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Netflix is one of the most popular subscription based “Over the Top” or OTT platforms. Netflix is one of the most enjoying platforms, which provide a platform to its members to enjoy TV shows, movies on “Internet-connected devices”. The objectives of the study are to analyse factors that determines success of business operations in India. The study is going to analyse Netflix competition in India by using “Porters 5 Forces model”. Furthermore, study also aims to analyse the factors, which drives Netflix to enter into India’s market. It will also conduct a strategic audit global strategy of Netflix for entering into India.
The threat of new entry (Weak force)
Threat of new entrants in the entertainment sector in India, is high as there are several existed players in the market. Economic growth is the primary element because of which new entrants are started entering into this industry (Gupta, 2017). In order to enter the existing market of India in the entertainment industry, which is extremely competitive, a lot of initial investment would be required by the new organisation. The existed players were Sony Liv, Eros Now, “Hot Star” “Amazon Prime”, “Zee 5”, “Jio TV”, and “Alt Balaji”.
Apart from that, even if the organisation somehow manages to enter the market, due to the presence of extreme competition it will not be possible for them to establish themselves successfully in the concerned market (Kumar, Gupta & Dixit, 2020). This made it easier for Netflix to operate in India without any major challenge in the form of the threat of new entry.
The threat of substitution (Strong force)
International Marketing Management theory represents that it primarily focuses on external environment and organisation (Gnizy, 2019). Therefore, with the help of this theory, Netflix can identify their external environment. The threat of substitution deals with the ease with which a service or product offered by industry is replaceable or can be substituted with another appropriate alternative. In this respect, it can be said that Netflix is experiencing a strong force. In a country like India, people still prefer to download the content and watch it on their phone without having to pay for that (Sull &Turconi, 2021). Many people cannot even afford the subscription fee. Apart from that, there are also large sections of people who go to theatres to watch the movie on the large screen and do not prefer to watch movies to a computer or mobile screens.
Bargaining power of buyers (Strong force)
The bargaining power of buyers is high in the entertainment industry, which exerts a strong force on the business operation of Netflix in India. It is due to the multiple options that are available to the Indian population from its competitors in the entertainment industry in the form of Hotstar, Sony Liv, Zee entertainment, Amazon prime as well as Bollywood movie-making industry. Netflix has to perform their best because of this, as one wrong move would make their customers switch to the services of its competitors as they can always bargain for quality service (Lotz, 2021). Moreover, the average population in India is 28.4 years, which is favourable for Netflix (Forni, 2020). In addition, the proportion of total Indian population is approximately 17.7% of the global population.
Bargaining power of suppliers (Strong force)
The bargaining power among suppliers is also extremely high in the entertainment industry. The media and entertainment companies have to fight among each other in order to get the telecasting rights of their movies or shows on their platform (Singh, 2019). Due to this strong force of bargaining power, the suppliers often get the financial benefit as these organisations often end up paying higher than what is actually required to win the telecasting rights from original producers of content. As usage of internet in India is growing with over time, it is favourable for Netflix. Netflix is providing its content on internet-connected device; it is easier for Netflix to reach big audience in India.
Existing competitive rivalry (Strong Force)
Existing competition in India in the entertainment industry is extremely high. There are many big companies in the entertainment sector that are fighting among each other to gain the much required competitive advantage (Anute & Ahire, 2020). The high competition for Netflix comes majorly in the form of Amazon Prime and Hotstar, which have successfully established their business and are big players in the concerned industry who are taking all the necessary measures to give tough competition to Netflix.
Netflix would have considered many factors before entering the highly competitive entertainment industry of India. Some of the crucial factors, which they would have considered, has been analysed and explained in detail below.
The scale of Bollywood Industry
The Indian Bollywood industry is one of the largest movie producing industries in the world after Hollywood, producing thousands of movies every year. This scale of Bollywood would have attracted Netflix to enter India as there are so many movies being produced by different production houses. Not all the people get to watch them in theatres due to the high price of tickets and unavailability of time. Netflix offers them an option to stream it from the comfort of their homes whenever they want with a minimal subscription fee (Netflix.com, 2021). Additionally, the multiple restrictions put by the censor board and pressure of performing in box office would have acted as a major positive factor as the original content produced by Netflix is attracting a large set of audience particularly young adults due to their better quality of storytelling (Forni, 2020).
The large population of India is also one of the important factors that Netflix would have considered before entering the Indian entertainment industry. The population of India is such that there is an audience available of every kind having different likings and belonging to different economic classes, which gives them a large set audience for their original content (Foxman, 2020). The large population of India also gives them the availability of a large customer base for digital streaming which in turn would help them generate large revenue.
