Netflix India to earn profit in its first year. There had been many
factors which have encouraged SVoD players to come closer to Indian internet users. High-speed
internet services like never before have changed the gear, technological advancements which
resulted into the conversion of simple television screens into an internet-enabled smart screen,
increase in the usage of smartphones having a small screen where people can watch and listen to
various types of videos and music as and when they want. A similar kind of development was
witnessed in the entertainment industry also where there was a rise in the video on demand or
content on demand by the consumer. This paved the way for global brands such as Netflix and
Amazon Prime. The country’s phenomenal Internet growth boosted future expansion and currently
streaming video giants. Telecom provider Reliance Jio in the past four years in India did a great job
by widening internet accessibility which brought in good times for the content creators.

Behind the rise of Netflix in India since 2016

Indian users are difficult to understand and Netflix had to adapt entirely different strategies. The
strategies adopted by Netflix India since 2016 are – content, marketing, promotional offers.

Content
Netflix provided its viewers a wide range of high quality specially selected content that suited its
hungry target audience. Although they may felt the need to create regional content to attract rural
India.

Marketing
When it comes to marketing, Netflix India is mostly sorted. The brand’s main promotional source
included websites such as YouTube. Being an internationally recognized brand makes it
uncompromising and the brand does not prefer intense advertising. Rather Netflix went for pop up
ads, banners, hoarding and other static website ads. Netflix has now been a leading source of sales
and revenues of advertisement ads. The brand promotes its original TV series with teasers and
trailers on YouTube and strategically places Hoardings in public areas to inform the public about
their next production.

Promotional offers
While its monthly package starts from US$6.5 and go as high as Rs. 800, it also gives its new users
a while its monthly package starts at US$6.5 and crosses US$10.5, it also offered a monthly free
trial plan for its new users, an absolutely enticing deal for Indian consumers. In addition, Netflix
India launched and reviewed its US$0.8 weekly schedule for its mobile audience in India
(Chandnani, 2019).

Indian competition overview [Exhibit 12]

The Indian OTT space is highly competitive with different players vying for the attention of
consumers using different package and business models. OTT content players such as Netflix,
Amazon Prime, Voot, Hotstar and others have gained huge popularity in India with their original
content and growing regional focus. With the idea of expansion in mind, Netflix came to India in
the year 2016 and successfully managed to create a loyal subscriber base of 500 K in its initial 2
years in the country. While Netflix India is now booming than ever due

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 5

 to its commitment to creating high-quality original shows and movies and its strategy to build the
notion of binge-watching. Though the primary market of Netflix India remains the high-income
consumers from Urban areas, the strategy has fairly worked out for them in getting the growth
numbers.

Hotstar
The famous Indian OTT platform began operations in February 2014, currently offering all of Star
India’s television programs like Indian movies including regional films, sports content in studio
(PTI, 2018). Hotstar has a 300 million active user base. It offers TV and movies in eight languages
for over 50 thousand hours. Hotstar Premium’s Indian user base has risen by 60%, representing 25%
of all video streaming subscribers in the industry. It was a market leader with 69.7% of the market
share.

Amazon prime
It entered into Indian SVoD market in July 2016. Amazon Prime annual subscription costs Rs. 999.
It also has a monthly plan of Rs. 129. Amazon Prime’s video content includes popular content
Bollywood movies. Amazon prime held a 5% market in India. Amazon Prime had more than 100
million subscribers worldwide (Hawkes, 2018).

Telecom providers
It includes the telecom OTT players such as Airtel, Vodafone and JIO, etc. The introduction of
Reliance Jio changed the video streaming market in India drastically (IANS, 2019). Rural India
consumes 65% of video content. with just 40% internet connectivity. Presently, there are around 32
online content and video streaming platforms available in India. This rapidly growing market was
expected to reach US$5bn by 2023.

Local cable and direct to home

India had less number of direct to home (DTH) connections than cable TV. Cable TV had a share of
46.5% of TV households. DTH players hold 42.4% market share. The collective shares of both the
modes were 88.9% of the lucrative Indian market. According to TRAI, 78% of the cable TV market
was controlled by about 15 big multi-system operators (MSOs). Given the attack of digital
streaming services, India does not appear to abandon old fashioned TV. As indicated by TRAI,
around 15 major MSOs commanded 78% of the digital TV. As per the data Performance Indicator
Survey (TRAI’s, 2019), there has been substantial rise in the DTH service in 2019, with the
expansion of 4.91 million active subscribers, 72.44 million subscribers with 7 players (Jha, 2019),
84 million rural families watching TV and 99 million urban watches in India (TVP Bureau, 2018).

Free access content

Zee TV networks offer movies, quality TV content and around 90 live channels on its Zee5
platform. Zee networks provide content in 12 languages. The subscription costs about 70 cents a
month. However, Zee5 provides free access to Airtel’s users who have taken plans priced at US$7,
25-a-month or more (Lee, 2019). Reliance Jio entered into film and TV streaming with a bang. It
also had a tie-up with Balaji Telefilms ALTBalaji to produce exclusive content in the Hindi
language, which was widely used in the country. Youtube gets Worldwide Mobile Internet Traffic
of 35% and Netflix gets only 15% [Exhibit 4(c)].

PAGE 6 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

Torrent downloads
Pricing had been the biggest challenge. Indian users are reluctant to pay for content yet on Torrent.
Users used to go to Torrent for free share and download of the film and TV shows contents
(Bloomberg, 2019).

