Netflix pivots to film licensing in India as originals disappoint

The platform, which will stream multiple big-ticket southern films featuring stars such as Vijay, Vikram, Karthi and Ajith Kumar besides Shah Rukh Khan-starrer Jawaan and Ranbir Kapoor’s recent release Tu Jhoothi Main Makkaar in the coming months, hasn’t renewed originals like Call my Agent: Bollywood and The Fame Game. Some shows in the development or shooting stage have already been canned, as the global parent doesn’t see the investment in local originals paying off much anymore.

Producers say the team in India is taking much longer to get back to producers on pitches and struggling with not enough expertise on ground. Overall, the Indian content budget is down by 35-40%, industry insiders say.

“There has been a de-escalation of India in the global scheme of things and the sense is that a lot of local originals are not meeting quality standards. Originals anyway take a lot more time and deeper relationships in the industry to put together, so if numbers are coming from licensed films, why not redirect investments there?” said a senior film producer on condition of anonymity. The person said the service is increasingly turning to the game that Amazon Prime Video had opened in India—to outbid everyone else in order to license the biggest movie titles. Plus, the international team doesn’t really distinguish between licensed films like RRR or Gangubai Kathiawadi from originals commissioned in-house. The only performance indicators that matter at the end of the day are revenue and engagement.

Speaking at the Global Business Summit last month, Netflix co-chief executive officer Ted Sarandos said India saw a 30% increase in engagement and watch time and a 25% rise in revenue in 2022. He also named RRR and Gangubai Kathiawadi as breakout successes in the West. “We’ve had the best year of our existence in India,“ he had said.

Netflix India declined to comment on Mint’s queries on changing business strategies. However, sources close to the company point out that the platform has renewed shows like Mismatched, Class and Fabulous Lives of Bollywood Wives for another season while the upcoming slate of originals includes titles like Scoop, Soup, Guns and Gulaabs, Khufiya and The Archies.

Calling even successes like Fabulous Lives relatively niche as compared to hits by other platforms such as The Family Man (Amazon Prime), a senior executive at a content studio said Netflix is yet to see that one big breakout title and pointed out that its first major success Sacred Games was released in 2018. “Movies are still getting some subscriptions but the India originals don’t seem to be delivering for Netflix,” the person said adding that it’s become far tougher to get meetings with executives and the whole cycle from pitching to them getting back takes much longer. The company has also realised that drama, as a genre, is not working for it. Another producer whose show was cancelled after a significant portion was shot, said the platform is suffering from a lack of connect with on-ground sensibilities and price cuts in December 2021 haven’t been supplemented with enough local expertise in the country.

Price cuts and control in budgets are becoming increasingly common across the streaming industry, Karan Taurani, senior vice-president at Elara Capital Ltd said. “The pure-play SVoD model hasn’t worked and Arpus are low for everyone along with inflationary pressures impacting subscriptions,” Taurani said adding that the dip in output for premium services like Netflix will become evident by the second half of this year or the first half of 2024.

Sumeer Mathur, chief strategy officer, Dentsu Creative India, said Netflix in India will have to deal with the complexity of differing tastes, languages and entertainment players who are more rooted in their customer bases. “A recent survey mentioned that 77% of consumers in India feel overwhelmed by the number of streaming services to choose from. This streaming fatigue will make it harder for newer players to grow. If the acquisition is the primary goal of Netflix, then newer shows or content spanning different languages will probably be a better investment,” Mathur said.