Walmart-owned Flipkart plans to open a new front in its ongoing battle with arch rival Amazon for supremacy in the Indian market. This time the theatre of action will be India’s Rs 4,462 crore video streaming industry.
Flipkart will launch free video streaming before Diwali, for its ‘Plus’ premium subscribers, sources told Network18.
Flipkart Plus is a rewards and loyalty programme like Amazon’s Prime membership, which offers faster shipping and exclusive deals. The only difference between Flipkart Plus and Prime is that the latter offers video content as well, in addition to music.
“Video was missing, and we will have it soon,” said the first source, adding: “Video has its own merits in a country that lives and breathes cinema.”
The Walmart subsidiary’s foray into video comes at a time when Amazon is doubling down on its entertainment offerings in India, with a host of originals and exclusives. Run by Jeff Bezos, the world’s richest man, Amazon launched Prime Video in India in December 2016 and since then has garnered 13 million users, according to research firm Redseer, which is more than 10 percent of Prime’s global user base.
To put things in context, to gain eyeballs and loyal users, companies often use the ABCD card -- of astrology, Bollywood, cricket and divinity. Flipkart is betting on Bollywood, and it will serve entertainment to Plus users free of cost.
One can become a Plus member by collecting 300 Super Coins, or reward points (a user gets two super coins for every Rs 100 of purchase on Flipkart). A Plus member gets faster delivery and can use the reward points to purchase more goods from Flipkart or its 100 partner companies like Zomato, OYO and MakeMyTrip.
“Why should someone have separate apps to shop and watch movies… Video is just another service,” said the second source, adding that video will create a lot of stickiness. Of course, every time a Plus member wants to watch a show or a movie, he navigates through the shopping app.
Flipkart already has about five-six million Plus members who enjoy the benefits of special deals and faster delivery. “They can now watch movies and episodic content free of cost,” the first source said.
Entertainment has helped Amazon in the US and India too. It creates loyalty and offers a lot more value. At the heart of Amazon’s strategy is to use video to convert viewers into shoppers. Its videos drew more than five million people worldwide to its shopping club by early 2017, according to company documents accessed by Reuters. In the US about 26 million watch its films and shows. The number has only gone up since.
“A combination of e-commerce services and entertainment services is fairly unique. This combination helps in bringing more Prime customers,” said Ujjwal Chaudhry, Director – Consumer Internet, Redseer.
For perspective, 10 percent of all 120 million online shoppers in India is on Prime. But, only 40 percent of them have paid for Prime. The remaining received it through bundled services of telecom operators. For example, Airtel postpaid users get free Prime subscription for a year. Also, half of the Prime users, according to Redseer, use it for video.
“Of the paying subscribers, in a survey recently conducted, we found that around 30 percent bought Prime for video services,” Chaudhry said. “While the service is being purchased for entertainment, the subscriber could also end up purchasing products on the e-commerce site.”
Flipkart Plus, unlike Prime, is not a paid subscription. The biggest hurdle, experts would say, to join Prime is that customers are required to pay Rs 1,000 upfront for an annual membership. Not having a paid subscription widens Flipkart’s appeal to people who want to watch movies and shop simultaneously.
Unlike Amazon and Netflix, Flipkart will not have original content. Flipkart will aggregate content from content producers. The cornerstone of Flipkart’s video streaming services’ success will be its ability to get as many exclusive streaming rights as possible.
An email sent to Flipkart for comments and context did not elicit any response at the time of publishing the story. We will update the story when we get it.
Kalyan Krishnamurthy, Flipkart’s CEO, will have to watch out for competition in the video business, which is already cluttered. Hotstar, run by Star Network, which witnessed a new peak after the Cricket World Cup, has 300 million monthly active users; MX Player 176 million, ZEE5 60 million, Prime 13 million, and Netflix 11 million.(Anand Murali is a contributing columnist for Moneycontrol)