Opportunity ahead in India

India has the second-largest number of internet users out of which approximately 500 million use
the internet on smartphones which increased the demand for “video on go.” Low-cost data and
higher data to voice ratio (84:16) added to this. This resulted in the rise of original content such as
web series and other videos on demand. In 2017, Netflix streaming revenue increased by 36% to
over US$11.6bn. They added 24 million new subscribers. Now, Netflix had become the US$100bn
club company (Modgil, 2018). The Indian market for VOD estimated around US$700m in the year
2018 and it was expected to touch US$2.7bn in 2023. In terms of time spent on watching videos
had increased from 2 min in 2012 to 67 min in 2019 (3,250%) (Exhibit 7). Also, the digital media
consumption of India was a meager 16% a lot of markets are yet to be penetrated in India ( Exhibit
8). The next 100 million subscribers on Netflix would be from India. India had been a bigger market
for the pay wallet when compared with China. The prime reasons behind this growth were the rapid
digital penetration and smartphone adoption and access to high-speed internet. Smartphone users in
India were expected to reach about 442.5 million in 2022. It increased at a rate of 14.5% in 2018.
India being the second largest Smartphone market in the world, it is estimated that Smartphone
users will increase to 829 million by 2022. Now, with over 400 million mobile users India is ahead
of the USA (Jagmohan, 2019). Internet users in India are at 566 million. Rural India was fueling
internet growth. Presently rural India has 251 million internet users and reached 290 million in 2019
(PTI, 2019). India’s internet users’ base reached 627 million in 2019. Roughly 97% of customers
use their cell phones for internet access. The middle-income progress that had been made in urban
center and rural areas was very exciting. India will be a major driver for Netflix’s future growth
with the company already benefitting from low internet costs and the expansion of 4G in the
country. Netflix offered Hollywood content and supported international credit cards in India; it
started accepting local payments and had added a lot of international content and aimed to give
Indian filmmakers a voice to the world.
The next 100 million subscribers on Netflix would be from India. With 120 million Netflix
subscribers across the world, about 60 million were from the USA. Netflix had been the biggest
contributor to download traffic across the world. It is responsible for almost 15% of downlink traffic
on the internet. It also had 26.58% of the global market share across video streaming services. This
was the part of the 58% of downstream traffic on the internet that comes from video streaming. Web
browsing had been the second-highest contributor, with 17.01% of downstream traffic coming from
it, gaming third with 7.78% and social media fourth with 5.1% [Exhibit 4(a)].

Challenges in India
Netflix was closely competing with Hotstar, Amazon Prime, Eros Now, Viacom 18 Balaji
Telefilms, TVF and Voot, etc. in India. Amazon Prime was becoming popular among Indian users.
Almost all the players were offering freemium services. It was posing tough competition for both
Amazon Prime and Netflix to capture the market by substantial profit margins. In the past 4 years,
35 video streaming services had been launched in the country and a majority of them were leading
TV networks (Munson, 2018). As per the research firm, Jana, Hotstar holds 69.4% of the on-
demand local streaming services market in India and Netflix holds just 1.4% of SVoD’s market
share in India. Amazon prime video was bigger than Netflix in India. All players were
struggling to retain consumers. Consumers are

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 7

 switching platforms quickly. As per one estimate, around 50% of OTT apps were uninstalled within
seven days of installation. To increase the user base was highly challenging. Almost all players were
trying to be among the top three of the user’s attention (Munson, 2018).
Netflix and Amazon were putting their best efforts to win over the India market. India was now the
world’s second-largest internet market. With the Reliance Jio penetration, Hotstar noticed that the
audiences were looking for vernacular content. Indian firm Times Internet acquired a video app,
MX Player for US$140m. MX Player used by 175 million customers. Times internet had planned to
turn it into a streaming service (ET Bureau, 2018). Indian production house Shemaroo, global giants
such as Facebook and Alibaba are also planning to enter into the local streaming market. Eros Now
which had over 100 mn subscribers worldwide intends to make big investments in the country.
Netflix and Amazon Prime Video are investing steadily in Indian content. Nonetheless, they
face intense
competition from emerging domestic players such as Star India’s Hotstar Digital Premium –
the world’s leading streaming network. India’s film and network TV market was posing formidable
challenges for newcomers (Hawkes, 2018). ALT Balaji known for its popular TV shows and films
had more than 2.5 million customers for its streaming services.
Netflix had its operations in over 190 countries by January 2016. About 126 original series and
movies have been released. No other network or cable TV channels have been able to achieve this
feat. Netflix’s productions of new content, buying the rights for additional content have led to a debt
of US$21.9bn as of September 2017. It further announced to produce new content Netflix will raise
another US$2bn in debt (Higgins, 2017). India’s streaming market had been extremely challenging
for Netflix and Amazon Prime Video. They were behind local service providers in India. This gap
had increased in recent months. Indian internet infrastructure and household income were improving
with the growth of the economy. There was a tremendous potential for growth for all the players
(Higgins, 2017). The local players have a deeper understanding of the ethos, culture and taste of
Indian consumers. They have accession to TV serials, an extensive catalogue of Bollywood movies,
reality shows and live sports events (especially cricket, which was extremely popular in the
country). Netflix can also create value for its subscribers. Low pricing subscription was posing a
barrier in the adoption of internet video services. In the US market, a monthly subscription was
priced over US$100. This was appealing to all the service providers. The price point had
continuously been less than US$4 for the past two decades in India. Netflix package in India was
priced around US$7 (Mukherjee, 2018). Hotstar was charging just `199 a month (US$3). The users
have access to more than 40 HBO shows at this price (Bloomberg, 2019). Netflix was charging
three times more than Hotstar. It was also charging eight times more than Amazon Prime Video.
Amazon Prime subscribers do not get all the benefits being offered to its US consumers. Hotstar
was the largest video streaming service. It had 75 million subscribers in the country. Viacom 18’s
Voot had 22 million users, Amazon Prime had 11 million and Netflix had 5 million active
subscribers. Airtel had over 300 million subscribers in the country and the monthly subscription
was the same as Netflix. However, only 6% to 8% of subscribers were paying regularly. The
majority of subscribers were not going beyond the 30-day trial period (Jonnalagadda, 2018).
Netflix’s content library was not enough for Indian audiences. Netflix was working its level best to
gain mainstream acceptance. Television remains the choice of the masses even in digital times.
Netflix has to rethink its strategy if it wants to compete with Amazon Prime Video and Hotstar.
Netflix takes lesser support from advertising. So to fund productions such as Sacred Games, it had
been charging Indian subscribers between INR 500 (US$7) and INR 800 a month, roughly what its
western subscribers pay. Amazon, when compared, charged INR 129 (US$1.80) per month
including streaming for its Prime service. According to IHS Markit, a market research company,
Amazon’s streaming service had 610,000 subscribers at the end of 2017 whereas Netflix’s had
522,000. Hotstar, the market leader, which was owned

