FOCUS-Netflix goes to “Tollywood” and beyond for long-sought Indian growth

By Shilpa Jamkhandikar

MUMBAI, May 24 (Reuters) – Devoted fans in southern India worship film and TV stars as gods, erecting huge statues of actors bathed in milk as part of prayer rituals for the success of a film.

This is the market that Netflix Inc, a streaming latecomer in India, is now eager to tap into. It has a range of Indian movies in various regions to showcase, but for TV series – essential for retaining viewers to its platform – it has only a few hit shows in Hindi and no TV shows in regional languages. .

The American company has given the go-ahead to at least six TV shows in South Indian languages ​​this year, aggressively seeking deals in Tollywood, as the Telugu film and TV industry is known, as well. than in the Tamil film and television industry, six people with knowledge of the company’s business. plans told Reuters.

As prolific as Bollywood in Hindi and known for its flashy, action-packed content, South India’s film industry has been doing extremely well lately, dominating Indian box office revenue so far this year. .

Netflix has “had meetings with just about every producer and filmmaker here. You’ll see the results of those meetings by next year,” said one of the people, a Tollywood producer. All sources spoke on condition of anonymity, fearing they could lose work opportunities.

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

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 search for growth takes on new urgency.

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

SMALLER THAN ITS RIVALS

In India, Netflix is ​​overtaking rivals in terms of revenue share in the subscription video-on-demand market, with a 39% share in 2021 compared to the 23% of Disney Plus Hotstar, its nearest rival, according to Media. PartnersAsia.

But analysts say its subscriber base is too small for comfort. Alongside Netflix’s 5-6 million, Disney Plus Hotstar, which owns the cricket broadcasting rights, has about 50 million. Local rival Zee5 has around 20 million and analysts also believe Amazon Prime and SonyLIV’s subscriber numbers are well above Netflix’s numbers.

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

“If Netflix doesn’t try to capitalize on this by building stronger relationships with local creatives, local studios/production companies and carving out a real foothold in India, someone else will,” she said.

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

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

A big part of Netflix’s woes have been its much higher prices in an extremely cost-conscious market. It slashed its fees late last year, making it more competitive but still significantly more expensive than its competitors.

It charges 649 rupees, around $8, per month for its highest quality streaming resolution plan which allows usage on up to four devices. A similar plan from Disney costs 299 rupees. Netflix’s mobile-only plan for one device is Rs 149 for one month, while Disney charges the same amount for three months.

Netflix’s brand 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 lineup of TV shows, according to the analysts.

According to two Indian producer sources, however, Netflix tends to take much longer than rivals to order shows and is less adept at providing feedback to content developers.

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

Even with new South Indian shows added to its pipeline, Netflix still lags behind its rivals. For example, Amazon last month announced 22 new original TV shows, eight of them in Tamil or Telugu.

“Netflix is ​​lagging behind Amazon, Hotstar and SonyLIV because it is still in the commissioning stage, while the others already have shows or are about to release,” according to a producer who said he was in talks with Netflix. ($1 = 77.7050 Indian rupees) (Reporting by Shilpa Jamkhandikar in Mumbai; Additional reporting by Nivedita Balu in Bengaluru; Editing by Edwina Gibbs)

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