The Screen Test | Will Netflix’s mobile-only gamble pay off in India?

Netflix has gone to town with a mobile-only plan that costs as little as Rs 199, which is less than even $3 a month. The plan is only for India despite its presence across 190 countries. The California-headquartered video streaming platform believes that India is the country that will contribute its next 100 million users.

The mobile-only plan is 40 percent cheaper than its earlier starting subscription in India since January 2016. The original scheme that offers seamless streaming across devices such as TVs, desktops, laptops and mobiles is here to stay.

The mobile-only subscription breaks the mould. No, it was not done in a haste. Netflix’s decision to be flexible with multi-device seamless streaming, at least for India, is backed by a detailed study on the video streaming behaviour of Indian consumers.

In December 2017, Netflix conducted the study that found nearly 65 percent Indians streaming video during their train travel.

Another thing that stood out was the timing of video streaming. Many Indian consumers do binge-watching around 9 am and 5 pm on mobile phones or tablets.

This is backed by the Nokia Mobile Broadband Index 2018 study  which found that about 65-70 percent of total mobile Internet traffic in India constitutes video content.

The reason is simple. Cost of mobile data is the cheapest in India. A study by Cable.co.uk revealed that 1 gigabyte of mobile data costs just $0.26 or Rs 17.94 in India while the global average is $8.53 or Rs 588.51.

That explained why Netflix reworked its strategy to hook millions of Indian subscribers who are yet to get a feel of its offerings.

Just look at the numbers. Most of India’s 566 million Internet users do so on mobile devices, according to data as of March 2019. By the end of this year, the number is projected to cross the 627 million mark.

Plus, some 197 million households in India have televisions – a device Netflix primarily targeted with its earlier plans. The fact is, most TV sets in India are not smart devices and so, not connected to Internet. In other words, the potential to scale up remains immense.

Additionally, there are more than 340 million smartphone users in India, which is projected to hit 442 million by 2022.

Netflix is in for a long haul as the market leader crown in India still eludes. As IHS Markit data show, the company is likely to treble its Indian user base to 4.1 million by 2019-end. Rival Amazon’s Prime -- a bundle of Prime Video, Prime Music, e-commerce deals and priority delivery – already boasts of 4.4 million subscribers.

At Rs 199 a month, Netflix believes that it can kill off some competition. Home-grown Hotstar’s premium subscription comes for Rs 299 a month and Rs 999 a year. A trimmed down version – Hotstar VIP, however, comes cheaper at Rs 365 a year. Amazon’s Prime is available at Rs 129 a month and Rs 999 a year. None of the other 30-odd video streaming services have any mobile-only plan to offer.

Analysts are upbeat about the future of over-the-top (OTT) services in India. According to a BCG study, OTT video streaming market in India is expected to be $5 billion by 2023, from $500 million last year, with 40-50 million users paying for subscription.

There is a caveat. The predictions were made much before Netflix came out with its mobile-only subscription plan. And the numbers are only going to go up if BCG were to conduct the study again.

With its mobile-only plan, Netflix has opened its door to potential consumers in rural India where mobile is the primary device to access Internet. And, rural India, the BCG study said, will make up nearly 48 percent, or 650 million, of India’s total Internet users by 2023.

Will the gamble pay off for Netflix in the long term? The answer is simple. Netflix needs to build a sense of loyalty, and that will only come with its content offering. The OTT player does understand this, which is why it is lining up an estimated Rs 500-600 crore to develop local content, movies and series.

The mobile plan in India is definitely a good start. It’s a hard choice too as Netflix knows China will be a difficult proposition to push through.