Will Netflix change the way India consumes content?

The arrival in India yesterday of Netflix, the subscription-based online streaming service associated with shows like House of Cards, Breaking Bad and Walking Dead, has created much excitement. While most online platforms in India provide free content, experts feel Netflix’s arrival is good news for paid content consumption.

US-based Internet TV service Netflix's arrival has generated a lot of buzz among consumers of online video content. Netflix here has three subscription packages priced at Rs 500, Rs 650, and Rs 800. For the first month unlimited streaming has been offered for free. Its pricing was the key issue in a country where users have free access to videos, even though some platforms do offer the ‘freemium’ model with part free-part paid content

Will Netflix Work In India? #Tellafaqs!

— afaqs! (@afaqs) January 8, 2016

Netflix is mainly known for its content catalogue which includes its original shows, full-length movies, documentaries, stand-up comedy specials and kids series.

So, how does this development impact the over-the-top (OTT) space and paid content consumption? Will Netflix sustain in a market that has a substantial base of illegally-accessed and pirated online content? Industry experts provide us their view.

Gaurav Gandhi, chief operating officer, Viacom18 Digital Ventures

If we look at price arbitrage, the US cable TV ARPU (Average Revenue Per User) is around USD 80-100, while Netflix's subscription rates are in the bracket of USD 8-10. That is a huge price arbitrage advantage that Netflix and other OTT operators had in the US. The Indian cable TV market has one of the lowest ARPUs in the world. Netflix's basic subscription plan is virtually double. Even if one takes in the premium HD packs of DTH and cable companies, there is not really any price advantage or arbitrage. Also, when the above pricing is seen in the context of high telecom data costs, it becomes another challenge.

The OTT explosion in India is happening primarily on mobile, so long format consumption at high data costs on mobile is a completely different paradigm here. Add to that the current challenge of bandwidth, which can change a bit with 4G and fixed line broadband.

I think Netflix will play the role of a 'category expander' for the online video market, as it is the only subscription-based VOD service with the kind of content only it has.

T Gangadhar, managing director, MEC India

Given the sheer quality and breadth of content, especially the TV shows, I feel Netflix has hit the sweet spot on pricing. The volume of content will only go up. Going by reactions on social networks, it seems like India is over the moon -- I guess that indicates that the pricing is a hit.

Will this boost paid content? While it's too early to predict, it may well be. When great content is available online, cord-cutting is an inevitable outcome. India is quite savvy when it comes to international content, thanks to torrents. This generation will now have the choice to watch the same high-quality content via legitimate means. This will get a massive fillip with 4G and faster broadband infrastructure.

As far as content catalogues are concerned, they are a function of complexities related to geographic rights. Its TV-show catalogue seems quite robust, so does the kids-targeted content. Most of Netflix's own flagship shows are available, so that's a great spread. Once the distribution rights are sorted out, I am sure the volume of movies will see a big uptick.

Uday Sodhi, executive vice-president and head, digital business, Multi Screen Media

This is a good development for the entire digital ecosystem, with it becoming a larger play for all digital players as more and more adoption of online content where online payment methodologies, as well as advertising and brand support will slowly start falling into place. We've seen significant improvement in infrastructure, too. In terms of pricing, I think it's more an international pricing, and we'll have to see how the consumer adopts it, and over a period of time, pricing for content will depend on cost of content and cost of bandwidth.

The market today is still nascent, and there is room for a lot of players yet. We will play to our strengths and Netflix will play to its strengths, and as markets evolve, consumers will choose content that they want. We are now seeing more and more players come out with paid options, especially for premium movies and shows. It is exciting to see early adopters use their credit cards and mobile payment options. We plan to integrate digital wallets, so there's a lot of innovation taking place. Basically, smartphone adoption, bandwidth improvement, and payment options, are the key to these businesses maturing.

Subin Subaiah, chief executive officer, Spuul Global

It is a myth that people won't pay for content -- people won't pay for bad content, or bad user experience, but if you have great experience and good content that meet good price points and proper access across devices, people will pay. India is an aspirational market where one will pay for quality. Netflix surely knows that there is a niche segment which enjoys its content, and it is one which will not receive any resistence vis-a viz pay for quality. And, within this segment, Netflix probably has the best content available. There is no alarm of domination here, because of the way the market has classified itself, be it propensity to pay or to consume, and moreover, there's plenty of room.

In terms of efficient online consumption in India, one could argue that it's going to take a while for a certain homogenity to set in, so where infrastructure is not friendly, our own focus has been more on getting consumers to download content.

Overall, Netflix in India will educate Indian consumers, take them off piracy, and further help in the revolution of paying for content.