In Indian Media Push, Amazon And Netflix Fight Each Other

Proof of a rising foreign presence in India’s fast-growing online entertainment business is the drama series Inside Edge, launched by Amazon to rave reviews in June.

In the hope of capitalising on the explosive recent growth in smartphone penetration and data consumption, US giants Amazon and Netflix are both ramping up investments, creating expensive new Indian content. But executives of India’s established television companies warn that the US groups will struggle to apply their standard playbook to frugal Indian consumers and therefore the U.S. giants face stiff competition from India’s television companies investing in online platforms of their own.

James Farrell, Amazon’s head of video content for Asia-Pacific says that compared to the “much lower quality” television shows previously produced in India, Inside Edge was “certainly more expensive”.

As part of Amazon Prime — the service that also offers perks such as faster delivery of products, it is available, along with a suite of international and Indian films. And as Amazon tries to lure viewers who could become loyal customers of its broader ecommerce business, Prime membership costs $99 a year in the US — but less than a tenth of that in India, the lowest rate offered in any market.

“Now more than half our new customers are coming from the video service . . . and the Amazon universe is pretty fantastic once you get in,” Mr Farrell says.

Since launching in India in January 2016, Netflix has also been building its presence there. Inside Edge, focused on cricket and corruption, and a second about a female homicide detective in New Delhi are two examples of its plans to film two new Indian drama series announced by the company this month.

But Sudanshu Vats, chief executive of Viacom18, one of the country’s largest television networks that Netflix will find India an utterly different proposition to the US and other developed markets and the company, unlike Amazon, has not slashed its subscription rates.

“If they continue to have global pricing in India,” Netflix might attract a maximum of 3m subscribers, Mr Vats predicts. “That’s still a very small number in the Indian context; it’s scratching the surface. It’s a very good business model but it doesn’t scale.”

it is targeting “the top end of the market” with its pursuit of “strong, quality titles”, Jessica Lee, Netflix’s head of communications for Asia, says.

“At this point, we are keeping pricing fairly consistent across the world . . . India is a massive market and there’s still a big potential with early adopters, world travellers,” she says.

Amid a price war in mobile services instigated by Reliance Jio, backed by India’s richest man Mukesh Ambani, data consumption is surging, however. With Jio subscribers alone consuming 1.7bn hours of video each month, it helped drive national mobile data consumption from 200m gigabytes to 1.2bn per month, Jio claims in the six months since its September launch.

The intensifying competition is unalloyed good news for some in the industry. At a reported asking price of $1bn, an opportunity to take advantage by pursuing sale talks on its library of more than 3,000 films, is seen by Eros International, a Mumbai-based film distributor.

By what consultants at Deloitte described in a recent report as “rampant piracy”, returns for the mainstream media industry have long been held back. with films downloaded in their millions from websites based mostly in North America, they estimate that the problem costs the sector Rs190bn ($3bn) a year.

“Piracy is a big problem but you have to live with it,” says Sushilkumar Agrawal, chief executive of film distributor Ultra Media. “We’re not going to go into the street and fight with people, and this is at the bottom of the police’s list of priorities.”

(Source:www.cnbc.com)

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Categories: Economy & Finance, Strategy, Sustainability, Uncategorized

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