By Newley Purnell
NEW DELHI--To win in India, home to many of the world's next
billion internet users, Netflix Inc. and Amazon.com Inc. are
copying the tactics of a video-streaming service built for the
local market.
Hotstar dominates the Indian market. Launched four years ago by
media conglomerate Star India as a mobile-first streaming platform
for watching cricket, movies and TV, it now has 300 million monthly
users--roughly 10% more than YouTube, India's second-biggest video
content platform. While only three million users pay for access,
that is still more than Amazon has, and more than twice as many as
Netflix. Walt Disney Co. now owns Hotstar.
Netflix and Amazon, shut out of China and facing stiff
competition in the maturing U.S. market, are adopting the
strategies that fueled Hotstar's success--low prices that the
average Indian viewer can afford and loads of local content in
multiple Indian languages.
Netflix is churning out Indian-language dramas, love stories and
thrillers and slashing its monthly rates. Amazon has signed up
local stand-up comedians and backed a "Sex and the City" clone
about a group of women in Mumbai that is broadcast in three Indian
languages.
India's plummeting mobile-data prices and cheap smartphones have
triggered an internet-access revolution in the world's
second-most-populous country. Global streaming services, local
broadcasters and telecommunications companies are trying to
capitalize with competing offerings to win new users, in a market
where subscription and ad revenue are expected to skyrocket to $5
billion in 2023 from $500 million last year, according to BCG, a
consultancy.
Streaming players are after consumers like Ashish Dubey. The
35-year-old driver watches Hotstar while waiting for his boss at
his New Delhi office. He has heard of Netflix and Amazon but isn't
interested in their programs. "I subscribed mainly for cricket," he
says.
Hotstar says its global rivals can't match its library of
decades of popular shows, which it inherited as a subsidiary of
Star India. Disney acquired Star India, a 28-year-old network of
more than 10 Indian television channels, as part of its $71.3
billion deal in March to buy the bulk of the 21st Century Fox
entertainment assets.
"We have a two-decade head start," says Varun Narang, Hotstar's
chief product officer. About 80% of content on the platform is
free; the rest costs as little as $1.19 a month for everything.
When Amazon and Netflix landed in India, they each brought
global libraries of hundreds of shows and movies, but only a small
portion was in local languages. They had little popular content
from India.
Netflix executives initially targeted well-to-do,
English-speaking urban Indians, according to a person familiar with
the matter, and quickly figured out they had to slash prices to
reach beyond India's upper crust, the person said. Netflix costs
around $7 a month in India, but to juice growth the company has
introduced smartphone-only plans that cost less than $1 for one
week of access at a time.
"We're trying to broaden the accessibly of Netflix," with lower
prices and local-language options, said Bela Bajaria, vice
president of international originals. Netflix has six original
series and 13 original films from India in the pipeline, in
addition to productions such as "Lust Stories," a new Indian
original movie about sex and relationships. The Mumbai office now
has about 70 people, up from a handful just a few years ago.
Asked last year at a business conference where Netflix will get
new subscribers in the years ahead, Chief Executive Reed Hastings
said: "The next 100 million is from India." Currently, of Netflix's
nearly 149 million global users, only about 1.2 million are in
India, according to research firm IHS Markit.
Amazon has about 2.5 million subscribers in India, IHS Markit
says. Prime Video, which launched in India in 2016, costs as little
as $1.19 a month. As in other markets, subscribers also get Amazon
music streaming and expedited shipping. Amazon is aiming to release
eight Indian original shows this year, up from one 2017 and five in
2018. Last year, Amazon added an interface for its app and website
in Hindi, Telugu and Tamil, and now has content in nine local
languages. Jennifer Salke, head of Amazon Studios, visited Mumbai
last year to meet with local staff, directors and writers.
"We are going for extreme localization," said Gaurav Gandhi,
Amazon Prime Video's India director. In March, Amazon launched
"Made in Heaven, " a slick drama about wedding planners that the
company says has been "successful."
Hotstar, in contrast, has eschewed big-budget productions. It
has rights to popular television shows in eight Indian languages
from Star India, ranging from romances and supernatural thrillers
to family-friendly dramas and sports. About three million people
pay for Hotstar's premium service, according to IHS Markit. It
costs $4.29 for one month at a time, or $1.19 a month if they buy a
yearly plan and pay up front.
Cricket is a major offering. Star India had exclusive digital
rights to popular Indian Premier League cricket when it launched
Hotstar and expanded that in 2017 to global TV and digital rights
in a deal valued at $2.3 billion.
The pressure on Netflix and Amazon is likely to increase when
Disney launches its Disney+ streaming service in November and rolls
it out internationally over the next two years. Still, there is
room for everyone, because only 3% of India's 4G-enabled smartphone
users subscribe to video services, said Constantinos
Papavassilopoulos, an analyst who follows India streaming trends at
IHS Markit.
Vibhuti Agarwal contributed to this article.
Write to Newley Purnell at newley.purnell@wsj.com
(END) Dow Jones Newswires
June 04, 2019 07:14 ET (11:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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