All Eyes on India as Netflix Targets its Next 100 Million Subscribers to Be from the Region!
Thanks to its successful international endeavors, SunTrust is confident that Netflix’s shares will rise exponentially in the coming months.
Upgrading the status of shares
As a matter of fact, SunTrust on Thursday went as far as upgrading the status of Netflix’s shares to buy from its initial hold, outlining impressive subscriber trends during its final quarter, as well as positive opportunities in India as the main factors for this change.
Additionally, the firm cited that as from the data collected from its Google search analysis, the trend showed that Netflix’s domestic and international subscriptions were tracking above the initially anticipated consensus.
According to SunTrust analyst Matthew Thornton, he noted that Netflix had avoided missing its subs 2 quarters in a row since its unprecedented growth in 2012.
Despite the positive news, Sun Trust interestingly also minimized the price target for Netflix from$415 to $410, pitting the subscriber miss for the second quarter as the reason behind this minimization.
As a matter of fact, during the announcement of its July 16 earnings, Netflix cited that it had accrued an additional 5.15 million subscribers and streamers, a notable drop from the initial 6.2 million record it had provided in April.
Additionally, shares at the company have seen a significant drop of 12.7%, though they have improved by an overall 82% to date.
That being said, Thornton is positive about the current financial and economic position of the streaming giant, especially the opportunities that it has in India. He continued to write that India is a key factor when it comes to incrementing Netflix’s market size.
He pointed out how the market in India is poised to be significantly larger than that of the United States, and how this notable gap will only increase exponentially in the next ten years.
Setting its sights on India
Chief Executive of Netflix, Reed Hastings, had notified investors and the press earlier in the year that the company was targeting India to be the main bulk of its next 100 million subscribers. However, the streaming giant does acknowledge that it faces a myriad of problems and issues there.
For starters, there are quite a number of global competitors in the region, including Amazon Prime Video and Indian streaming giant, Hotstar.
Additionally, Netflix offers monthly subscriptions ranging from $7 to $12, which is roughly about 600 to 850 Rupees, that is significantly higher than the current payment options available in India.
Moreover, India also has way fewer options when it comes to broadband households in comparison to the United States.
Striking partnerships with Indian companies
To counter such nuances, Netflix has struck partnerships with local mobile companies and set-top box enterprises such as Tata Sky, Bharti, Videocon, and Vodafone. Thornton believes this is a smart move as this will enable Netflix to ramp up its library with a number of original Indian productions. Plus based on SunTrust’s Google search analysis, this move seems to be receiving a great reception from Indian viewers and audiences.
In fact, Thornton noted that at the current moment, Netflix’s app is the most widely downloaded entertainment app in India as from data collected from Apple’s app store.
Moreover, in Japan, Netflix opted to increase its subscriber fees; a clear indicator that it is receiving positive trends in subscriber behavior. The company has also started testing ways in which users are able to register and purchase the subscriptions while still having the ability to bypass the expensive commission fees slapped by Apple’s app store.
How Netflix enticed the international market
Last year, Netflix was lauded for its unprecedented growth, especially in the international market. In the span of one year, Netflix went from having 7 million subscribers from the United States to about 100 million subscribers worldwide.
In the late 90s, Netflix first launched as a distribution DVD service, which provided users with movies via mail. In fact, the service was so convenience that Netflix inadvertently led to the death of film rental services in America.
Moreover, as television moved from simple sitcoms to series with more complex storylines such as The Shield and The Sopranos, Netflix saw the opportunity to capitalize on this endeavor. They began using compression technology in the early 2000s, which enabled massive video files to be streamed seamlessly using the internet.
This turning point is what enabled Netflix to evolve from a DVD by mail service to the largest video streaming service in America by 2007.
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