Netflix is moving ahead with its global quest and will soon enter India, where the majority is mad about Bollywood movies, says a report from Reuters citing industry executives. Reed Hastings, Netflix’s co-founder and chief executive, is expected to talk about the company’s international expansion at an event this week.
Netflix may soon announce India plans
Slowing subscriber growth in the home market forced this video streaming giant to seek international growth. India is the second most populated country in the world with 1.3 billion people, of whom 20% are online, making the country an obvious choice for the company that is spreading into Asian countries.
Though the streaming firm has not shared anything about expansion plans in India, Reuters learned from some industry executives that the U.S. firm will soon make the India announcement, which can be expected as early as this week at the Consumer Electronics Show (CES) in Las Vegas.
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Big market, bigger challenges
Tarun Pathak, an analyst at Counterpoint Technology Research, said that Netflix is entering India at the right time. Most Internet users in the country use their smartphones to go online, and the majority of those devices are 4G capable, which helps in reducing stream time. One out of every two mobile devices sold in the current year are expected to be 4G equipped, the analyst said.
High-speed Internet connectivity is spreading rapidly among a vast population that is used to paying pennies for watching the latest Bollywood releases. Though the market is big, a bigger challenge for the streaming firm will be to convince Indians to spend.
For the third quarter, Netflix’s average revenue per user (ARPU) was $25.29 in the U.S. and $21.59 abroad. In India, where a movie can cost 29 rupees or 44 cents and monthly subscriptions are priced as low as Rs. 200, analysts expect ARPUs to be a fraction of that amount, says Reuters.
It appears that local rivals are already preparing for a Netflix challenge. On Monday, Eros International, a U.S.-listed Indian rival of Netflix, announced a partnership with the country’s third-biggest mobile carrier, Idea Cellular, which has around 167 million subscribers currently.
On Tuesday, Netflix shares closed down 2.09% at $107.66. In 2015, the stock gained almost 116%, while in the last one month, it has lost almost 18%.