PAGE 8 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

by Rupert Murdoch’s 21st Century Fox, had 1.6 million (Jonnalagadda, 2018). Revenue from SVoD
had been an increasing trend and had been expected to increase from US$94m in 2017 to US$116m
in 2019 and US$135m by the year 2023. However, the revenue growth rate had been declining since
2018. From 2017 to 2018 revenue increased at the rate of 14%, by 2020 the revenue growth rate
was expected to grow at 8% and 0.9% by 2023 (Exhibit 9).
SVoD players such as Amazon Prime introduced Fire TV and Firestick with Alexa voice remote in
India. The fire stick had several apps through Amazon Appstore, namely, Hotstar, Sonyliv, Voot,
Zee5, Netflix. MI had plans to launch the MI box in India. MI box is an android based smart set-top
box for television which could be another threat for Netflix in the highly competitive market. Star
India, an Indian media conglomerate with a network of 60 channels in eight languages had reached
to 9 out of 10 cable and satellite TV homes in India launched a new product in SVoD market i.e.
HotStar. Many players of SVoD market such as Hotstar, Voot, Amazon, SonyLiv were in different
lines of business like they had TV media channels, or were into telecom businesses such as Jio,
Airtel or E-commerce. Following that line, it would be wise for Netflix to decide to either diversify
or to introduce something such as Fire TV stick or a setup box for its streaming services. India being
world’s second-most populous country i.e. 17% of the world population (1.3 million) Netflix has
only been able to capture 11 million active users in India, i.e. 2.08% market share of active users
(Exhibit 10). A report by a Bangalore based research and consulting firm (RedSeer Consulting)
showed that Hotstar tops the space with over 300 million monthly active users (MAU) compared
to
13 million of Amazon Prime video and 11 million for Netflix. Netflix needs aggressive marketing
strategies, effective marketing communication to increase their market share and also to increase its
active user database.

Government regulations
By 2023 Indian streaming market will reach to US$4.5–5bn, as reported by Boston Consulting
Group. This indicates incredible lucrative opportunities for existing platforms, such as Hotstar,
Netflix and Amazon Prime Video. The market had immense growth, but
major concern was about legal and regulatory tussles that could limit their freedom over time.
Hotstar, Netflix and other players, found self regulation as the approach to overcome government
regulation with retaining their image of being an online platform that provides users the freedom to
enjoy the content as per their tastes and preferences (Jonnalagadda, 2018). Instead of absence of any
specific laws in India with respect to the online content regulation, Netflix faced legal issues when a
dissent was recorded against its series “Sacred Games.” The dissent affirmed that the series
included a scene that offended India’s former Prime Minister late Rajiv Gandhi.

Pricing

Netflix mantra in India: product over pricing. Indian cable TV players survived 100% support
for advertising. It charges a very low entrance fee. Cable costs more in other parts of the world and
has advertisement free content. Indian consumers were sensitive to prices. Indian consumers are
still unwilling to pay for their content. Netflix charges in India
approximately US$7.7–12.35 (INR 500-INR 800), depending on the plan the consumer
decided to choose (Jonnalagadda, 2018). It is more than just other services. Netflix concentrates on
high quality content. It was compelling for consumers to compare before choosing movies in
theatre, DVDs or cable subscriptions. Netflix has now been sensitive to household stories and
content. It doesn’t want to opt for competition in prices. It is serious about creating and investing
exclusive content for this purpose. Netflix had three price ranges in the country, charged INR 499/-
for a basic plan (US$6.90). For a standard plan, customers are required to pay INR 649/- (US$9).
When subscribers choose the premium

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 9

 scheme, they pay INR 799/-rupees (US$12) (Jonnalagadda, 2018). In India, Netflix had no low-
price plan.
At last, Amit and his intern team agreed that with the lower revenue growth on the SVoD market
and almost 35 players on the OTT market, and the increasing competition and Hotstar lead the
market, Amazon’s diversified products, Netflix, have a lower market share, even though market
expenditure has been increased. Their market share has not increased as expected, and their rate of
net income growth has fallen compared to the previous year [Exhibit 11(a) and 11(b)]. Therefore, if
Netflix wants to improve its market share in the Tier II, Tier III towns, Netflix should re-plan its
strategy. Netflix with a high premium price cannot capture the market as freemium pricing had
captured Hotstar. They need to redesign marketing strategies, competitive strategies so that they can
Keywords:
Competitive strategy, reach the masses, attract more income, gain market share and help them redefine their image.
Product development, Note: This case has been written on the basis of published sources only. Consequently, the
Pricing,
International market entry, interpretation and perspectives presented in this case were not necessarily those of Netflix or any of
Diversification, its employees.
International business

