Success of ‘Sacred Games’ Means Netflix Is Here to Stay – But How?

How does Netflix plan to win a billion consumers, and what is its strategic differentiator?

"Netflix and Chill” is a parable truly coming alive in India.

In less than a month, the first Indian Netflix original Sacred Games and the anthology film it acquired, Lust Stories – scripted and directed by the biggest names in Bollywood – have helped catapult the online streaming channel, at least in perception, to the front of the video streaming space in India.

Netflix has garnered appreciation for quality content that has both global and local appeal previously unheard of on Indian TV. At the same time, the message to its competitors is clear – this is just the beginning. Netflix is here to stay.

The only question – how?

What is Netflix’s Strategy?

A company once only concerned with DVD rentals has today managed 125 million subscribers in the online streaming world, according to Reuters. CFO Reed Hastings at a conference in New Delhi in February even predicted that the next 100 million will come from India.

Indeed, Indians rank high among the top downloaders of content on mobile phones. Yet, the reality is that Netflix has approximately 4.6 million subscribers in the country.

So how does it plan to win a billion consumers, and what is its strategic differentiator?

For Netflix’s Chief Content Officer Ted Sarandos, the company has put its bets on regional and local content that has global appeal. Sacred Games is a case in point. Speaking to The Hindu, Sarandos said:

Coming into a new market, it helped us to understand the storytelling here. They were attempting to develop it for American TV for a couple of years. As soon as it fell out of that deal, we jumped in on it. We are not making an American version; we are making the ultimate Indian version. And if we do it well, it will travel around the world.

Ted Sarandos

Netflix is “Glocal”

According to a report published by Reuters, Netflix plans on spending $8 billion on content worldwide in 2018 alone, and is looking towards big players in Bollywood to produce most of its initial content. Upcoming thriller Bard of Blood is part of Netflix's deal with Shah Rukh Khan's Red Chillies Entertainment.

"Netflix has shown that Indian stories have a global audience and we would love to use this platform and its reach to tell more stories," Khan said in 2017.

Netflix is indeed quick to adapt, and its glocal appeal is shining bright upon India. Both Lust Stories and Sacred Games have sought to synthesise the Western exposure Netflix has brought to millennials and the diverse domestic content Bollywood has to offer. It also welcomes mainstream, commercial films and comedy stand ups – most famous being Vir Das. Indian books are also a favourite.

In the coming year, Netflix will commission five to seven series, Erik Barmack, vice-president, International Originals, told Scroll.in.

We are trying to create a cultural movement – a new way to do TV in India. We will be treating the show like a local production but also a global story.

Erik Barmack

Netflix’s New Age Model

At the Economic Times Global Business Summit, Hastings said Netflix was willing to tap into India because of availability of cheap data and “robust internet”.

Because of the rise of OTT (over the top) content and expanding footprint of 4G services, streaming has been made much easier in India.

About a million Indians are employed in the Indian media and entertainment industry today. Imagine what that number could be as Indian storytelling becomes a byword for great entertainment and the audience grows around the world.

Reed Hastings at The Economic Times summit

According to a KPMG report, the number of video-capable devices and connections are expected to grow 2.2-fold by 2021.

Netflix also cashes in on being the only ad-free network in the Indian market.

What’s unique about the Indian market is the evolution of pay television. It is extremely inexpensive and advertisement supported. So, basically everything at home has a lot of ads in it, while Netflix is the only ad-free network.

Reed Hastings to Economic Times

What’s in it For Indian Creators?

Netflix's allure is in its artistic freedom – to produce, to direct, to act, and tell stories that the big screen is apprehensive of. All this and more is attractive to a Bollywood that is now tired of constant run-ins with the Censor Board.

"Pehle dar dar ke karte the, abh sab khul kar karenge,” (earlier we worked in fear, now we can do it fearlessly) Nawazuddin Siddiqui told The Hindu.

When the Censor Board banned Unfreedom, a film about lesbian romance and religious fundamentalism, Netflix was the only online streaming source to license the film in April.

Delivering the Last Mile

In India, Netflix remains a premium service due to its subscription price. Their revenue model has to complete with the likes of Hotstar that earns from advertisements as well as subscription, and Prime Video that costs much lesser. There is a lot to make up.

Application analytics predictor App Annie predicted Hotstar to have the most active subscribers in 2017 (63 million) followed by Voot and Amazon Prime, respectively. Netflix is fifth in the list, so it’s then only a peg in a widening digital space.

However, Netflix remains adamant that it will keep its prices the same and reorient its focus on great content as a niche strategy to make its mark in the Indian market.

Our first priority is getting the content right, to a point so great that people don’t mind paying for it. 

Jessica Lee, VP of Communications at Netflix, to Forbes

Another concern is regarding DTH services, which may still be the cheaper option in India. In the US, cable TV is more expensive ($80 onwards) than Netflix ($10). The reverse is true for India. The Indian media industry also falls prey to piracy. India will climb from eighth in the 2016 rankings ($700 million piracy losses) to third in 2022 ($3.1 billion piracy losses).

While Netflix has garnered appreciation for quality content previously unheard of on TV – Stranger Things, Narcos, The Crown – it may take a long time to tap into the mass of the Indian market that has very diversified interests. At the moment, it is juggling to keep a precarious balance – of bringing quality local/regional content and meeting demands for international content that forms the bulk of America’s popular culture.