Netflix India earns twenty times more money per user than Hotstar

Netflix earns twenty times more money per user than Hotstar
Hotstar has been installed on nearly 46 percent of the handsets
Netflix reaches only one in ten users

Netizens looking for quality content:

Over the last few years, there has been a massive increase in the demand for smartphones. More and more consumers now pursue their content online through these devices so it is natural for them to also stream shows on the same device. According to reports, there are over 1.1 billion wireless devices and with the high demand for the same, this number will certainly increase as time goes by.

In India alone, smartphone users have grown tremendously and the online streaming platforms have become a major source of their entertainment.

Increasingly, more and more netizens are looking for quality content and prepared to pay the same price. And premium online content streaming providers are taking advantage of all benefits including monetary benefits.

Netflix being premium:

Netflix, a US-based streaming giant known to offer premium paid content product, has a higher number of paying customers and ARPU than other Indian OTT platforms.

Share of OTT platforms in India source: quartz

The Indian unit of Netflix, the world’s largest online video streaming company, became profitable in its first year of operations, eking out a net profit of Rs 20.2 lakh for 2017-18. Netflix India’s reported revenues for FY18 was Rs 58 crore.

Netflix’s average monthly order value (AOV) in India as of March 2019 was Rs640 ($9.36) per client or almost Rs8,000 per year. In contrast, the AOV of a Hotstar customer stood at Rs376 per year.

Netflix tapping the English-speaking population:

Netflix earns twenty times more money per user than Hotstar, India’s most popular streaming video platform.

Hotstar vs netflix (source: quartz)

A significantly higher reason Netflix can charge is because its strategy is skewed towards prosperous customers. Since its launch in India in January 2016, the over-the-top (OTT) platform has been targeting English-speaking customers in India with a penchant for Western displays.

Netflix’s new affordable plan:

Netflix is the country’s most costly OTT service, charging more than twice what local rivals are charging. The firm has tested the country’s Rs250 mobile-only subscription package — half the price of its fundamental plan — but no formal launch is yet in order.

Despite finding takers ready to shell out big bucks, it still captures a small market share. For example, among the million-plus smartphone users studied by Kalagato, Hotstar has been installed on nearly 46 percent of the handsets, whereas Netflix reaches only one in ten users.

The rise of Netflix:

While the company entered India as part of its global roll-out in January 2016, in April 2017 when it started commissioning content, Netflix was registered as a Limited Liability Partnership (LLP) in the country. However, the latest numbers reflect seven months of finance from September last year after the actual transfer from Singapore to local distribution entity. The revenue numbers translate into approximately Rs 100 crore for the entire FY18 on an annualized basis.

Market share of top 5 OTT players (source: quartz)

Content is the king:

However, Content is still king with or without pricing hacks. “There are some advantages of cross-pollination, such as product distribution, customer acquisition, etc., but the price is not the only determinant as viewers want the best content,” said Aman Kumar, Kalagato’s Chief Business Officer.

So it’s no wonder that Netflix is lined up in India with an impressive slate of initial programming.