Notes
1. Cisco. (2018). VNI Complete Forecast Highlights. Retrieved from www.cisco.com:https://www.
cisco.com/c/dam/m/en_us/solutions/service-provider/vni-forecast-highlights/pdf/India_Device_
Growth_Traffic_Profiles.pdf
2. Saha, S. (2019, July 24). Netflix brings Rs 199 per month plan in India: What it offers, how is it
different from other plans and more. Retrieved from www.indiatoday.in/:www.indiatoday.in/
technology/features/story/netflix-cheap-rs-199-per-month-plan-in-india-what-it-offers-how-is-it- different-
from-other-plans-and-more-1572990-2019-07-24

References
Avia. (2019). Future of video India 2019. Retrieved from https://avia.org/ https://avia.org/all_events/the- future-
of-video-india-2019/
BCG. (2018). Indian OTT market may reach US$5 billion by 2023 with 50 mn subscribers. Retrieved from
https://www.business-standard.com, https://www.business-standard.com/article/current-affairs/indian- ott-
market-may-reach-5-billion-by-2023-with-50-mn-subscribers-bcg-118112001027_1.html
Bhagia, R. (2018). Netflix’s conundrum: How to succeed in India’s price-sensitive market. Retrieved from
https://bestmediainfo.com, https://bestmediainfo.com/2018/08/netflix-s-conundrum-how-to-succeed-in- india-s-
price-sensitive-market/
Bhushan, K. (2018). Netflix’s next 100 million subscribers to come from India. Retrieved from https://www.
hindustantimes.com, https://www.hindustantimes.com/tech/netflix-s-next-100-million-subscribers-to-come- from-
india/story-9oAk2kniJIEb4xe87MzdKK.html
BI. (2018). India’s online media streaming market has exploded, growing nearly 4 times in just 6 years. Here are
the main players. Retrieved from https://www.businessinsider.in/, https://www.businessinsider. in/indias-online-
media-streaming-market-has-exploded-growing-nearly-4-times-in-just-6-years-here-are-
the-main-players-/articleshow/66760653.cms (accessed 25 May 2020).
Bloomberg. (2019). Netflix’s next big market is already crowded with cheaper rivals. Retrieved from
https://economictimes.indiatimes.com:https://economictimes.indiatimes.com/industry/media/entertainment/
media/netflixs-next-big-market-is-already-crowded-with-cheaper-rivals/articleshow/70287704.cms? from=mdr
Chandnani, L. (2019). Marketing strategies using which Netflix is ruling Indian OTT market. Retrieved from
https://www.marketingmind.in, https://www.marketingmind.in/marketing-strategies-using-which- netflix-is-
ruling-indian-ott-market/ (accessed 25 May 2020).

Choudhary, V. (2016). Amazon prime video launched in India. Retrieved from www.livemint.com/:www.
livemint.com/Consumer/HrRSNfsQaONsfvVh8dU1ZI/Amazon-Prime-Video-launched-in-India.html (accessed
9 April 2020).

PAGE 10 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

CNBC. (2018). Why Netflix is struggling in India[video file]. Retrieved from https://www.youtube.com/ watch?
v=BO0FlrveCts

Deoras, S. (2017). How Netflix and its competitors are relying on analytics?. Retrieved from https://www.
analyticsindiamag.com, https://www.analyticsindiamag.com/netflix-competitors-relying-analytics/

ET Bureau. (2018). Times internet buys MX player for Rs 1,000 crore. Retrieved from https://
economictimes.indiatimes.com-https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/times- internet-
buys-mx-player-for-rs-1000-crore/articleshow/64773344.cms

Hawkes, R. (2018). India’s SVOD market to add 25MN subs in five years. Retrieved from https://www.
rapidtvnews.com/, https://www.rapidtvnews.com/2018121854525/india-s-svod-market-to-add-25mn- subs-in-
five-years.html#axzz6NSW82XkU (accessed 25 May 2020).

Higgins, F. (2017). Netflix: viewers surge but so does the debt. Retrieved from https://factschronicle.com,
https://factschronicle.com/netflix-viewers-surge-debt-5308.html

IANS. (2019). OTT services beat TV in customer satisfaction in India. Retrieved from https://www.
dailypioneer.com, https://www.dailypioneer.com/2019/technology/ott-services-beat-tv-in-customer- satisfaction-
in-india.html

Jaganmohan, M. (2020). Smartphone users in India 2015-2022. Retrieved from https://www.statista.com,

https://www.statista.com/statistics/467163/forecast-of-smartphone-users-in-india/ (accessed 25 May 2020).
Jagmohan, M. (2019). Smartphone market in India - Statistics & facts. Retrieved from https://www.
statista.com, https://www.statista.com/topics/4600/smartphone-market-in-india/

Jha, L. (2018). Indians spending more time watching online videos. Retrieved from www.livemint.com/
Consumer/IbdTyfGeqmLR73zj4zTXBN/Indians-spending-more-time-watching-online-videos.html (accessed 9 April
2020).
Jha, L. (2019). DTH subscriber base grew by 4.91 mn in FY19. Retrieved from https://www.livemint.com,
https://www.livemint.com/industry/media/paid-dth-subscribers-grow-by-4-91-million-in-fy-2019-in-india-
1562851138795.html

