A boy watches a movie on his mobile phone in a cot on a pavement in Kolkata, India. Picture: REUTERS/RUPAK DE CHOWDHURI
A boy watches a movie on his mobile phone in a cot on a pavement in Kolkata, India. Picture: REUTERS/RUPAK DE CHOWDHURI

Netflix and its rivals are facing a price war in India as a jump in the cost of watching video on mobile phones threatens to slow demand in what is shaping up as a key growth market globally for streaming.

The country’s three wireless carriers hiked data tariffs by as much as 41% earlier in December, leaving some customers in India, where most streaming is done on phones, with less to spend on entertainment services such as Netflix, Apple’s TV+ service — which debuted there in November — and those of local competitors.

Cheap broadband, a well-established film culture and a vast English-speaking population have helped to make India a lucrative streaming battleground, with Netflix targeting 100-million subscribers in the country, almost 25 times the customer base as of 2019. But an increase in data costs, coupled with a wider slowdown in the economy, could make customers more sensitive to how much they pay for content, just as players such as Apple and Amazon’s Prime try to dig a foothold in the market.

This is a challenge that will affect growth, as the mobile data boom has been a big factor driving adoption in India,” said Utkarsh Sinha, MD of Bexley Advisers, a boutique investment bank focused on early-stage deals in tech and media. “The Indian user has largely used data like running water without thought.”

Netflix is already trying to get ahead of the move, slashing prices by as much as half for subscribers that commit to three months or more. Most of the country’s streaming services, including Apple TV+, Amazon Prime and Walt Disney’s Hotstar have also offered discount deals in 2019 and subscriptions at prices well below those in other markets. Apple’s new TV+ service, for example, sells for about $1.40 a month in India, compared with about $5 in the US and Japan.

Netflix said in a statement that its users may value the flexibility that comes from being able to pay for a few months at once. “As always, this is a test and we will only introduce it more broadly if people find it useful,” a spokesperson in India said. Representatives for Amazon, Apple and Hotstar in India declined to comment.

As all platforms become equally competitive on content, pricing will be a key lever to pull to draw in customers and encourage churn,” said Sinha. “Netflix has introduced an India-only price, and Amazon is already subsidising its Prime offering through a package deal.”

The price pressures add to what is already a cut-throat streaming market, with about 30 operators hawking online video services in the country of 1.3-billion people. Viu, a smaller streaming player run by Hong Kong-based PCCW’s media arm, recently decided to exit the market because it lacks the cash to challenge bigger rivals, India’s Economic Times reported, citing an executive it did not name at Viu.

Free services will take a hit

Mubi, a UK-based curated streaming service, became the latest to take a crack at the market. While the effect of higher mobile phone tariffs will ripple across the industry, services that draw higher-income Indians who can easily afford to pay a little more for wireless access are somewhat insulated, said Mihir Shah, India vice-president at Media Partners Asia in Mumbai.

Free services — such as Bytedance’s TikTok and social media video sites will take a more direct hit as it becomes more expensive to watch on wireless devices, he said. In aggregate, streaming services will continue to grow, even as costs rise.

While the big streaming brands are competing on price, they’re also spending money on content to offer India’s viewers more. Netflix CEO Reed Hastings has said the company wants to become “more Indian” in its content offering and plans to spend as much as $420m to create local TV and films.

Disney’s Hotstar has drawn hundreds of millions of active users to exclusive sports programming, especially cricket, the nation’s most popular game. For its part, Apple is adding to its TV+ offering a series based on the best-selling novel Shantaram about a convicted Australian bank robber and heroin addict who escapes from prison and lands in the slums of Mumbai.

With Ragini Saxena

Bloomberg