There's no reason Netflix can’t hit 100 million subscribers in India: Ted Sarandos

Sarandos also said that introducing an ad-supported plan in the US made sense as the subscription market there was saturated, while India's still had room to grow. 

On the linear TV vs streaming debate, he said that even though broadcast television is cheap or even free in India, the evolution to streaming is inevitable as it offers far greater value and control.

Here are some edited excerpts from the interview:

In January 2022, Reed Hastings (chairman of the board and former co-CEO) said it was frustrating that Netflix wasn’t as successful in India as in other markets. Would you say that Netflix has since cracked the Indian market?

It feels that way, and we want to keep doing that. The core of every international expansion for us has been product-market fit. Are we priced correctly for the market and is the programming attractive to our members? We're so much further along that continuum and it definitely feels like we found a nice new gear in India.

The thing that I love about coming to India every time is that it's always changing, it's always growing and it's always moving very quickly. It's a very high-energy country. Last year, India was our fastest-growing market and this year, too, it remains one of our five fastest-growing markets.

This is not just about delivering people's favourite movies and series, but setting the expectation that the next one will also be great. That's what we've been up to and I think it's coming together in ways that we couldn't have imagined a few years ago.

Despite reducing prices, you remain the costliest streaming service in India. Have you found the right price point?

At the core, we have to be of value to the consumer. The price point is not just ‘how much is it?’ but also “what's it worth?" and that's really determined by how much engagement we have. Do we have the programming you want to watch? Do we have the movies you want to see? Do we have this series that you love? We have to do that over and over and over again. The more we can increase the value proposition, the more we can increase the price. But we can't raise prices without increasing the value to consumers.

Do you plan to bring Netflix’s ad-based model to India anytime soon?

It remains to be seen. We're very early in our advertising initiative around the world and it’s currently available in a very few markets. It took us about six months to launch the product and we're about a year into it now. We’ve just announced a relationship with Nielsen for external measurement. So we're just getting our legs underneath us on advertising generally. And India, as you know, is not necessarily the first market you go to with this product.

Right now we find a lot of value in the subscription model. People are finding an attractive price point to sign up for the service. In the US, 100% of households were using Netflix, but thanks to password-sharing about 30 million were not paying at all. We gave them the opportunity to pay less, with some advertising, and it allowed us to expand the market. In India, we're still expanding the subscription market.

Are there any plans to cut prices further in India, considering how cheap TV is here?

We are more focused on increasing value. When we first launched streaming about 16 years ago, the alternative to Netflix was piracy. So we knew from the very beginning we had to be better than free. That really helped us in markets like India, where TV is very inexpensive. We have to be better than free, and have people saying that Netflix is worth the price.

What about YouTube? Is that not competition?

YouTube for us is an adjacent model. There is a lot of Netflix content viewed on YouTube, like trailers or behind-the-scenes videos. We even stream some of our premiere events and all those kinds of things on YouTube. So it's a great adjacent business and quite complimentary, actually.

Reed Hastings initially said the next 100 million subscribers for Netflix would be from India. What is a more realistic number today?

I am bad at predictions, but there's no reason that we shouldn’t have 100 million subscribers in India. We talked about that number as a possibility. There is no reason to think it can’t happen over time. Over what time span, I'm not exactly sure.

But all the reports suggest that India’s total streaming subscriptions are stuck at 40-50 million.

You have to keep in mind that the product evolves, too. Initially, we had one price point in India; now there are multiple price points. At some point, there might be a hybrid model, too, with advertising. You have to keep adapting. We've got several easy entry points and these will continue to evolve over time.

What is your view on linear TV versus streaming?

In the US, more people are on streaming today than cable. Advertising dollars just tipped to over 50% for connected TVs versus linear. That's a rapid evolution, and it’s going to spread around the world. Choice and control are the two things you have to offer if you're going to compete in modern entertainment. That's true everywhere in the world. Once you get that it's very hard to go back.

I know linear, with advertising, is free here but once you have a sense of the entertainment value and control that you get with an on-demand service, you just know there's no going back.

The evolution from linear to streaming and on-demand is inevitable. Streaming is the way people will consume entertainment at home, but how long it will take to reach critical mass in each country is something we will have to see. Five years ago, you would have bet against where we're at today. It's about deeply serving an underserved population. If you do that at the right price point, with the right things people want, it's very difficult not to win.

How do you navigate regulations in each country? India, for instance, is introducing a new set of broadcast rules.

This is why it's so important that we have people on the ground in the countries where we operate – people who understand not just the regulatory environment, but also local sensitivities, culture and customs. 

We've got to have a product that feels local, even though we're not, and to do that it's best not to go to war with regulators. That's not good business. 

We've got to understand the balance between consumer desire and operating norms in every country. I know India is unique in many ways, but [so are] many other places.

Netflix is perceived as a premium service, but you have acquired some mass-market content. Is there a change in the positioning?

I think the variety of programming leads to that, but it’s not at the expense of anything else. It's just that we’re continuing to expand. So if you think about Netflix globally, it was the same thing. When we first started, you had a handful of prestige dramas. Then we started doing more and more different things. We still do prestige dramas, but we also do Cake, a competition show, and telenovelas in Mexico. So we keep expanding the offerings and that’s good because we can address more people with different tastes. We want to be the first place you go to when you watch a movie or a TV show.

But to be clear, this is not at the expense of existing projects, but an addition to them. Because we have enough distribution heft in the market, we can do that at lower prices and continue to support the lower price point even though we're expanding content. When we reduced the price in India, and I said this last year, we grew revenue, we grew engagement and we grew profit, which we are reinvesting more than ever in India.

Reed Hastings and you have talked about content travelling globally. Korea is a great example where your investments in the market have made it a content hub. When will it happen in India?

I honestly think what happened in Korea had been decades in the making. I do think that we're in the first part of that same process in India right now. We went from the Oscar nomination for ‘R.R.R.’ to the Oscar win for ‘The Elephant Whisperers’ and the International Emmy win for Vir Das. So for us, it's opening up a new business. People get a taste of things and it gets their curiosity going and they want to see more.

Are you looking at having more south-Indian content?

Our content viewing from the south is up 50% and I find that pretty exciting. We have been focusing on expanding into south Indian languages for a long time. It's not unusual for us, in any given country, to first go where the population is before we get more and more local expertise and fan out. When we started in France, our main focus was on Paris. After a few years, we started expanding out to different geographies and languages. We have a similar plan here.

Recent reports suggest that movies on the platform are generating more buzz than web series.

I think in general, television at the scope and scale that we're doing with ‘The Railway Men’, ‘Guns & Gulaabs’, ‘Scoop’ etc doesn’t have a long history in India. So people will react immediately to a film because that's what they have always done. The relationship with television, with that kind of storytelling, has not been around that long. I think the three examples I just cited would probably have been movies 10 years ago.

Will the investment in movies continue?

Everywhere in the world, we invest in the best original films and original series. Typically, 30% of our original investment is in films and 70% in series, but in India, it is probably a little more in films. Of course, films need that kind of investment. But we are investing so much in shows because that kind of audience stays with you as they enjoy the long format.

You just premiered ‘Archie’, which seems like your biggest offering to date in India.

What Zoya (Akhtar) has done with Archie is create a world that is a complete fantasy, but feels very real. It feels like a place you'd like to be in and spend some time in. And it's Archie's world. You may be from a generation that knew about Archie comics, or from one that has only streamed episodes of Riverdale. Those are two wildly different things, and I think Zoya has created something completely different and completely fresh. The thing I love about Archie is that it’s so joyful – it’s like a two-hour escape.