Netflix is losing to homegrown OTT players in India — as the country remains addicted to soaps and movies

  • ZEE5, SunNXT, Hotstar and Amazon Prime are ramping up faster on content, and speech that Netflix is unable to keep up with.
  • Despite Indian platforms are also crude and rough to navigate, they are winning over Netflix because of their legacy content.
  • Netflix has chosen to place a premium with ‘little’ on offer — an option that many Indians chose to ignore.
The global OTT major Netflix has around 1.7 million Indians logging in every day. For a country of billion people addicted to video and cheap internet plans — it is not an impressive number. According to CLSA data, not only have its daily active user number dropped by 35% since last January, it’s only a 10% of traffic that the top OTT player in India gets at over 16 million — that is Hotstar, owned by the Walt Disney Company.

In fact, Netflix is only ahead of SunNXT, a platform that offers regional content. However, it’s not like Netflix isn’t trying. Last year, the streaming platform said it will invest ₹3,000 crore and produce 30 original shows. Some of them — like Sacred Games — have become international hits. Yet, it is lagging even behind platforms like Jio TV and Airtel TV.

This is despite the fact that Indian platforms might not be as intuitive as Netflix’s algorithm, which works hard to suggest the ‘right kind of content’. Most of Indian platforms are also crude and rough to navigate. Yet, they are winning over Netflix because of their legacy content.

For example, ZEE live streams all of its 45 channels on the platform and so does Hotstar. All the popular superhit shows like daily soaps in Hindi, Tamil and Telugu — that were only available through cable — are now available for streaming throughout the day.

These platforms have found the sweet spot to capture the bulk of TV consumers that lie above and beyond the millennials.

With content already in place, these TV channels simply shifted to digital at low costs. They are able to pass on these cost benefits to their customers as well. “With 70% of India’s mobile data consumption on video, OTTs are likely to lead the digital wave and provide broadcasters with an alternate medium to monetise content besides TV,” the CLSA report said.

Original shows on Netflix, SunNXT and Zee 5
OTT Platform ShowsMovies
Zee51153 with 70 originals 3147
SunNxt390 4087
Netflix 82 shows in Hindi and 30 original 789

Movies, movies and movies

Despite being legacy players, they have not turned complacent. ZEE5, SunNXT, Hotstar and Amazon Prime are ramping up faster on content at a speed that Netflix is unable to keep up with. “These OTTs have about four times Netflix’s movie titles,” said the report.

ZEE5 has a library of 3,147 movies and 1,153 shows out of which 70 are original web series. On top of that, it costs less than a third of Netflix’s cheapest plan at ₹199.

SunNxt, a popular OTT platform in South India, also has 390 shows and 4,087 movies and cost 75% lesser than its cheapest plan at ₹199.

As a result, investors have stopped considering Netflix a threat. “Consequently, even as Netflix service evolves in India, with unlikely widespread adoption we do not see it as a threat and retain BUY ratings on Zee and Sun TV,” says the report. Hotstar and ZEE5 are also going fast and hard creating original shows and employing new age film-makers to capture the target audience of Netflix — the urban consumer.

However, the CSLA report excluded the number of shows they have in English and other foreign languages like The Witcher, Money Heist or Narcos - which are very successful.

“Netflix is also not choosing to chase the mass market,” said Business Insider sources on the condition of anonymity.

In spite of that, Netflix is still lagging behind in local content. It’s newly released Ghost Stories and Karan Johar’s What the Love failed to impress the audience.

The Prime theory

Netflix probably will never be able to replicate the diversity and depth of homegrown OTT platforms. However, it is also failing to compete with a global entrant like itself — Amazon Prime Video.

While Amazon realised that it might never build a library worth thousands, it can generate interest by showing the latest movie releases within a few weeks. For example, Pati, Patni and Woh, a superhit movie that was released in December 2019 and can now be streamed on Amazon Prime Video.

The Jeff Bezos-owned platform is also quick to stream new South Indian movie releases capturing real movie buffs and providing a ‘premium’ like feeling to audiences. This, combined with a wide variety of originals that are both Indian and international, along with Hollywood movies and series has caught the fancy of viewers.

It also helps that Prime Video is much cheaper than Netflix. Even though it did double its annual price to ₹999 last year, its introductory price was ₹599. It is also actively building a library of old and hit movies across languages on its platform and promised to invest $1 billion on new shows.

SubscriptionNetflixHotstarZEE5Amazon Prime Video
Monthly From ₹ 199 to ₹800₹299₹99₹129
Yearly ₹6000-9000₹999₹999₹999

As of now, it looks like Netflix is making hay with its few subscribers and premium charges. In 2019, Netflix earned twenty times more money per user than the top player Hotstar or any other OTT services. It reported a monthly average order value of ₹640 per user whereas AOU for Hotstar remained at ₹376 per customer, reported Quartz.

Netflix reported an increase of 700% growth in its India revenue in 2019 to ₹466.7 crore. It reported a profit of ₹5.1 crore. Whereas, Hotstar’s losses widened by 42.5% to ₹554.38 crore. In the same year, Zee5’s profits grew by 6.7% to ₹412 crore in FY19.

The Game of Thrones

However, almost all streaming majors are coming after Netflix’s urban consumer fast and wide. Hotstar, which rules the Indian OTT market in India — like Amazon — diversified its content ranging from news to live cricket matches and also streams the popular HBO original Game of Thrones.

The emergence of these new platforms in a crowded market have spoiled Indian consumers for choice. That is what probably caused Netflix to lose 0.2 million users in 2019, especially since it charges a premium for international shows. Meanwhile, Netflix’s command over English content might also reduce as international competition increases in India.

“Other global OTT platforms such as Apple TV+, which launched in September 2019, have ramped up in India, with differentiated content (mainly Hollywood movies); while the service is free for Apple users for a year; for others, plans start at ₹99 per month,” the CLSA report said.

Globally, Netflix is popular for making its viewers ‘addicted’ and has also faced the flak because of it. But, Indians have been addicted to TV and its homegrown TV shows which are not necessarily brainy nor thought-provoking.

Netflix is trying to bring in as much desi content by deepening relationships with leading production houses such as Dharmatic Entertainment and Red Chillies. In this space, it is still on the way to achieve what many TV backed streaming platforms already did.

With multiple languages; a wide variety of tastes and a cornucopia of content — India is a tough market. Not to mention that its consumers are value conscious. On the top of that, Netflix has chosen to place a premium with ‘little’ on offer making it an easy option for a large number of Indians to ignore - for now.

See also: Netflix has focused on India as a key area for growth. Exclusive data tells the story of its progress.
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