Editorial: It’s showtime!

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Published: January 9, 2016 12:21:51 AM

Eros, Wynk, Box ...Netflix—internet TV matures

India’s internet television space is getting crowded. Telecom-driven platforms like Airtel Wynk Movies are competing with broadcasters or studio platforms such as Ditto TV and Eros Now and internet-based platforms like Spuul or Box TV. Most of it is very affordable—Eros Now is available at a monthly subscription of just Rs 60 and HOOQ at Rs 199. The cable ARPU in the country today is just about Rs 200. Against this backdrop, Netflix’s entry price appears somewhat expensive. The world’s leading internet television network, which launched its product in more than 130 countries on Thursday—China is an exception—has priced its product at Rs 500 per month for a basic package and Rs 800 for a premium offering. That’s roughly in line with the cost in the US, of around $10, and suggests Netflix may not be looking for scale just yet. But if the Indian OTT space doesn’t feel threatened by Netflix’s arrival and believes it will merely make a guest appearance, catering for a very limited audience of just about 1% of the total television viewership of 700-800 million and playing in a niche, it might be mistaken.

Netflix will definitely look to grow its share in the online over-the-top (OTT) market which itself will grow fast, driven by better bandwidth speeds and more smart-phones. And it will almost certainly start sourcing original content locally even as it continues to build its Bollywood library. Certainly, telcos looking to compete with RJio’s offerings—maybe even Jio itself—would like to work out special deals with Netflix for subscribers. And given it has deep pockets—Netflix is tipped to launch more than two dozen original shows this year and spend some $5 billion on content—it will try to create quality content both for audiences in India and the Indian diaspora. The entertainment ecosystem today is almost entirely driven by Hindi and regional content; Hollywood box office accounts for less than 10% of total collections, and that’s after most films are dubbed. So, for now, it is possible just a small fraction of the viewing population that wants English content will subscribe to Netflix. But on-demand content is here to stay and, with time, audience tastes too will change—large parts of urban India will almost certainly gradually switch to video-on-demand. Once it has enough content, perhaps, Netflix may even drop prices—certainly, right now, with the content likely to appeal to a limited audience, prices may not be that significant. It will be interesting to watch trends in advertising, especially if the television channels stay with catering for the masses, as they do today. Also, not too many households may cut the cable cord since subscription rates are minuscule compared to those in markets like the US. But the ability of DTH and cable operators to raise ARPUs will be restricted by the development of internet TV. The clear winners in this space will be content providers who will ask for more in terms of IP ownership, revenue share and the like. Those that can afford pricey content can carry viewers with them. It’s showtime, folks!

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