Netflix India Market Entry: Product and Pricing Strategy

Introduction: Netflix and the Indian Digital Market

India is one of the emerging markets for digital business and a lucrative destination for companies dealing in digital content. It is crucial for many digital content companies to establish a presence in India given the country's large population and the rapidly growing number of first-time internet users. This market holds great prospects for future growth.

One of the major companies providing digital content is Netflix, which has been announcing updates for its online platform and has indicated its intention to penetrate high-growth markets. Some of the innovations the company has developed include carrier billing and in-app subscription sign-ups — two verticals the company has formally announced. With its eyes on the lucrative Indian digital content market, Netflix has signaled its intent to create Bollywood content. Bollywood is the term given to the Indian Hindi-language film industry, the largest in India. These signals suggest the company is serious about entering India and capturing its digital content market.

According to experts, two major issues characterize the digital market in India: low credit card penetration and the fact that most new consumers will be mobile-first internet users. According to the most recent data, credit card and bank account penetration in India stands at just around 2% of the population. Netflix has attempted to address both issues through its announced plans for India. Carrier billing, for example, is a practical solution to these problems. The company cites data showing that 71% of smartphone users in India are accustomed to topping up their airtime balance. Netflix authorities claim that enabling consumers in this way is the key to success in the Indian market (Netflix.com).

Carrier billing can also serve as an effective tool for consumer acquisition in India, where the process differs from that in developed economies. Partnerships with mobile service providers could be a strong marketing proposition for Netflix, as these providers are already accustomed to managing billions of impressions daily through more than 20 customer-facing channels — ranging from SMS and top-up notifications to websites and call centers.

As an entry strategy, Netflix could consider acquiring Bigflix, the Indian counterpart to Netflix. Bigflix has been active in India for several years and, in a manner similar to Netflix, allows users to stream and download high-definition digital content through a subscription model. The subscription fee is approximately Rs. 250 per month. Bigflix's services are primarily limited to a selection of Bollywood films and some regional-language movies, and its platform is available across all devices, including desktops, tablets, smartphones, and connected TVs (Bigflix Watch Online Movie).

Bigflix also offers a movie-on-demand ecosystem spanning product, distribution, and content. Through its extensive HD movie library, Bigflix provides access to Hindi, English, and several regional-language films. Its collection of approximately 2,500 movies is considerably smaller than Netflix's library, but users can watch content without interruption from advertisements.

Acquiring Bigflix would give Netflix a ready user base and instant licensing rights to around 2,500 Indian films. Combined with Netflix's existing library of English and international content, this would create a highly competitive offering in the Indian market.

Product Mix, Strengths, and Weaknesses

A product is something produced in order to satisfy customers (Kotler, Philip, and Gary Armstrong, 51). Netflix's product mix is extensive. The most common product form is its movie library, accessible online through smartphones, laptops, tablets, and connected TVs. The company also offers users access to thousands of popular television shows via online streaming against a subscription fee. In addition, Netflix offers a mail-in DVD service, through which DVDs are delivered to customers' homes on demand. This tangible product offering has given the company a competitive edge over rivals.

The product range is accessible through three subscription plans: online streaming only, DVDs without streaming, and DVDs combined with streaming — the last of which was introduced in 2012 (Netflix.com). Products are further differentiated by picture quality (high-definition or standard) and the number of screens on which content can be watched simultaneously (Netflix.com).

Netflix thus offers both tangible and intangible products. Mail-in DVDs are tangible, while online streaming is intangible. The intangible products are available on platforms such as Xbox, PlayStation, and Wii, and the streaming service is also compatible with smartphones, making Netflix's content accessible anywhere with an internet connection (Varadarajan).

A primary strength of Netflix's product strategy is that the company does not produce content itself. The movies and TV shows are created by third parties; Netflix's role is to act as a distributor by acquiring rights and delivering content to consumers. This significantly reduces production risk.

The intangible nature of the online streaming product means it can be accessed from any location with an internet connection. Users simply log on to the website, browse the content library, make a payment, and begin watching. Furthermore, content can be downloaded or streamed across multiple device types — PCs, laptops, smartphones, tablets, and connected TVs — eliminating compatibility constraints (Varadarajan).

In terms of content quality, Netflix's content library is substantial. Agreements with major production companies — Disney, for example — grant access to highly popular films. The company's original productions, such as House of Cards, have further strengthened its content offering. The mail-in DVD collection is similarly impressive.

The primary weakness of Netflix's product lies in its dependence on internet infrastructure. Since product delivery depends on connection quality, the company has no control over network speed or reliability. Slow internet connections — a common problem in India and similar developing markets — can hinder sales even when demand exists.

The mail-in DVD service introduces inventory management challenges. Delays in delivery can frustrate customers, and DVDs may be damaged or lost in transit, leading to customer attrition despite product quality.

Additionally, Netflix's subscription model requires users to return one rental before receiving another, which may inconvenience some customers. For users who watch only one or two movies per month, subscription costs may feel disproportionately high.

Brand Name, Brand Image, and Brand Equity

Netflix is a global brand. Though primarily established in the U.S., the company plans to expand into emerging markets, particularly India and China, where internet user bases are growing rapidly. Netflix currently has approximately 50.65 million subscribers globally, and its brand image is one of its strongest assets for entering India.

With only Bigflix offering comparable competition in India, Netflix can leverage its globally recognized brand name — which is already known among Indian internet users — to gain a head start in the market. A large portion of Indian internet users are familiar with Netflix's products and services, and the company's reputation as the global leader in digital content streaming gives it a significant marketing advantage over local providers such as Bigflix. The brand name and brand image of Netflix will therefore be critical factors in its Indian market entry strategy.

For Netflix, the augmented product encompasses the pre-sale support provided through the accessibility and user-friendliness of its website, where users can search for movies or TV shows with ease. Product augmentation can also be extended during the purchase process through guided purchasing assistance and after-sale support to resolve any viewing issues. In India, where a large proportion of new internet users are accessing digital content for the first time, user-friendliness and robust customer support are critical enablers of user acquisition.