Netflix goes to ‘Tollywood’ and beyond for long-sought India growth

Mumbai, May 24 (BUS): In southern India, devoted fans of film and television stars worship like gods, erecting huge statues of actors bathing in milk as part of a ritual prayer for the film’s success.

This is the market that Netflix, behind streaming in India, is now eager to tap into. It has a range of Hindi films in various regions to show but for TV series – which is key to keeping viewers loyal to its platform – it has only a few hit shows in Hindi and no TV shows at all in regional languages, Reuters reports.

The US company has given the green light to at least six South Indian language TV shows this year, and is aggressively chasing deals in Tollywood as it is known in the Telugu film and television industry, as well as in the Tamil film and television industry, six people with knowledge of the company’s plans told Reuters.

Despite a Hindi-speaking Bollywood production known for its flashy and action-packed content, the South Indian film industry has been doing well in recent times, dominating the box office revenue in India so far this year.

One of the people, a Tollywood producer, said Netflix “has had meetings with just about every film producer and director here. You’ll see the results of those meetings by next year.” All sources spoke on condition of anonymity for fear of losing job opportunities.

Netflix has always made India, with a population of 1.4 billion, a major market. In 2018, two years after its launch in the country, CEO Reed Hastings predicted that the next 100 million subscribers would come from India. But it has so far only between 5 and 6 million, according to analysts’ estimates.

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By Hastings’ own admission, Netflix has been frustrated with its lack of success in India compared to its other markets. This new push south also comes at a time when the hunt for growth is taking on new urgency.

The streaming giant stunned investors last month when it reported a quarterly net loss to global subscribers for the first time in more than a decade, and predicted even deeper losses ahead. Its stock has lost nearly half of its value since then. Read more

Smaller than competitors

In India, Netflix is ​​outperforming its competitors in terms of revenue share from the subscription video-on-demand market, capturing 39% in 2021 compared to nearest rival Disney Plus Hotstar with 23%, according to Media Partners Asia.

But analysts say its subscriber base is too small to make it comfortable. Next to Netflix’s 5-6 million, Disney Plus Hotstar, which owns the rights to broadcast cricket, has about 50 million. Domestic competitor Zee5 has around 20 million, and analysts also measure Amazon Prime and SonyLIV’s subscriber numbers to be significantly higher than Netflix’s.

The potential of the Indian market “cannot be underestimated,” says Julia Alexander, director of strategy at US-based Parrot Analytics.

“If Netflix doesn’t try to capitalize on it by forging stronger relationships with local creators, local studios/production companies, and establish a real place for it in India, someone else will,” she said.

Asked by Reuters about criticism of its performance in India and its push towards regional languages, Netflix said in a statement it was confident of what it called “India’s long-term winning strategy”.

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“India continues to present a tremendous opportunity for Netflix to invest and grow, both in terms of membership and the diversity of content we offer our members,” she said.

A big part of Netflix’s problems are its high prices in a very cost-conscious market. It lowered fees late last year, making it more competitive but still significantly more expensive than competitors.

It charges 649 rupees, roughly $8 per month, for its HD streaming resolution plan that allows use on up to four devices. A similar plan from Disney costs 299 rupees. The Netflix mobile-only plan for one device is 149 rupees for one month, while Disney charges the same for three months.

Analysts say that Netflix’s branding as a premium service may make it reluctant to cut prices further, but that means its best, if not only, path to significant subscriber growth is to expand its TV slate.

According to two sources from Indian producers, Netflix tends to take much longer than competitors to commission shows and is less adept at providing feedback to content developers.

Netflix did not address this criticism in its response to Reuters.

Even with the addition of new South Indian shows to its pipeline, Netflix still lags behind its competitors. For example, last month Amazon announced 22 new original TV shows, eight of which are in Tamil or Telugu.

According to a producer who said he was in talks with Netflix, “Netflix is ​​lagging behind Amazon, Hotstar, and Sony Leaf because it’s still up and running, while others are already out or about to be released.”

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