Cashing in on digital wave: Netflix launches in India with plans starting Rs 500 a month

Netflix Inc launched operations in India on Wednesday, with plans starting at Rs 500 ($7.50) per month.

The video-streaming service will also offer two other plans priced at Rs 650 and Rs 800, it announced on its website.

Cashing in on digital wave: Netflix launches in India with plans starting Rs 500 a month

Plans start at Rs 500 in India/ Reuters

Netflix Inc's global expansion to movie-mad India, industry executives said, is tied in with high-speed Internet connectivity that is rapidly spreading among a vast population used to paying pennies for their latest Bollywood fix.

Slowing growth at home in the United States has put pressure on video-streaming service Netflix to grow internationally and India, where a fifth of the country's 1.3 billion people are online, has widely been seen as a likely next step in Asia.

"Netflix is entering India at the right time," said analyst Tarun Pathak at Counterpoint Technology Research.

Most Indian Internet users go online via smartphones, which are increasingly capable of connecting to the latest, fourth-generation network (4G) which cuts streaming times considerably.

"We expect at least one in two mobile devices sold this year to be 4G equipped," Pathak said.

The challenge is convincing Indians to spend, analysts said. Netflix's average revenue per user (ARPU) in the third quarter was $25.29 in the United States and $21.59 abroad.

In India, where a movie can cost 29 rupees (44 cents) and monthly subscriptions are as little as 200 rupees, analysts expect ARPUs to be a fraction of that.

Mobile partner

With most Indians getting online with smartphones, a telecom partner could speed Netflix's market entry a year after Hotstar - from Twenty-First Century Fox Inc controlled Star Network - and three years after Singapore-based Spuul.

Netflix paired with SoftBank Group Corp for its Japan launch, piggybacking on the one of the country's mobile network providers for its first foray in Asia in September.

Netflix's U.S.-listed Indian rival Eros International PLC announced a partnership on Monday with Idea Cellular Ltd, the country's third-biggest mobile carrier with 167 million subscribers.

For telecoms companies, streaming services increase data consumption which is more lucrative than telephone calls. Moreover, movie subscriber numbers are widely expected to jump with the large scale introduction of 4G services, led by the Jio network of Reliance Industries Ltd.

But in price-sensitive India, reaching new customers with big-budget content is likely to prove far easier than fending off the appeal of cheap, easily available pirated copies.

"In India our biggest worry is not Netflix," said Michael Smith, chief technology officer at startup Hooq, backed by Singapore Telecommunications Ltd, Time Warner Inc and Sony Corp.

"It's the 20 cent copy of a movie that has just been released."

Footprint in 190 countries

Netflix has said it had significantly expanded its global footprint to 190 countries, making its Internet TV service available in 130 new markets including India -- but not China.

Netflix, which began as a mail-order DVD service but is now producing award-winning original content alongside its offering of older shows and movies, launched in 2007. Now, 70 million subscribers pay a monthly fee for unlimited service.

"Today you are witnessing the birth of a new global Internet TV network," co-founder and chief executive Reed Hastings said at the Consumer Electronics Show in Las Vegas.

"With this launch, consumers around the world -- from Singapore to St. Petersburg, from San Francisco to Sao Paulo -- will be able to enjoy TV shows and movies simultaneously -- no more waiting."

"While you have been listening to me talk, the Netflix service has gone live in nearly every country in the world except China, where we hope to be in the future."

Netflix noted in a statement that it "continues to explore options for providing the service" in China, the world's most populous country, where the government censors online content it deems to be politically sensitive.

Other countries or markets without the service are Crimea, North Korea and Syria due to US government restrictions on American companies, Netflix said.

While English is the main language for most of the new markets, Netflix said it has added support for Arabic and Korean, along with simplified and traditional Chinese to the 17 languages it now uses.

"From today onwards, we will listen and we will learn, gradually adding more languages, more content and more ways for people to engage with Netflix," said Hastings.

"We're looking forward to bringing great stories from all over the world to people all over the world."

Following its launch, Netflix first expanded to Canada, and then to Latin America, Europe, Australia, New Zealand and Japan. Until Wednesday, it was available in 60 countries.

The company has been shifting from recycling old shows and movies to producing more original content, with its shows such as "House of Cards" and "Orange Is The New Black."

In 2016, the company plans to release 31 new and returning original series, two dozen original feature films and documentaries, as well as its own stand-up comedy specials and 30 original children's programs.

Netflix is ahead of key rivals in streaming such as Amazon and Hulu, which have also begun to produce original content.

The rapid expansion is likely to impact the bottom line at Netflix. In its most recent quarterly update, the company said that it expects "to run around break-even through 2016 and to deliver material profits thereafter."

For the third quarter, Netflix posted a net profit of $29.4 million on revenues of $1.7 billion. While revenues grew 23 percent from a year ago, profits were halved.

Netflix raised prices in the US and several other countries in the past year, saying it was needed "to improve our ability to acquire and offer high quality content."


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Updated Date: Jan 07, 2016 11:24:34 IST

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