Jonnalagadda, H. (2018). Netflix is getting crushed in India, and it’s all because of Amazon and Hotstar.
Retrieved from: https://www.androidcentral.com, https://www.androidcentral.com/netflix-getting- crushed-
india-and-its-because-amazon-and-hotstar

Lee, P. R. (2019). Netflix woos Indians to pay for content, faces fight from cheaper rivals. Retrieved from
www.business-standard.com, www.business-standard.com/article/companies/netflix-woos-indians-to- pay-for-
content-faces-fight-from-cheaper-rivals-119071800969_1.html

Malik, Y. (2018). Netflix, Amazon slug it out in India’s competitive video streaming market. Retrieved from
www.business-standard.com/article/companies/global-giants-netflix-amazon-prime-grab-a-large-chunk- of-india-
s-ott-space-118112201161_1.html (accessed 9 April 2020).

Modgil, S. (2018). Netflix sees a potential of adding the next 100 Mn customers from India: Reed Hastings,
CEO Netflix. Retrieved from https://inc42.com/buzz/netflix-india-reed-hastings/ Retrieved from
https://inc42.com/buzz/netflix-india-reed-hastings/

Mukherjee, J. S. (2018). Amazon prime beats Netflix in India. Retrieved from https://timesofindia.
indiatimes.com/, https://timesofindia.indiatimes.com/business/india-business/amazon-prime-beats- netflix-in-
india/articleshow/62827321.cms (accessed 25 May 2020).

Munson, B. (2018). Netflix sees a potential of adding the next 100 Mn customers from India: Reed Hastings,
CEO Netflix. Retrieved from www.fiercevideo.com/, https://www.fiercevideo.com/video/ amazon-netflix-
getting-trounced-india-svod-market-by-star-india-s-hotstar

Netflix. (2020a). Retrieved from https://en.wikipedia.org Retrieved from https://en.wikipedia.org/wiki/

Netflix

Netflix. (2020b). Netflix Timeline- A brief history of the company that revolutionized watching of movies and
TV shows. Retrieved from https://media.netflix.com/en/about-netflix (accessed 11 April 2020).

Netflix. (2020c). Netflix – watch TV programmes online, watch films online. Retrieved from https://www.
netflix.com/signup/planform (accessed 9 April 2020).

Netflix Annual Report (2018), Retrieved from https://s22.q4cdn.com/959853165/files/doc_financials/

annual_reports/2018/Form-10K_Q418_Filed.pdf (accessed 8 April 2020).

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 11

 OTT: Over the Top. (2020). OTT: over the top.
Pahwa, A. (2019). Netflix business model j how does Netflix make money?. Retrieved from https://www.
feedough.com, https://www.feedough.com/how-does-netflix-make-money/

PTI. (2018). Star bets on Hotstar to take Indian content global. Retrieved from https://telecom.
economictimes.indiatimes.com, https://telecom.economictimes.indiatimes.com/news/star-bets-on-hotstar- to-take-
indian-content-global/62595280

PTI. (2019). India’s internet users to reach 627 million this year: Report. Retrieved from https://www.
businesstoday.in, https://www.businesstoday.in/current/economy-politics/india-internet-users-to-reach- 627-
million-this-year-report/story/325084.html
Raj, P. (2019). Netflix- The story of the storyteller. Retrieved from https://www.nextbigbrand.in, https://
www.nextbigbrand.in/netflix-the-story-of-the-storyteller/
Rao, R. (2019). Long road for Netflix to catch up with rivals in India. Retrieved from https://www.
businesstoday.in, https://www.businesstoday.in/technology/news/long-road-for-netflix-to-catch-up-with- rivals-
in-india/story/367082.html

Sagar Malviya, G. L. (2018). Netflix India makes profit in its 1st year. Retrieved from https://
economictimes.indiatimes.com, https://economictimes.indiatimes.com/tech/internet/netflix-india-makes- profit-in-
its-1st-year/articleshow/66423533.cms?from=mdr
Samtani, G. J. (2018). Entertainment goes online a $5 BILLION OPPORTUNITY. Retrieved from https://
image-src.bcg.com:https://image-src.bcg.com/Images/Entertainment-Goes-Online_tcm21-208006.pdf (accessed
9 April 2020).

Sandvine. (2019). The mobile internet phenomena report. Retrieved from https://www.sandvine.com/
hubfs/downloads/phenomena/2019-mobile-phenomena-report.pdf

Singh, D. (2018). Indian OTT market to reach $5 billion in size by 2023, says BCG report. Retrieved from
www.businesstoday.in, https://www.businesstoday.in/current/economy-politics/indian-ott-market-to-reach- dollar-5-
billion-in-size-by-2023-says-bcg-report/story/293323.html (accessed 25 May 2020).

Singh, J. (2019\). Netflix CEO reed Hastings on censorship in India: Self-Regulation better than alternative.
Retrieved from https://gadgets.ndtv.com:https://gadgets.ndtv.com/entertainment/features/ netflix-india-self-
regulation-online-censorship-reliance-jio-red-hastings-interview-2009865
Singh, M. (2018). Netflix and Amazon are struggling to win over the world’s second-largest internet market.
Retrieved from https://www.cnbc.com/2018/07/05/netflix-and-amazon-are-struggling-to-win- over-indian-
viewers.html (accessed 11 November 2019).

