It looks like Netflix's (NASDAQ:NFLX) problems in India are getting bigger by the day. Substantial price hikes by Indian telecom companies are already a problem for Netflix, and now, the company indicates that all's not well on the content front, either. The streaming giant has reportedly run into production issues that are affecting content quality and cost.
According to a report by Indian daily The Economic Times, the content Netflix produces in India is plagued with several pre-production issues. A lack of efficiency during the pre-production process is forcing Netflix to correct content in the post-production phase. Such a bottleneck is adding to the overall cost of producing content and hampering quality at the same time. This is something that Netflix needs to avoid in light of the latest challenges the company is facing.
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Netflix wasn't on top of its content game last year
While Netflix did manage to record 700% revenue growth in India during fiscal 2019 (which ended last March), it seems to have lost its wheels since. CEO Reed Hastings admitted last month that the company was unable to attract new users, as it lacked strong content in India. This has given rise to the speculation that Netflix will fall short of its 2019 subscriber acquisition target in the country.
A look at the top 10 most popular releases on Netflix India last year reveals that the streaming giant didn't have a solid content library. The highly anticipated Sacred Games: Season 2 -- the most-watched show on Netflix India in 2019 -- didn't live up to the hype after an impressive first season. The next Netflix India original on the list -- Bard of Blood -- was also panned by critics.
Drive -- a Netflix original movie -- has an IMDb rating of just 2.4 out of 10. This was the fifth-most-watched product on Netflix in India last year. Another Netflix film -- House Arrest -- bit the dust and ended up with an IMDb rating of just 5.6.
In all, it can be said that Netflix lagged on the content front in India last year. This might prove costly, as rivals such as Amazon Prime Video came up with some well-received shows, such as The Family Man. The problem for Netflix is that an Amazon Prime Video subscription is much cheaper and is more feature-laden.
So, if the likes of Amazon can provide cutting-edge content at cheaper prices, Netflix's dream of achieving 100 million subscribers in India might remain just a dream. But the good part is that Netflix has recognized the problem early and has started taking corrective steps.
A course correction has begun
Netflix is now working on streamlining the content production process in India to avoid the problems it faced last year. The company is now taking the help of cloud computing to streamline the workflow and keep a tab on the production process so that content quality is not compromised and costs don't balloon. The new workflow is supposed to give showrunners better control over the production process.
The company has also decided to spend big money on creating original content for the Indian market. Hastings said last month that Netflix was on track to invest 3,000 crore rupees (around $418 million) on original content for Indian audiences in 2019 and 2020.
This -- along with an improved production workflow -- should help Netflix regain its mojo on the content front in India. And it is important for Netflix to keep churning out acclaimed content if it hopes to attract more customers, charge a premium over its rivals, and make a dent in India's fast-growing online video consumption market.
Digital marketing research firm eMarketer estimates that India is all set to overtake the U.S. in over-the-top video consumption. So Netflix needs to get its act together quickly, as India will play a critical role in determining if it remains a top tech stock in the long run.
https://www.fool.com/investing/2020/01/15/netflixs-new-problem-could-prove-costly-in-this-ma.aspx
2020-01-15 09:00:00Z
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