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Online video streaming demand has surged in India amid the novel coronavirus-induced lockdown, and Netflix is benefitting from the change despite its premium pricing structure. NFLX stock is in the green.
As the coronavirus outbreak took its time, the whole situation with “staying at home” took its time as well. That also means that online video streaming demand has surged all over the globe. However, in India Netflix Inc (NASDAQ: NFLX) is profiting from the change in spite of its premium pricing structure.
There are some third-party reports that have arisen during the last few weeks that made it clear that the video streaming giant’s focus on achieving India-specific content and attracting more clients through engaging pricing plans is giving it a breakthrough in this advantageous market.
But let us take a closer look at how a brave plan of getting 100 million subscribers from India by Netflix seems to be getting its traction.
Netflix in India
As per the data released by the technology services-focused website CompariTech, Netflix had 2 million subscribers in India at the end of 2019. The company predicts that the number of subscribers rose to 2.44 million in the first quarter of 2020. That actually represents a jump of around 22%. It also predicts that Netflix could have almost 2.83 million subscribers in India at the end of the second quarter of the year.
In the nonappearance of country-specific data from Netflix, CompariTech came to these data based on the company’s results for the first quarter of 2020 and the fourth quarter of fiscal 2019.
The data also came as CompariTech used subscriber and revenue estimates from third-party sources and went on applying quarter-over-quarter growth rates seen in the last quarterly report.
Be it as it may, CompariTech admits these numbers could not be really precise. However, the company says these data still gives us an idea of how Netflix could be doing in India in the absence of any official data from the company.
If we look at it rationally, the company isn’t wrong when talking about Netflix rising in the Indian market in spite of charging a premium over rivals. Netflix seems to be enjoying pricing power in India, as 90% of Indian consumers want to pay more money for the subscription.
What’s more, third-party surveys also show that viewing hours on Netflix India have inclined considerably in the wake of coronavirus.
The main reason why users are watching more Netflix content and are willing to pay more for a premium service is because of the company’s content strategy. Just last year, CEO Reed Hastings stated that the company has set aside a war chest of $400 million in India-specific content in order to win over more subscribers. It seems the strategy is working. Also, the good part is that the company is now trying to make its content library stronger by making new partnerships and cooperations.
Possible Partnership Deal with Viacom18
Allegedly, Netflix is in negotiations with media firm Viacom18, a joint venture between ViacomCBS Inc (NASDAQ: VIAC) and India-based TV18. The company works with several famous TV channels in India, including MTV, VH1, Comedy Central, Nickelodeon, and Colors. It also has a streaming service that goes by the name of Voot.
According to the sources familiar with the situation, two companies are trying to spread their existing relationship in a bigger way that could see Viacom18 making exclusive content for Netflix as a part of a multi-year deal.
The earlier partnership between Netflix and Viacom18 happened in order to produce three originals for the Indian market – Jamtara, She, and Taj Mahal 1989.
At the time of writing Netflix stocks were up by 0.28% in the after-hours trading. During the trading session. NFLX gained 6.72% to trade at $485.64. Meanwhile, Canaccord Genuity analyst Michael Graham reiterated his “buy” rating on Netflix shares and raised his price target from $500 to $550. Bank of America Merrill Lynch added the stock to its “U.S. 1” list of top-quality investment ideas.