Stacey, K. (2018). India: Netflix takes a gamble on its next 100m subscribers. Retrieved from https://www.
ft.com, https://www.ft.com/content/110fe8ce-7f5f-11e8-bc55-50daf11b720d

Statista. (2015). (Number of mobile phone users in India from 2013 to 2019 (in millions). Retrieved from https://
www.statista.com, https://www.statista.com/statistics/274658/forecast-of-mobile-phone-users-in-india/

Statista (2018). Video streaming (SVoD). Retrieved from https://www.statista.com, https://www.statista.

com/outlook/206/119/video-streaming–svod-/india
Statista (2019). Video streaming (SVoD). Retrieved from https://www.statista.com/, https://www.statista.
com/outlook/206/100/video-streaming–svod-/worldwide#market-revenue (accessed 9 April 2020).
Statista (2020). Video streaming (SVoD). Retrieved from https://www.statista.com/, https://www.statista.
com/outlook/206/119/video-streaming–svod-/india (accessed 25 May 2020).
Statistc (2020). Internet usage in India - Statistics & facts. Retrieved from https://www.statista.com/,
https://www.statista.com/topics/2157/internet-usage-in-india/ (accessed 25 May 2020).
TVP Bureau (2018). Cable TV ahead of DTH in market share. Retrieved from https://www.televisionpost. com,
https://www.televisionpost.com/cable-tv-ahead-of-dth-in-market-share-rathore/

Uenlue, M. (2019). Economies of scale: what you can learn from Netflix about scaling up. Retrieved from
https://www.innovationtactics.com, https://www.innovationtactics.com/economies-of-scale-
Vdocipher (2018). How OTT is revolutionizing TV experience in India. Retrieved from https://www.
vdocipher.com, https://www.vdocipher.com/blog/2018/08/ott-india-revolution-vod/
Weekedstar (2019). Netflix’s history. Retrieved from http://weekendstar.blogspot.com, http://
weekendstar.blogspot.com/2019/01/netflixs-history.html

PAGE 12 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

Exhibit 1 (a), (b), (c) and (d)

Table
SVoD E1
revenue, no. of users, average revenue per user
Exhibit 1(a)Exhibit 1(b) YearSVoD revenue in US$ millionSVoD users in Exhibit 1(c) Exhibit 1(d)
million SVoD penetration in ARPU on SVoD in
(%) US$
2017 94 44.6 3.3 2.10
2018 107 47.7 3.5 2.24
2019 116 50.8 3.7 2.28
2020 125 54.3 3.9 2.30
2021 131 58.5 4.2 2.24
2022 134 63.3 4.5 2.12
2023 135 68.9 4.8 1.96
Source: Statista (2019)

Exhibit 2(a) and (b)

Table E2 Global revenue comparison SVoD, global user penetration

Exhibit 2(a) Exhibit 2(b)

Global revenue comparison SVoD Global user penetration
CountryRevenue in $Mn CountryUser penetration in (%)

USA 11,420 Sweden 38.6

China Japan Germany 1,782 USA 38
UK 1,400 Slovenia 33.4
India 980 Norway 30
975 Ireland 28.2
Source: Statista (2019)
116 India 3.2

Exhibit 2(c)

Figure E1 Competition Netflix vs Amazon

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 13

 Exhibit 3. Netflix timeline

Table E3
1997 Reed Hastings and Marc Randolph (software executive) co-found Netflix to provide online movie rentals
1998 Launched the first DVD rental and sales site, netflix.com
1999 Debuts a subscription service, offering unlimited DVD rentals for one low monthly price
2000 Introduced a personalized movie recommendation system, used members’ ratings to predict choices for all Netflix members.
2002 Issued IPO (initial public offering) on Nasdaq as “NFLX” with 600,000 members in the USA
2005 The members rise to 4.2 million
2007 Introduced streaming, allowing members to instantly watch their TV shows and movies on their PCs
2008 and Partners with consumer electronics companies to stream on the Blu-ray disc players, set top boxes (TV), Xbox 360, internet connected TVs,
2009 PS3 and other internet connected devices
2010 Got available on the Apple, iPhone, iPad, iPod Touch, the Nintendo Wii and internet connected devices. Launched its service
in Canada
2011 Launches throughout the Caribbean and Latin America
2012 Became available in Europe (Ireland, UK and also in the Nordic Countries. Won its first Primetime Emmy Engineering Award
2013 Expanded to the Netherlands. Launched its first slate of original programming including House of Cards, Hemlock Grove, Arrested
Development and Orange is the New Black
2014 Launched in six new countries in Europe (Austria, Belgium, France, Germany, Luxembourg and Switzerland). Netflix garners 31
primetime Emmy nominations including outstanding drama series, comedy series and documentary or nonfiction special for “House
of Cards,” “Orange is the new black” and “The Square,” respectively. House of Cards won three Primetime Emmy Awards. Netflix
was the first internet TV network nominated for the primetime Emmy. Netflix now has over 50 million members globally
2015 Launched in Australia, New Zealand and Japan, with continued expansion across Europe in Italy, Spain and Portugal. The first
Original feature film “Beasts of No Nation” is released
2016 Got available Globally. Launched in 130 countries bringing their global entertainment service to 190 total countries Globally.
Premiered Stranger Things, which went on to become an acclaimed and award-winning worldwide phenomenon
2017 Won its first Oscar, with The White Helmets for Best Documentary Short Subject. Netflix hits 100 million members globally.
Netflix signs producer overall deals with Shonda Rhimes and Jenji Kohan. Premieres BRIGHT, its first tentpole action film,
starring Will Smith
2018 Won Oscar for Best Documentary Feature for Icarus. Announced overall deals with Ryan Murphy, Kenya Barris, Jason Bateman.
Brought back classic rom-coms including popular films "The Kissing Booth,” "Set it Up,” "Sierra Burgess is a Loser,” "Nappily Ever
After and one of Netflix’s most-watched movies of all time, "To All The Boys I’ve Loved Before.” Premieres international originals
from Denmark (The Rain), India (Sacred Games), Mexico (La Casa de las Flores) and Spain (La Casa de Papel, Elite). It became the
most nominated service at 2018 Primetime and Creative Arts Emmy Awards with 112 nominations. Ties with HBO for most wins
taking home 23 accolades for series include Godless, Seven Seconds, GLOW and Queer Eye
2019 Netflix wins four Academy Awards, including Best Director, Best Foreign Language Film and Best Cinematography for “ROMA,“
and Best Documentary Short Subject for “Period. End of Sentence.“ Netflix acquires the StoryBots property, the Emmy, Annie,
and Parents’ Choice award-winning children’s media brand created by Gregg and Evan Spiridellis. Netflix releases its first original
animated feature film, “Klaus.” Netflix unveils its first international originals from the Middle East (“Jinn”) and Thailand (“The
Stranded”). Netflix wins 27 Primetime and Creative Arts Emmy Awards for series including “Black Mirror: Bandersnatch,”
“Ozark,” “Queer Eye” and “When They See Us.”

