Is Netflix missing the mark to create original Indian content?

Netflix does account for a third of India's SVOD market with a revenue of Rs 1,569.35 crore in FY21, which is a 67 per cent jump over the previous fiscal's revenue. But it also saw an equal rise in expenditure to Rs 1,551.84 crore in FY21. Also, its net profit has not kept pace with revenue growth, growing from Rs 8.91 crore in FY20 to Rs 10.72 crore in FY21.

Its Founder & Co-CEO Reed Hastings said in December 2019 that the firm planned to invest Rs 3,000 crore on original Indian content over two years. London-based global research agency Omdia's 'India: Online Video Trends' report pegs Netflix's investment to create original Indian content at Rs 1,500 crore ($200 million) for calendar year 2021 alone. It has launched more than 90 original titles in India so far. Bela Bajaria, Netflix's head of Global TV, who was recently in India, had also told Business Today that "the investment in India is a big one… We are fully committed to creating quality content from India".

At the moment, though, the company is struggling to strike a balance between revenues and profits, while its content costs are shooting up. For example, multiple industry sources told BT that despite rivals refusing to pay more than Rs 40 crore to acquire the rights for Alia Bhatt-starrer Gangubai Kathiawadi, Netflix ended up paying substantially more. The sources added it was hard to understand the logic behind the expensive acquisition given that the movie made Rs 129.10 crore at the box office, according to film trade portal Bollywood Hungama, yielding at best a return of 1.5x on the budget. A film is considered a hit when it makes returns of 3x-4x.

While Netflix's revenue has increased, the rise may not necessarily be an accurate indicator of the success of its content investments in India. This is because analysts and experts say Indian viewers prefer its international titles over its Indian originals. For instance, consulting firm Ormax Media-which tracks weekly viewership numbers for OTT content-found just one Netflix show in its list of top 15 series on SVOD platforms between January 2021 and April 2022-the Spanish drama Money Heist Part 5 with 15.8 million unique viewers in India. This list is topped by Disney+ Hotstar's Hindi thriller Rudra, a remake of the British show Luther, with 35.2 million unique views. Amazon Prime Video's The Family Man has 26.1 million views. However, within Netflix's own top 15 originals in India, while two of the top three spots are occupied by international titles-Money Heist at No. 1 and Squid Game at No. 3-11 of the overall top 15 are Indian shows.