Amazon and Netflix look to India for subscriber growth (AMZN, NFLX)

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Amazon and Netflix have invested in cricket-focused web series in a bid to grow their subscriber bases in India, where the sport is massively popular, The Financial Times reports.

Amazon launched its drama series called Inside Edge in June, while Netflix announced earlier in September its plans to create a similar Indian drama. 

As the two companies’ US presence matures, international markets can help sustain subscriber growth. Netflix has over 100 million subscribers, while Morgan Stanley estimates there to be over 80 million Prime subscribers globally. The companies are positioned to grow in India due to increasing connectivity — the number of internet users is forecasted to reach 1 billion in 2020, up from roughly over 400 million in 2016, according to KPMG data cited by Financial Times.

• Amazon’s India video push can meaningfully grow Prime membership. More than half of new Prime members come through Amazon’s video service, according to James Farrell, the company's head of video in the Asia-Pacific region. Additionally, the company’s localized pricing strategy — Prime membership in India costs less than $10 per year — is likely to entice price-conscious Indian consumers, with other benefits like faster shipping for e-commerce purchases heightening the value proposition.
• Netflix is poised to add subscribers as well, but its relatively high price could limit growth. Netflix’s cheapest subscription plan costs roughly $8 a month in India, which is more than double the typical monthly Indian cable television price. Few members may choose to subscribe to Netflix's relatively expensive streaming service, especially as its content isn’t entirely localized to India. The service may attract at most 3 million Indian subscribers with its current pricing strategy, according to Viacom18 CEO Sudanshu Vats. 

However, Amazon and Netflix will need to contend with the original content push of local Indian media companies. Indian media company Star India, which has over 650 million monthly viewers, creates roughly 18,000 hours of content every year, according to the company’s chairman Uday Shankar. In comparison, Netflix plans to create 1,000 hours of original content in 2017. This highlights how newcomers to the market will have to sharpen their content strategies, given the vast amount of alternative content available to Indian consumers.

Preference to purchase pirated content and data price concerns could also inhibit Amazon and Netflix’s subscriber growth. Though the share of 3G and 4G connections are expected to rise by at least 20 percentage points from 2016 to 2021, many Indian consumers are concerned with the price of data usage. Many Indian consumers choose to buy pirated content from local merchants to minimize the amount they stream and their data costs. Nonetheless, Amazon and Netflix seemingly more heavily weigh the pros than cons in decisions to expand Indian presence.

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