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The Rise of The OTTs

The video streaming market is likely to explode to $5 billion by 2023. Sit up and watch

Alfonso Cuarón’s masterpiece Roma won three awards at the 2019 Oscars but it ended up dividing Hollywood after noted filmmaker Steven Spielberg’s outburst that Netflix movies should only compete with TV releases at the Emmys and not with movies at the Oscars. But then the video-streaming service has always pushed the envelope — be it in the way it uses technology or creates cutting-edge content that’s close to a cinematic experience. Spielberg’s rant is proof of Netflix’s growing clout in the entertainment business. Despite establishing supremacy in video streaming, Reed Hastings, the 58-year-old founder of Netflix is going all out to create original blockbuster content. It has a target to meet — of bagging more than 500 million subscribers across the world to keep up with investor expectations that has driven the Netflix stock to trade at higher multiples of 130x. It is one of the favoured tech stocks alongside Facebook, Amazon, and Google.

Clocking over $16 billion revenue globally, Hastings is banking on emerging markets such as India to fuel Netflix’ growth outside of developed countries. The video-streaming major is looking to garner 100 million subscribers in a country that it streamed into in 2016. “The next 100 million is from India,” he had said at an event early last year. To understand why Hastings is bullish on India, one needs to get the context — of 139 million subscribers globally, Netflix has about 59 million subscribers in the US vis-a-vis 170 million pay-TV homes (100 million cable TV and 70 million DTH) in India.

Though the most expensive service at Rs.500-800 a month in India, the ad-free video streamer has already turned profitable in the first year of operation, eking out a net profit of Rs.2 million for FY18 on revenue of Rs.580 million. The numbers are just for seven months starting September 2017, post the transfer of business from Singapore to the Indian entity. Hence, on an annualised basis, Netflix would have easily clocked Rs.1 billion for the fiscal.

Not surprising, Hastings is putting his money where his mouth is. Netflix has announced India-centric 12 original web series and 13 original films. After starting out with the launch of a not-so-appreciated Brahman Naman, an Indian sex comedy, the streamer tasted success with Sacred Games and Lust Stories.

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