Can Netflix And Amazon Disrupt India’s Streaming Video Market?

U.S. e-commerce giant Amazon recently fired a fresh salvo in India with its video streaming service, Amazon Prime Video. On April 19, the company launched its streaming media device, the Amazon Fire TV Stick, in the country. The device offers access to local and international movies, television shows and popular apps when plugged into a HDTV and includes features designed specifically for India. For instance, it has a voice search in Hindi and English and also offers data monitoring and other features to help customers optimize their data plans and stream more content using less bandwidth. It also comes with free data for three months. India is only the fifth market – after the U.S., the U.K., Germany and Japan — where Amazon has introduced this device.

Netflix how to download netflix movies and tv shows
NFLX Photo by Matt Perreault

“We started Prime with unlimited fast delivery and then added unlimited access to Prime Video at no additional cost. Now, the Fire TV Stick transforms TV viewing and makes the Prime experience even better,” said Amit Agarwal, senior vice president and country manager of Amazon India, at the Fire TV Stick launch in New Delhi. Nitesh Kripalani, director and country head, Amazon Video India, added: “Our aim is to solve the problems our customers face. With the Fire TV Stick, customers can watch our latest and exclusive movies and TV shows from the comfort of their living rooms.”

Prime Video made its debut in India a few months ago and is an important part of Amazon’s overall arsenal as it battles for supremacy in the country’s growing e-commerce market. Amazon entered India in 2013 and introduced its popular subscription-based program, Amazon Prime, in July last year at Rs.499 per annum ($7.78 at the exchange rate of $1 = Rs.64) to drive customer loyalty through features such as unlimited one-day deliveries and early access to lightning deals. (In the U.S., Prime customers are estimated to spend around four times as much as non-Prime customers.) In December, Amazon added video as a free add-on service to its Prime offering in India to make it even more attractive.

The move seems to be paying off. “We are humbled by the tremendous response that has led to Prime sign-ups more than doubling since our launch, consuming nearly a billion minutes of content. The Prime Video app is among the top five entertainment apps across iOS and Android,” says Kripalani.

While announcing the company’s better than expected first quarter results recently — Amazon posted $35.7 billion in revenue, beating analysts’ estimate of $35.3 billion — CEO Jeff Bezos made special mention of Amazon’s performance in India. Bezos said: “Our India team is moving fast and delivering for customers and sellers …. We’re grateful that customers are responding — is the most visited and the fastest growing marketplace in India. It’s still Day one for e-commerce in India, and I assure you that we’ll keep investing in technology and infrastructure while working hard to invent on behalf of our customers and small and medium businesses in India.”

While the main objective of the Prime video service is to increase customer stickiness and boost Amazon’s sales, it has created ripples in the country’s nascent but growing video streaming market. At around $8 a year (far cheaper than its U.S. rates, which range from $8.99 to $11 a month depending on the plan), it is among the cheapest internet video services in India. Gaurav Gandhi, chief operating officer of Viacom 18 Digital Ventures, the digital arm of media house Viacom 18 which runs the online video service Voot, describes it as a “very disruptive price point.”

Amazon Prime Video is also available at a fraction of the price of its global competitor Netflix, which entered India last year. And while Netflix is the world’s leading internet television network with over 86 million members in over 190 countries, according to industry tracker App Annie, Amazon Prime Video currently has around 9.5 million subscribers in India — more than double that of Netflix’s 4.2 million.

At monthly subscriptions ranging from Rs.500 to Rs.800 ($7.79 to $12.45 depending on the plan), Netflix has maintained its global pricing and is the most expensive video streaming service in India. Hotstar, Star India’s digital platform and the leader in this space with over 60 million users, offers most of its content for free; its paid subscription for premium content is priced at Rs.199 ($3) per month.

“[Amazon and Netflix] will force other players to produce original content faster than they would otherwise have done.” –Jehil Thakkar

Netflix and Amazon are the only major ‘subscription-only’ players in India. Others – there are around 30 online video service providers in India – typically are advertisement-led and are either totally free for the viewers or have a freemium model. According to industry estimates, of the approximately $220 million video streaming market, only a fraction is subscription-based.

Betting Big on India

Reed Hastings, founder and CEO of Netflix, says premium pricing is part of Netflix’s India strategy. In a recent visit to the country, he said: “There are around 300 million smart phone users in India. But we are targeting mostly the high end — 10 or 20 million — for whom our pricing is not a problem.” Pointing out that India is “hugely important” to Netflix because “it’s one of the strongest internet markets,” Hastings added that “India has seen the highest growth among all its Asian markets.”

In a bid to increase its reach here, Netflix recently entered into strategic partnerships with leading telecom service provider Bharti Airtel and Videocon direct-to-home TV service; it will now be available on the mobile and direct-to-home platforms of these two companies. To make payments more convenient for its subscribers, Netflix has tied up with telecom firm Vodafone; Vodafone customers can pay for their Netflix subscriptions via their monthly telephone bills.

User experience, Hastings said, is going to be a key focus area for Netflix. “When we started, it took one-and-a-half megabits to stream video on your mobile, and then we were able to bring it down to one megabit and then to half a megabit. Now we can get it down to 200 kilobits. So you can get 24 hours of viewing with 1 GB of data. We are further trying to bring it down to 100 kilobits.”

Netflix’s India performance evokes a mixed response. Jehil Thakkar, an industry analyst who until recently was head of media practice at KPMG India, says Netflix has had “minimal impact” and “is being consumed by only a very small sliver of the India market.” Rajiv Vaidya, CEO of video streaming platform Spuul, feels that Netflix has “created a huge buzz” at the top end of the market.

Frank D’Souza, head of the entertainment & media practice at PwC India, notes: “Despite the fact that Netflix is a subscription-based platform in a market dominated by players like Hotstar and Voot which provide content almost free of cost, it has been able to attract 4.2 million active users and is among the top 10 OTT (over-the-top content, which refers to