Sources: Netflix (2020). Netflix Timeline- A brief history of the company that revolutionized watching of movies and TV shows. Retrieved 11 April
2020, from https://media.netflix.com/en/about-netflix

PAGE 14 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

 Exhibit 4 (a), (b), (c), (d), (e)
Table E4 (a), Global internet phenomena report/ global application category traffic share, (b) global mobile application traffic share: Web and video
traffic (downstream volume of traffic across entire internet), (c) globally mobile internet phenomena report October 2018
(worldwide mobile internet traffic), (d) global mobile application traffic share: the social mobile network and (e) a global video
streaming traffic share
Exhibit 4(a) Exhibit 4(b) Exhibit 4(c) Exhibit 4(d) Exhibit 4(e)
Basis (%) Basis (%) Basis (%) Basis (%) Basis (%)

Video streaming 57.69 Netflix 14.97 You Tube 35% Youtube 37.04 Netflix 26.58
Web 17.01 HTTP media stream 13.07 Facebook 20 Facebook 8.37 HTTP media stream 24.40
Gaming 7.78 Youtube 11.35 Netflix 15 Snapchat 8.29 Youtube 21.30
Social 5.10 Raw MPEG-TS 4.39 Instagram 5.71 Raw MPEG-TS 8.04
Market Place 4.61 HPPT (TLS) 4.06 Web Browsing 4.55 Amazon Prime 5.73
File Sharing 2.84 QUIC 3.87 Whatsapp 3.68 Twitch 3.45
Messaging 1.72 Amazon Prime 3.69 Facebook videos 1.56 Facebook videos 3,42
15

VOL. 10 NO. 3 2020

Security 1.41 HTTP download 3.69 Netflix 2.44 OPENload 0.80

Storage 1.41 HTTP 3.22 App store 2.12 Skygo 0.50
Audio Streaming 1.05 Play station download 2.67 Google play 1.90 Hullu 0.43

Source: Sandvine (2019)

j EMERALD EMERGING MARKETS CASE STUDIES j PAGE
 Exhibit 5. Netflix subscription fees plan in India

Table E5
Features Basic Standard Premium

Monthly price after free month ends on 8/28/19 US$6.6 US$8.5 US$10.5
HD available No Yes Yes
Ultra HD available No No Yes
Watch on your laptop and TV Yes Yes Yes
Watch on your mobile phone and tablet Yes Yes Yes
Screens you can watch on at the same time 1 2 4
Unlimited films and TV programmes Yes Yes Yes
Cancel at any time Yes Yes Yes
First month free Yes Yes Yes
Source: Netflix (2020)

Exhibit 6(a) and (b)

Table E6 Netflix rev enue since- 2014 (consolidated) (amount in $) (in thousands)
Global streaming Global streaming paid net Global streaming free
Year Revenue Operating income Net income paid memberships membership additions trials at end of period

2014 5,504,656 402648.00 266799.00 54476.00 13042.00 2915.00

2015 6,779,511 305826.00 122641.00 70839.00 16363.00 3923.00
2016 8,830,669 379793.00 186678.00 89090.00 18251.00 4706.00
2017 11,692,713 838679.00 558929.00 110644.00 21554.00 6938.00
2018 15,794,341 1605226.00 1211242.00 139259.00 28615.00 9196.00
Sources: Netflix Annual Report (2018); Netflix (2018)

Table E7 Consolidated operating expe nses (amount in $) (in thousands)

Parameter 2018 2017 2016 2018 vs 2017 2017 vs 2016

Technology and development 1,221,814.00 953,710.00 780,232.00 28.00% 22.00%

Revenue percentage 8% 8% 9%
General administrative 630,294.00 431,043.00 315,663.00 46.00% 37.00%
Revenue percentage 4% 4% 4%
Interest expense (420,493) (238,204) (150,114) 77% 59%
Revenue percentage (3%) (2%) (2%)
Interest and other income (expense) 41,725.00 (115,154) 30828.00
Provision for (benefit from) income taxes 15,216.00 (73,608) 73,829.00
Marketing expenses 2,369,469 1,436,281 1,097,519 65% 30%
Sources: Netflix Annual Report (2018); Netflix (2018)

