Netflix has been facing saturation in the US market for the past few years. It saw its growth rate plateau in the American market during the July-September period. Nevertheless, the company has found a strong footing in the Asian market, particularly in India.
Showing almost 2X growth in its operating revenue, Netflix’s Indian entity has posted Rs 923.7 crore topline in FY20, regulatory filings show. This figure stood at Rs 470.5 crore in FY19. The company has generated 93% of the operating revenue worth Rs 858.6 crore through the provision of entertainment services in India while the rest 7% is earned through exports.
The video-on-demand streaming giant has shelled out a pretty penny to operate its platform in India, focussing on developing indigenous content and acquiring rights to existing intellectual properties or IPs for streaming in India. Its total expenditure during the fiscal year has increased by 97% to Rs 909.3 crore in FY20 from Rs 461.8 crore in FY19.
Netflix India operates under Netflix Entertainment Services India LLP, an entity which has been profitable since FY18.
Netflix India had beefed up the local team by swelling employees’ count to over 100 last year. This could be substantiated by the personnel expenses on its expense sheet. Employee benefit expenses have increased by 90% to nearly Rs 101 crore during FY20 from Rs 53.1 crore in FY19.
While Netflix has been pumping money in its operations to increase scale during the last fiscal, it has managed to register a 73% jump in its yearly profits which grew to Rs 8.92 crore. The growth in profits is evident, it has been earned at a razor-thin profit margin of only 0.96%.
The surge in operating revenue and profit in FY20 appears to be driven by the growth of the mobile-only version of Netflix. The company had launched Rs 199 ($2.80) per month subscription exclusively for the Indian market in July last year.
While there is no concrete source to ascertain the number of Netflix’s subscribers from India, a report by Media Partners Asia estimates that the platform would end up this year with 4.6 million paid subscribers.
Netflix has been focusing on producing India-centric content from last year and this strategy has been faring up very well for the company. Apart from churning revenue from the local audience, the revenue from export for the Netflix Indian entity has jumped 2.7X to Rs 64.8 crore in FY20 as compared to only Rs 23.7 crore in FY19.
This upsurge in topline has given a substantial boost to Netflix India’s reserve and surplus account which has ballooned 2.7X to Rs 14.3 crore at the end of fiscal ended in March 2020.
To ramp up its original content for the Indian audience in the country and across the globe, Netflix’s chief executive officer Reed Hastings committed to investing Rs 3,000 crore in developing local content in December 2019. The platform has produced several hit web series including Delhi Crime, Jamtara, Little Things and Sacred Games featuring Nawazuddin Siddiqui and Saif Ali Khan.
To drive subscription among Hindi speaking millennials, Netflix had launched a Hindi interface for its website and mobile application in August. Moreover, it also partnered with Viacom18 to bring more content for a local audience in Hindi and other vernacular languages.