wordpress blog stats
Connect with us

Hi, what are you looking for?

India fizzles out of Netflix earnings, as company forays into gaming and TikTok-esque feature

Netflix said that it is not interested in any acquisitions this year and is instead, looking to increase user screen time, expand mobile-only plans, and invest more in gaming. 

India has been reduced to a single mention in Netflix’s earnings communications over Wednesday — a single offhand remark about the situation “tightening up” in the country in the previous quarter. Netflix seems to have put India on the back burner as it faces steep challenges in mature markets. The company has on more than one occasion (including this one) called TikTok a competitor, and now has a TikTok-esque short video tab on its mobile apps. It is also launching a gaming vertical, and has launched its mobile plan — first tested in India — in more countries. All this to say, the company is looking to keep its users engaged and stop them from leaving the service.

And leaving the service they are — Netflix lost 430,000 more subscribers than it gained in Q2 2021 in the US and Canada, a rare occurrence. The company also faced production troubles over the first half of the year, impacting the regular releases of content on its site. “The pandemic has created unusual choppiness in our growth and distorts year-over-year comparisons as acquisition and engagement per member household spiked in the early months of COVID,” the company explained in its letter to shareholders.

That might explain why India isn’t too high up the company’s priorities — or case studies list — right now. Last quarter, Netflix admitted it was “still figuring things out” in India. It recently fired Srishti Arya, the international films originals head for India. Films account for a much larger share of viewing for Netflix in India, which is not usually the case for the company in other countries.

Consolidation a challenge

As Netflix’s rivals in the US consolidate into bigger media giants that can take on the streaming pioneer, the company is starting to face an existential threat in its biggest markets. But the company said it didn’t have any ‘gotcha’ acquisitions in mind just yet:

Advertisement. Scroll to continue reading.

The planned combination of Warner Media Group and Discovery and Amazon’s pending acquisition of MGM are examples of the ongoing industry consolidation as firms adapt to a world where streaming supplants linear TV. The industry has consolidated materially over the years (Time Warner/AT&T, Viacom/CBS, Discovery/Scripps, Disney/Fox, Comcast/NBCU/Sky, etc.) and we don’t believe this consolidation has affected our growth much, if at all. While we are continually evaluating opportunities, we don’t view any assets as “must-have” and we haven’t yet found any large scale ones to be sufficiently compelling to act upon. — Netflix Q2 2021 Letter to Shareholders

The company said its biggest priority was to increase the 7% of user screen time (measured by Nielsen) they currently account for. Saying that the shift away from linear TV to streaming was far from over, the company argued that it had a long runway to grow in this respect.

  • Still early days: The company said that despite the impending competition from heavyweights, there was nothing but growth ahead. “Internet streaming has been amazingly consistent, prolific. As you get new competition in, you get validation, more reasons to get a smart TV or unlimited broadband. So, I think, for at least the next several years, the growth story of streaming as a whole is very intact,” Netflix co-CEO Reed Hastings said. CFO Spencer Neumann pointed out, “And if you go overall, we’re roughly 20% penetrated in broadband homes. And we talked in the last call that there’s 800 million to 900 million, either broadband or PayTV households around the world outside of China.” He added, “And then, if you look at the range from an APAC region where we’re only roughly 10% penetrated, so clearly, early days.”
  • Mobile plan working out: The mobile plan that was first tested in India for a cheaper price than Netflix’s other plans was working in the company’s favour, Chief Product Officer Greg Peters said. “In the five markets where we had previously launched a mobile-only plan, we have found that the mobile only plan has been an effective way to introduce more consumers to Netflix while being roughly revenue neutral as the lower average revenue per membership is offset by incremental acquisition and generally better retention,” the company said in its letter to shareholders. “What we’re trying to do is, as we bring in lower price plan offerings that sort of decrease average revenue per member, we’re also thinking about that from the calculus of expanding the funnel in a way that delivers total net positive revenue,” Peters said.
  • On gaming: Netflix said it would start efforts around gaming, building on smaller steps like interactive content (choose-your-own-adventure titles like Black Mirror: Bandersnatch). “Just as we’ve continuously expanded the nature of our offering by adding new genres, unscripted, film, local language programming, animation on and on, we think we have an opportunity to add games to that offering and deliver more entertainment value,” Peters said. “So, this is going to be a multiyear effort.” “We’re going to start relatively small, we’ll learn, we’ll grow where we focus our investment based on what we see is working” and improve based on user feedback, Peters added.
  • Cautious on sports: While Netflix has put out sports documentaries, buying rights for sports streaming is something the company isn’t too keen on. “What’s good about this for us is that we could apply those same kind of creative excellence to the storytelling behind those sports, the personalities behind those sports, the drama that happens off-camera,” Co-CEO Ted Sarandos said.

Letter to Shareholders | Earnings Call | Transcript thereof

Also read

Written By

I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

When news that Walmart would soon accept cryptocurrency turned out to be fake, it also became a teachable moment.

News

The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.

News

In this excerpt from the book, the authors focus on personal data and autocracies. One in particular – Russia.  Autocracies always prioritize information control...

News

By Jai Vipra, Senior Resident Fellow at Vidhi Centre for Legal Policy The use of new technology, including facial recognition technology (FRT) by police...

News

By Stella Joseph, Prakhil Mishra, and Yash Desai The Government of India circulated proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020 (“E-Commerce Rules”) which...

You May Also Like

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