In Q2 2018, Netflix added fewer subscribers than expected, sending stocks tumbling down by 10%. The company struck an optimistic tone on India in their earnings call, though, saying that the country had “lots of potential” in the future. This is literally true, considering how under-penetrated Netflix is in India — IHS Markit estimates that the company has only around half a million subscribers here two and a half years after launching. “We’re way behind YouTube and Hotstar. Those are really the leaders on the internet. There is so much TV viewing at Linear TV that could be internet viewing,” Chief Product Officer Greg Peters said, echoing a point the company’s CEO has made in the past about India — unlike other markets, TV in India is ad-supported and cheap, meaning that paid streaming services are a niche offering for the foreseeable future.

“We’re still a niche product [in India],” Peters said. “We’ve got a long way to go to expand languages and many other aspects to able to be a broad Indian product.”

Netflix in India

That beachhead so far has been one original show, and four Indian original films — all of them swept up under the company’s brand after they were made. The first original series, Sacred Games, was released this month with a significant TV and billboard advertising spend. Since Netflix doesn’t release viewing data for its titles, it’s not possible to know how successful the show has been. But location-filtered searches for discussions on Twitter that I saw indicate that the show is gaining traction mostly with desi audiences worldwide. This stands in stark comparison to Narcos, which almost immediately became a global hit, even among non-Spanish speaking audiences.

Meanwhile, Netflix has more shows lined up for India — Ghoul starring Radhika Apte comes out next month and quite a few more shows after that. Half of the slated shows have a female lead, and they seem to have much higher production values than shows that air on TV networks. Deepening this niche of high-production-quality serialized content is clearly a key part of Netflix’s content strategy in India. But movies aren’t being left behind either.

“Late in the quarter, we launched Lust Stories, a new Indian original film,” CEO Reed Hastings said in this quarter’s letter to shareholders, “which has been a major success as our largest watched original in percentage terms in any individual market in its first month.”

Transcript | Letter to Shareholders