PAGE 16 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

Exhibit 7. Average time spent watching videos in India

Table E8
Year Time spent viewing video in
India(minutes)
2012 2
2013 3
2014 4
2015 7
2016 18
2017 39
2018 52
2019 67
Sources: Jha, L. (2018). Indians spending more time watching online videos. Retrieved 09 April 2020, from:
www.livemint.com/Consumer/IbdTyfGeqmLR73zj4zTXBN/Indians-spending-more-time- watching-online-
videos.html

Exhibit 8. Share of digital in media consumption (2018E) (Hours/week) (Numbers in

percentage)

Figure E2

120

100
34 31 25 20 16
80 39 38
Digital Media
60
Traditional Media
80 84
40 75
61 62 66 69
20

0
USUKJapan Russia ChinaBrazilIndia
Sources: PQ Media, BCG analysis, Digital advertising includes search, video,
display, social media, Samtani (2018)

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 17

 Exhibit 9. SVoD revenue growth

Table E9
Year Revenue growth (%)

2018 14.1
2019 8.7
2020 8
2021 4.8
2022 2.2
2023 0.9

Exhibit 10. Market share of active users (%) as on November 2018

Table E10
Platform (%)

Amazon Prime Video 1.43

Alt Balaji 0.21
Jio Tv 17.60
Jio Cinema 1.86
Netflix 2.08
Tata sky 0.89
Sony Liv 3.17
Voot 11.76
Hotstar 40.18
Airtel TV 4.59
Source: Statista (2019) and Malik (2018)

PAGE 18 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020

Exhibit 11 (a) and (b)

Table E11
Categories Hotstar Netflix Amazon prime video

Price Time US$2.6 /month 7,886 US$6.6/month 633 US$6.6/year NA

spent in India (App Mn minutes (Nov 16) Mn Minutes (Nov 16)
Annie estimates) Hindi, English, English, Bangla, Hindi, Hindi, English, Tamil,
Languages Malayalam, Tamil, Tamil Bangla, Telugu, Marathi
Bangla, Telugu,
Kannada, Gujarati,
Marathi Game
of Thrones, Modern The Black Mirror, Stranger Transparent, The Grand
Popular shows Family, The Night of Things, The Crown, Tour, Mozart in the Jungle,
Silicon Valley, Divorce Narcos, Jessica Jones fear the Walking Dead,
The Night Manager

Table E12
Service Monthly fee Annual fee

Netflix US$6.6–10.5 NA
Amazon Prime US$0.5 US$13.2
Hotstar US$0.5/ 2.6 US$13.2
ALT Balaji US$0.3 US$4
Voot NIL NIL
Source: Choudhary (2016)

VOL. 10 NO. 3 2020 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 19

 Exhibit 12. Comparison of Netflix and its competitors

Table E13
Points of
Differences
Netflix Amazon prime Hotstar

USP Its adaptive streaming using Machine If Prime subscription the User Owned by Star India, which belongs to
Learning to identify network conditions gets access to priority delivery of purchases The Walt Disney Company Entire
and modify the video quality up or down made on Amazon Access to Prime Music catalog of Disney+ content Many titles
based on that This is streaming Closed Captioning and Audio could be localized for the Indian market
to minimize buffering. Dubbing, Closed Description available across most content (dubbed in various regional languages)
Captioning, Audio Description available Offers the best value among all the three Regional content Have
across most content Ad free content services Library is moments of glory when it is about the
home of the one of the best movies and content quality Offers access to
TV shows Subscription also comes with some of the best past- and-present HBO
the additional benefits Live sporting events
Rates and Only monthly package between US US$1.7 per month, US$13.2 p.a. both Hotstar premium US$13.2 p.a. or US
tariff $6.6. to 10.5 including access to mobile app $0.5–3.95 per month. Hotstar VIP US$:
4.8 p.a.
Access No company-exclusive hardware required, Access through Hotstar VIP Access
app/website/smart TV only Basic: access Website to all the content except Hollywood/
to watch on 1 screen at a time in Standard Amazon Fire TV and Stick Amazon Indian/ international shows and movies
Definition and download videos on 1 Prime video app Hotstar Premium Access
phone or tablet Standard: access to watch to all the content on the platform
on 2 screens at a time. HD available. including Hollywood/ Indian/
Download videos on 2 phones or tablets international shows and movies, live
Premium: access to watch on 4 screens at a streaming of sports such as cricket,
time. HD and Ultra HD available. football, tennis and live news channels
Download videos on 4 phones or tablets Content can be streamed only on a single
Service Content can be watched after a monthly fee screen at a time for all accounts
Different service for different packages
Streams all Indian shows earlier than their
No tiers based on quality or features. The actual broadcast and has all the other shows
Content Licensed old movies, hollywood movies, current plans give all users unlimited access on its platform as well. Packages based
documentaries, Past TV shows and to the entire catalogue of movies and TV services
seasons, award winning original content shows at all supported resolutions and
formats Larger total library of movies and Has a lot of regional + international
TV shows, according to a December 2018 content.
report from Reelgood – more than All the star Network programs including
12,000 movies in fact. Amazon has also the sports programs. It has exclusive rights
been making investments in its own original for HBO produced content in India. It has
content a lot of collection of movies too
Content Video and audio quality on Netflix is Video quality is generally very good on Offers the highest video quality full-HD
delivery superb. The company has mastered the Amazon Prime Video
art of adjusting its level of video
compression to match your internet
connection speed
Source: Created by case authors based on various online articles and reports

Corresponding author
Ashish Gupta can be contacted at: ashishgupta@iift.edu

PAGE 20 j EMERALD EMERGING MARKETS CASE STUDIES j VOL. 10 NO. 3 2020