The Indian population has a great craze for different kinds of videos and movies. The Indian population is greatly attracted to innovative ideas and thrilling movie scenes. It can be seen from the sources that Netflix and its services mostly attract women over the age of 15 to 24. According to sources it can be seen that 2,5 million Indian women are connecting themselves to Netflix as their entertainment medium and aged 24 to 35 are also preferred to engage most of their time in Netflix (Statista.com, 2020). Among 15 to 24, age groups are highly engaged themselves as their recreation purpose after a heavy educational routine. Moreover, Netflix provides web series on innovative ideas and this is very eye catchy for the modern generation. Most women between the ages of 24 to 35 years old prefer this medium after their household and office work. This Netflix helps to relieve their stress by providing various series, movies and videos in various languages. With the help of IMM theory, Netflix will be able to identify difference between international marketing and domestic marketing (Morgan, Feng & Whitler, 2018).
Netflix contains various web series and movies in different languages. It helps to enhance the culture of different mediums worldwide. Besides Hindi and different Indian languages, now most of the Indians prefer Web Series and movies in English. Along with Bollywood, Netflix provides various Hollywood web series and movies at the corner of the house. Moreover, this web series and movies help to enhance different cultures among the people of India. They are attracted by other cultures and implicated in their real lives. According to data, it can be seen that due to the large number of Indians engaging themselves in Netflix, it enhances the revenue of Netflix and helps to promote social standards (Economictimes, 2018).
Netflix provides different ideas related to its monthly subscription plan. They mainly focused on a pocket-friendly approach over their plan. Due to most of the young generation using this medium for their entertainment purpose, they will not be able to allow themselves in costly packs. Netflix mainly focused on their plans that are acceptable for all levels of people. This drives a large number of Indians to subscribe to Netflix as their entertainment medium.
Due to India's second position as an internet user after China, it helps to enhance the market of Netflix. Most of the people of India depend on movies and series as their entertainment purpose. It helps to enhance revenue collection for Netflix from their users. Bollywood always acts as an emotion for Indian people. They always tend to commit themselves to Bollywood as their entertainment. Moreover, in some cases, it can be seen people learn various things from these movies. Like, new trends, new culture etc (News18.com, 2021).
The business strategies of Netflix are based on competitive advantage and growth. The idea of Netflix is based on "digital media markets”, "entertainment content production", free online access and avoiding intermediaries. All these ideas are analysed and evaluated in this report. There as follows:
Digital media marketing includes social media and internet sites which helps to marketing their services and products (Jackson, Janssen & Gabrielli, 2018). As Netflix operates through digitalisation processes, hence, it promotes the adoption of various digitization techniques for streaming online videos and for watching movies and web series. According to sources, it can be seen that internet users are present in large numbers in India. Taking these advantages, Netflix provides a better entertainment option for Indian people by focusing on Bollywood as their medium to drive the mind of Indians towards the facilities of Netflix.
Entertainment content production
Social media entertainment become an important factor in emerging industry (Cunningham & Craig, 2019). Indians mainly depend on Bollywood as their entertainment option to reduce their stress and recreational process. This important factor is used by Netflix to drive the attention of Indians towards their medium. They focused on producing entertainment content by focusing on various languages to attract people with different languages and cultures. Moreover, they tie up themselves with various production houses of India to produce different web series and movies in the Indian language or Hindi. This attracts the Indian people towards Netflix.
Free online access
If clients of Netflix subscribe to the services rendered by Netflix, they can enjoy free access to the contents for the entire month. Netflix provides an opportunity to its client regarding unlimited views of the contents of Netflix. This can be considered as an advantage from Netflix. Hence, clients can enjoy uninterrupted services during the month of the subscription and they can enjoy happy leisure time (Rancord, 2019).
In the case of Netflix, they release their podcasts, web series, and others directly on their platform. They do not have to rely on other external factors or agents for releasing their content. This can be considered a cost-efficient practice, as there are no intermediaries in their releasing process. On the other hand, Bollywood has to rely on external factors before releasing its movies on the silver screen. This includes additional cost, which they recover from the movie tickets. Hence, at this point, Netflix is having an edge over Bollywood movies
According to sources, it can be seen that the revenue growth of Netflix enhanced rapidly in the year 2020 related to 2018 and 2019. As per the figure, it can be observed that in 2018 Netflix has earned Rs.0.58Billion. However, next year, in 2019, it will earn Rs.4.71billion. Hence, it can be satiated that the revenue graph of Netflix is moving upward at an increasing rate. Similarly, in 2020, Netflix has earned Rs. 9.24 Billion. Hence, this figure has provided a vivid idea about the growth of Netflix among Indian audiences and the hike of the content of Netflix among the modern generation of India (Statista.com, 2020).
It can be concluded from this report that Netflix made an effective market in India by applying various strategies related to their sustainable business over the years. These strategies include various factors that enhance the interest of Indians in their platform. They have identified crucial factors that have led to the growth of Netflix in Indian origin. Moreover, they analyse the users to understand their need to evolve innovative ideas to enhance their market.
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