Mumbai: In a 2005 piece for Inc.com, Reed Hastings, co-founder and chief executive officer (CEO) of Netflix, wrote: “DVDs will continue to generate big profits in the near future. But movies over the Internet are coming, and at some point it will become big business. We want to be ready when video-on-demand happens." The second of these two predictions came true in a big way, and Netflix, which began life in 1997 as a DVD rental company, was ready, launching its streaming service in 2007.
Today, Netflix has a market cap of almost $85 billion and 109 million subscribers worldwide. It has changed the landscape of television by exploding the idea of appointment viewing, by challenging viewers to consume in marathon sessions instead of well-spaced chunks, and through its successful, diverse programming. It is also making the movie establishment nervous with its disdain for the traditional theatrical window and upcoming projects with big-ticket names like Martin Scorsese and Will Smith.
Netflix entered India in January 2016. The company doesn’t release subscriber numbers, but its active users in the country are estimated to be fewer than those of competitors like Amazon and Hotstar (a Netflix subscription is significantly more expensive than that of either rival). How it proceeds with local content development might depend on the success of Sacred Games, Netflix’s first original series, here. The show, set to premiere in 2018, is adapted from Vikram Chandra’s gangland novel; it’ll be directed by Anurag Kashyap and Vikramaditya Motwane and star Nawazuddin Siddiqui and Saif Ali Khan.
We caught up with Hastings, who was on a day-long trip to Mumbai (a few questions were answered later over email). He spoke to us about Netflix’s plans for India and its latest collaboration, The Bard of Blood, with Shah Rukh Khan’s Red Chillies Entertainment. Edited excerpts from an interview:
It’s been almost two years since Netflix launched in India. Are you happy with the progress made?
Twenty years overall, and two in India. We’re very pleased. We had a great reception, great growth. International for us is rapidly growing—it’s 50 million households now subscribing outside of the US.
Have you expanded as much as you’d expected here?
We’ve expanded much faster than we could have imagined, because Reliance Jio has transformed the scene. When we were planning, we were very worried about the internet. Now, with the cost of data coming down, it’s been fantastic. Our partnership with Vodafone has been great, and our global originals like 13 Reasons Why and Stranger Things have been really big for us here.
What are the specific areas you’re concentrating on now in India?
We’re expanding the content rapidly. We’ve commissioned many originals, like Sacred Games—that’ll be coming out in 2018 and be our first big Netflix India original. And it’s not just for India; it’s an Indian story that we want to expand around the world. We also have Selection Day and Again.
Is the idea to see how Sacred Games does and then take a call on further collaborations?
Well, we’re doing that already. We just announced The Bard of Blood. We’ll just keep commissioning more and more. Some of them will work okay and some will be epic—we can’t be sure which ones in the beginning, we have to be willing to try. It’s not just us—Hotstar, Amazon, YouTube: everyone’s investing heavily.
What are the challenges you’re facing here?
It’s mostly just awareness; not everyone knows of Netflix. And getting a smart TV from LG or Samsung or Hisense. When you can watch internet TV, that’ll be great.
A recent survey places Indians as one of the highest public bingers of Netflix shows.
We love it when people watch on the bus or at home. It’s just the celebration of the excitement of the content, watching a new series. This is an active binge-racing community. People are very addicted when they start watching, going to the next episode, and the next.
Is there a certain kind of show that works best in India?
Well, it certainly helps if it’s an Indian show. But we’ve seen some great success with the big US originals like Riverdale and Stranger Things. We’re always excited about sharing content—to do an original here and have it be popular in the US and Europe.
How are you tackling the technological challenges here?
When Netflix launched here, we didn’t have the download option. Now you can download content whenever you’re near wi-fi. We’re also looking at improving picture quality to support HDR, which makes the blacks really black and the colours very vivid.
Did the download option make a significant difference to Netflix’s presence in India?
It expanded usage quite a lot. You can stream on the go also, but you’re always worried about the data costs. India tends to use this feature very heavily. I think nearly everyone here does some downloading. Indian users have become used to going to wi-fi and downloading. But as streaming becomes cheaper and easier and data costs come down, then it’ll just be when you’re off the internet.
You’ve been more circumspect, compared with Amazon Prime, when it comes to acquiring local content.
We’re focused on a few great shows—shows that everyone wants to see. We’d like to have everything—maybe when our budget grows—but for now, we’re focused on the series side. And in terms of Indian programming, we’re trying to really help this new category of premium TV, because as you now, serialized shows have been associated here with “inexpensive", and we want to make some great ones—like an 8- or 10-hour movie.
Are you happy with the price point you’re at in India?
Yes, five hundred rupees, that’s our global price, and it’s worked very well for us. It’s a little less than two movie theatre tickets. It’s trying to create a category that’s really high quality.
Netflix has always been opposed to the idea of the theatrical window. You release your films online the same day they release in theatres (if at all). This has created some tension between you and the movie establishment in the US and Europe.
You know, we don’t really follow the movie theatres so much in terms of what they do—that’s really between them and the studios. What we focus on if we produce a movie is that, really, our members have paid for that movie, so we want them to get first access to it. But what happens with the rest of the movie industry, that’s up to them.
Do you expect the number of Indian subscribers viewing on TV to increase, or will the majority of viewing here continue to be on mobile phones for the immediate future?
Thirty-one percent of our India members sign up on mobile devices; but after six months, we find that their viewing habits move from mobile to TV. Already, more than one-third (34%) of Netflix viewing hours in India is through connected TVs, which includes people using smart TVs or game consoles. We continue to improve the streaming experience and we have HD, 4K and HDR content, which provides an incredible viewing experience. As smart TV adoption expands in India, we expect to see increased viewing on TVs.
Has the algorithm become more accurate, compared with a couple of years ago? How has it worked when you test on yourself?
People’s tastes are very broad, even in a single market. By using advanced algorithms, we can make tailored recommendations based on individual users’ tastes. Since we have become global across 190 countries, the algorithms now draw upon a much larger audience of over 109 million members. The feature of personalization and discovery is now even more dynamic and is only going to get better as our content library grows. Members who love action blockbusters, Korean soaps, anime, sci-fi, Sundance films, zombie shows, or kids cartoons will find that Netflix fills their homepage with relevant and interesting titles.
You were ready to catch the streaming wave when DVDs were still popular. What’s the next big change you think you’ll have to be prepared for?
The new era of internet TV, which began a decade ago, is likely to be very big and enduring also, given the flexibility and ubiquity of the internet around the world. We believe the switch from linear TV to internet TV is a once-in-a-generation phenomenon, similar to the switch from landlines to smartphones. Over the following decades, internet TV will replace linear, and we hope to keep leading by offering an amazing entertainment experience.