Pirating content is a way of digital life in India. Downloading torrents was and still is, a popular activity in the country. People download songs, movies, sitcoms, games and just about everything that could be put in byte form. However, recent years have witnessed a notable increase in subscription services. All over the world, it has been largely agreed that subscription services are doing a great job at reducing piracy. The clearest indication of this has been the increasing share of Netflix and YouTube amongst the data carried by American ISPs at the expense of torrents.
Over the past two years, Indians too have become more open to subscription services. I believe this is just the tip of the iceberg. As time passes by, more and more people are bound to latch onto subscription services. There is a confluence of factors that would contribute to this trend in India.
Pricing: Don’t show me too much money!
One of the greatest impediments to subscription services in India was the pricing. More often than not, most American firms would simply convert their dollar denominated pricing into Indian rupees without accounting for the difference in purchasing power parity. This meant that even people who were open to paying for subscription services would shy away as these subscription services would appear expensive compared to other expenses in their lives. However, matters have started to change. Amazon’s Prime subscription which costs USD 11/month or so in the US is available in India for just Rs.500/year (~USD 8). Similarly, Apple Music, which costs around USD 10/month in the US is available for just Rs.120/month (~USD 2) in India. The same goes for the recently announced Google Play Music.
This rationalization in terms of pricing has really helped these services grow in India. As I pointed out in a previous article, a low price in India does not mean lower profits. What India lacks in terms of ARPU can be made up for in terms of volume. The volume play is not visible right now but would eventually come into the picture a few years down the road.
Honey, I speeded up the Net and got us 4G!
According to Counterpoint’s latest market research report, a whopping 97 percent of smartphones shipped in India were 4G capable. Add to this the fact that data rates in India are currently the cheapest in the world and it bodes well for digital subscriptions. After all, data rates were always an inhibiting factor in the growth of digital subscriptions in India. When asked to pay as much as Rs.300 for just 1 GB of data per month, then people have to spend an insane amount of money on data packs to make full use of their digital subscriptions like Netflix or Apple Music.
Now, however, most telecom operators in India are providing data packs that give as much as 1 GB data per day at just Rs.350 per month. One can easily binge-watch their favorite sitcom at 480p on their way to work if they are allotted 1GB of data per day. Considering the competitive intensity of the Indian telecom sector, things might improve as we move forward. Already certain operators are ready to provide as much as 1.5 GB/2 GB data per day if people are willing to pay a little bit more.
Made for India content and investments
During the early days, most subscription providers would just provide their American content in India without any modification. Although this appealed to those living in urban areas, it significantly limited the prospects of expansion. But now there is a growing interest from subscription providers like Netflix and Amazon Prime Video to make India-specific content and investments. Amazon has been on a roll lately signing up several production houses to license their content. Netflix too is in talks with biggies like Aamir Khan and Hotstar is busy making sure that it’s the go-to destination for Indian sports enthusiasts. Apart from content, there are other types of investments as well. Netflix has partnered with DTH operators to integrate itself on set-top boxes. It has also partnered broadband providers like ACT for peering which greatly improves performance. Amazon’s recent Fire TV Stick comes with extra data for Airtel/YOU broadband subscribers and HotStar has an integration in the works with Jio TV. YouTube has also launched YouTube Go which was designed to work on low-speed broadband networks. Made for India indeed.
Yo ho ho, no pirate’s life for me!
The result of all these investments and changes is becoming visible. As much as 30 percent of all the orders that Amazon processes in India are now Prime orders. Similarly, the views that Hotstar received for IPL now exceed traditional TV. Netflix has as much as 2,00,000-3,00,000 subscribers in India according to an analysis done by Medianama. Subscription driven analysis website, The Ken, has also claimed to have broken even on a cash flow basis just three weeks into operation.
And I still feel that this is just the tip of the iceberg. Subscription services have a long way to go in India and I feel that as people keep upgrading to faster smartphones, networks become better and purchasing power increases, the volume dynamic would come into the picture. When this happens, the services that are making investments now would begin reaping the benefits. I would not say that the era of torrents is over, but yes, when it comes to digital content, it is no longer as much fun to be a pirate in India now!