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Netflix casts India as its new star

US streaming giant launches aggressive plan as home growth slows

 Netflix is adding original titles and dropping its prices in India.   © Reuters

NEW YORK -- Netflix is adding original titles and dropping its prices in India in a bid to increase viewers and compete with local platforms as growth in its U.S. home market slows.

Chief content officer Ted Sarandos said in a Tuesday earnings call that Netflix is "seeing the investment in local language content in India payback in the form of excitement and member growth and hours growth that's encouraging us to keep going." 

Sarandos announced the strategy a day after the streaming giant revealed it was adding another 10 original Indian titles to its platform. 

The new batch of original content follows Netflix Indian originals such as Love Per Square Foot and Sacred Games, which came out last year, and Delhi Crime, a new series released last month.

Coinciding with Delhi Crime's debut, Netflix also rolled out a cheaper, mobile-only plan in India, priced at about $4 per month, only half the cost of its basic plan. Last year, the company launched a strategic partnership with Indian telecommunication company Airtel, offering the first three months free and allowing users to pay directly through their phone bill.

Netflix’s aggressive game plan in India comes as the company finds it increasingly difficult to gain new users in the U.S., where it has cut marketing and announced a price hike to chase larger margins. The company also faces growing competition from the likes of Amazon, Apple -- which unveiled its own streaming service earlier this month -- and Disney, which just recently closed its merger with fellow entertainment giant Fox.

In the first quarter of 2019, Netflix added just 1.7 million new paying members in the U.S., half a million fewer compared with a year ago. Reed Hastings, CEO of the Los Gatos, California-based company, has said that the company's next 100 million subscribers will come from India.

But competition in India will be steep. In addition to its U.S.-based rivals Netflix must contend with local players led by HotStar, which offers on-demand video content across a variety of local languages and has over 300 million monthly active users -- though only a small portion are paying members.

Owned by Star India, a Fox asset now part of the Walt Disney Group, HotStar began service in early 2015. Netflix entered the Indian market about a year later. Indian financial publication Mint reported that HotStar plans to localize movies and shows from Disney+ -- Disney's streaming service set to launch this November -- by dubbing or by adding subtitles in several Indian languages. HotStar is also known for streaming live sports games, including cricket, India's national obsession. Star India owns broadcasting rights to all cricket matches played in India through 2023.

Eros Now, owned by Indian film production and distribution company Eros International, is another top player. The parent company, which is traded on the New York Stock Exchange, said in its latest quarterly report that its streaming platform has 142 million registered users and 15.9 million paying members. Subscriptions start at less than $1 a month, a fraction of Netflix's new cheaper mobile-only option.

"These services have been around for quite some time," said Tony Gunnarsson, a senior analyst at the London-based consultancy Ovum. "Local services could have -- Indian, Bengali, Tamil -- all the different [language content], and being really cheap, which of course, works well in India.

"Amazon and Netflix are competing head-to-head in India for, we think, a largely metropolitan-based, highly-educated and affluent demographic," Gunnarsson added.

"India is a huge country with a big divide in terms of affordability and also the connection that they have."

Netflix does not release figures of international subscribers by country, but according to estimates by Hong Kong-headquartered market research company Counterpoint Research, Netflix had 1.6 million paid subscribers in India in 2018 and about half a million the year before -- still a long way off its goal of 100 million.

Greg Peters, Netflix's chief product officer said the company is looking to "broaden the accessibility of the service then to more and more Indian consumers."

"Part of that is making sure that we have the right payments models in place and innovating and testing about our new models to make the Indian consumer feel like they have existing ways of paying that are natural to them that they can use to pay for Netflix," Peters said.

The company is also still doing a lot of experimentation to figure out exactly how to price its plans in India, Peters added.

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