Netflix banks on India for subscriber growth

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Netflix's next 100 million subscribers will come from India, said Netflix CEO Reed Hastings at The Economic Times Global Business Summit (GBS) on Friday, per The Economic Times. For context, Netflix last reported 117.6 million global subscribers in Q4 2017.

The company didn't disclose how many India-based subscribers it had, but Consultancy Media Partners Asia estimates this figure at more than 500,000. To help grow its subscriber base in India, the company plans to release five to six Indian originals a year, and it announced on Friday three new Indian original series it's commissioning.

India is an attractive market for Netflix for several reasons:

• Consumer spending in India is anticipated to more than double by 2025.Rising household income and economic growth are expected to boost consumer spending in the country to $4 trillion by 2025. Growth in consumer spending implies that the pool of consumers who can sign up for a Netflix subscription will increase significantly in the coming years.
• Internet penetration has grown rapidly and will nearly double by 2021. Internet penetration in India has grown nearly sevenfold since 2009, per Kleiner Perkins. Meanwhile, Cisco predicts the number of internet users in India will rise from 373 million in 2016 to 829 million in 2021.
• And Indian consumers are increasingly viewing long-form online video.Online video consumption in India grew by five times in 2017, with videos longer than 20 minutes accounting for 96% of content viewed on Hotstar, India's largest video streaming service, per WARC. This bodes well for Netflix, which tends to focus on releasing longer-form original series over short-form original content.

However, Netflix's pricing strategy may cause Indian consumers to turn to more affordable streaming services. A Netflix subscription in India costs around $7-12 per month, depending on the package, versus $3 per month for Hotstar and $15 per year for Amazon Prime, which includes access to Prime Video. Hastings said Netflix hopes Indian consumers compare Netflix's price to movie tickets, rather than a typical pay-TV subscription, according to The Hollywood Reporter. Although Indian consumers will gain more disposable income in the coming years, the amount they're willing spend on OTT services will remain limited, which may inhibit Netflix's ability to onboard subscribers in the region.

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