Netflix really only has to conquer a few outlying regions of the world to be a true multinational force, but the two major outstanding heartlands were always going to be tough – India and China. Not only have local rivals had a long multi-year head start to build up local content relationships, but Netflix in India has two serious obstacles to overcome – price and the fact that there are almost no broadband lines.
Some 22 million broadband lines have to be shared among over 1 billion people, and although Indian’s do their best with village shared WiFi services and the like, the only way to conquer India is through cellular connections.
The local cellular operators have all laid down their own backhaul to extend their reach into suburban, if not rural India and it is down those lines that Netflix content will have to travel. Here it has one of two things up its sleeves. In the near future, it promises to compress decent video down to 250Kbps, and that will be a serious advantage, and the fact that the cellular operators are still in a cut-throat pricing spiral, where they are prone to partner with anyone for an edge.
So, it is not too surprising that Netflix has managed to partner this week with cellular and DTH players – Airtel, Videocon d2h and Vodafone to bring its content to consumers there. The biggest issue though is the $7.50 a month which Netflix wants to charge, something above a full cable subscription price in India, which takes it outside the price range of its rivals. Local “uncarrrier” Reliance Jio has offered 300 TV channels for free, built into its basic data charges, a move that has had rivals cutting their data prices by as much as 80%. It has picked up 100 million customers in under a year. Netflix would do well to cut a deal with Jio, but who would buy a cut price cellular service and then pay top rates for Netflix? Makes no sense.
But competitive pressure from Jio has other operators reaching for deals with Netflix, and Vodafone has found it a helpful partner in most other territories already. We had assumed the Videocon and Bharti Airtel deals will relate to push VoD, but actually Videocon clarified that it would have to be connected to one of the 22 million broadband lines in India in order to work, which dramatically limits its potential customers.
A statement said that Netflix content will be accessible to Bharti Airtel users through its DTH services which uses a dedicated Netflix button on the remote. It will also be available on the Videocon d2h set-top.
The Vodafone deal will see the SVoD provider use carrier billing for subscriptions and it is offering both SD and UHD content, with a premium for the UHD subscription.
Netflix only launched in India just over a year ago, and talks about investing in Indian content, although we suspect that this will yield most dividends when this content is supplied to Indians working overseas, and able to pay higher SVoD prices. Local researchers put Netflix subscribers at just over 225,000 customers so far in India.