This year, Netflix passed a milestone as it broke 100 million subscribers worldwide. But despite a majority of subscribers being from outside the US, there is one international territory the company hasn’t been able to crack — India.
According to new research from global industry analysis firm Counterpoint, Netflix has approximately 5 million subscribers in the country — 70 million less than the leading service Hotstar and 6 million less than Amazon Prime.
While Netflix and Amazon have made significant progress in adding regional content, they still have a lot of ground to cover. One of the issues that could be hindering their growth is reluctance to adapt an ad-based monetization model. Netflix, for example, has held onto its global strategy of a subscription-based revenue model, which may work in the US, but has a different result in India.
The players that have been successful in the country — like Hotstar — work on a hybrid revenue model, also popularly known as a ‘freemium’ model. Hotstar India earns through subscription as well as advertisements, with majority of its revenue coming from advertisements.
According to the report, only 2-3% of Hotstar subscribers pay for the services, with the rest stick with the free content. In Netflix’s case, approximately 6% of subscribers pay for the service and the rest take advantage of the ‘free first month’ trial through multiple credit and debit cards.
If Netflix and Amazon want to have more of a presence in India, they will need to consider increasing focus on local, niche content. Hotstar for example streams live cricket matches and offers full coverage of IPL (Indian Premier league), and new Bollywood movies. Its niche content also includes Indian soap operas that, according to the report, appeal to young and middle-aged working women as well as housewives.