Netflix, Inc.

(Netflix), the world's leading provider of subscription

video on demand (SVoD), launched its Indian platform on January
6, 2016. Due to its huge population, India represented a lucrative
market. Furthermore, the younger generation in India had
dynamic consumption patterns that were comparable to those of
Western consumers, giving Netflix another reason to invest in the
country. However, six months after Netflix's launch in India, as the
initial buzz surrounding the entry subsided, important questions
loomed: Would the company be able to meet the diverse needs of
Indian consumers? Was the Indian market and consumer
seasoned enough to adopt a more sophisticated model of SVoD?
How could Netflix get a stronghold in a market that was still
grappling with basic infrastructure problems and low Internet
penetration, as well as censorship issues? Even though Netflix was
a formidable player globally, it was not the first mover in the
Indian market and many of its competitors were already doing
extremely well. How could Netflix compete and move forward in
India?

Political Factors that Impact Netflix in India: The Way Ahead

- Role of Non-Government Organization, Civil Society & Protest

Groups – The country has a vibrant civil society community and
Netflix Svod should build bridges with them and seek out areas of
co-operations. Civil society groups are influential not only in
policy making but also in building a society wide narrative.

- Transition of Government and Changes in Policy – There is

consistency in policy making from one government to another.
Secondly governments from all parties adhere to the treaties
made by the previous governments.
- Political Governance System – Based on the information
provided in the Netflix in India: The Way Ahead case study, it
seems that the country have a stable political system. Netflix Svod
can make strategies based on the stable political environment.

- Size of Government Budgets – Both Local Governments and

National Government – The government at both national level
and local levels are running deficit budgets which is boosting
growth in the short term but may lead to increase in inflation over
medium term.

- Unrest within the Country & Chances of Civil Unrest – We don’t

think that Netflix Svod business operations are facing any dangers
from any kind of civil unrest or internal militant operations in the
country.

- Government Regulations and Deregulations – The government is

adhering to all the rules and regulations under World Trade
Organization norms. There is consistency in both policy making
and implementations of those policies.

- International Trade & Other Treaties – The country has a good

record of adhering to international treaties it has done with
various global partners. The government of each party has
adhered to the treaties done by previous governments, so there is
a consistency in both rule of law and regulations.

- Democracy & Other Democratic Institutions – According to

analyst the democratic institutions are needed to be strengthened
further so that business such as Netflix Svod can thrive in an open,
transparent and stable political environment. Strengthening of
democratic institution will foster greater transparency and reduce
the level of corruption in the country.

Economic Factors that Impact Netflix in India: The Way Ahead

- Inflation Rate – The inflation rate can impact the demand of

Netflix Svod products. Higher inflation may require Netflix Svod to
continuously increase prices in line of inflation which could lead to
lower levels brand loyalty and constant endeavors to manage
costs. Cost Based Pricing could be a bad strategy under such
conditions.

- Government Spending – As mentioned in the political factors,

government of the country is running deficit budgets. The
implication for Netflix Svod is that it can boost sales of its product
in short run but also expose Netflix Svod to medium term forex
and currency depreciation risks.

- Level of Household Income and Savings Rate – Increasing

consumption and stagnant household income in United States
had led to credit binge consumption. It has decimated the culture
of savings as people don’t have enough to save. Netflix Svod
needs to be careful about building marketing strategy that is
dependent on “Purchase on Credit” consumer behavior.

- Consumer Disposable Income – The household income of the

country has increased constantly in the last decade and half,
compare to the USA market where household income is still
below 2007 levels and not increased in real terms since early
1980’s. Netflix Svod can leverage this trend to expand the market
beyond its traditional customers by employing a differentiated
marketing campaign.
- Financial Market Structure and Availability of Capital at
Reasonable Rates – The quantitative easing policy of Federal
Reserve has led to liquidity flooding all across the global financial
markets. Netflix Svod can borrow cheaply under such
circumstances. But this strategy entails risks when interest rate will
go up.

- Employment Rate – If the employment rate is high then it will

impact Netflix Svod strategies in two ways – it will provide enough
customers for Netflix Svod products, and secondly it will make it
expensive for Netflix Svod to hire talented & skillful employees.

Social Factors that Impact- Netflix in India: The Way Ahead

- Immigration Policies and Level of Immigration – What are the

immigration policies of the country, what is the level of
immigration, and in which sectors immigration is encouraged. This
will enable the Netflix Svod to determine – if required can it hire
talent globally to work in that particular market.

- Level of Social Concerns & Awareness in Society – Higher level

of social concerns in the society often result higher consumer
activism and pressure from non-governmental organizations, &
pressure groups.

- Gender Composition in Labor Market Netflix Svod can use

gender composition of labor market to understand the level of
liberal nature of the society, women rights, and women’s say in
matter of societal issues and consumption decisions. The gender
composition of labor market is a good indicator of disposal
income of household, priorities of the households, and related
needs.
- Education Level in Society – Education level of the society
impacts both the quality of jobs and level of income. High level of
education often results in better jobs, higher income and higher
spending on complex and aspirational products.

- Nature of Social Contract between Government & Society –

Before entering into a market Netflix Svod needs to understand
the nature of social contract between government and society. For
example it has been extremely difficult for US companies to enter
UK health market as UK health system is a nationalized system
and everything goes through contracts at national level.

- Types of Immigration & Attitude towards Immigrants – Given

the latest developments such as Brexit and Immigrant detention
on Southern border of United States. Attitude towards
immigration has come under sharp focus. Netflix Svod should
have capabilities to navigate under this hyper sensitive
environment.

- Attitude towards Health & Safety – The attitude towards health

and safety is often reflected in the quality of the products and
cost structures of manufacturing processes. Netflix Svod has
stringent norms for health and safety norms so in emerging
economies it may have to compete with players who don’t have
high cost structures that of Netflix Svod.

- Power Structure in Society – Netflix Svod should carefully

analyze both - What is the power structure in the society? How it
impacts the demand in the economy. For example the power
structure in US economy is slowly moving towards the older
generation as that generation has higher disposable income
compare to the younger generation.

Technological Factors that Impact Netflix in India: The Way Ahead

- Property Rights & Protection of Technology Oriented Assets –

Netflix Svod should analyze the legal status of various property
rights and intellectual property rights protections that are
common in US.

- Level of Acceptance of Technology in the Society – Netflix Svod

has to figure out the level of technology acceptance in the society
before launching new products. Often companies enter the arena
without requisite infrastructure to support the technology
oriented model.

- Mobile Phone & Internet Penetration – Netflix Svod should

assess the level of internet and mobile phone penetration in the
country as it will it in building a requisite business model based
on local needs and realities.

- Cost of Production and Trends – Netflix Svod should assess -

What are the cost of production trends in the economy and level
of automatization. In near future the sector most disrupted by
technological innovation is manufacturing and production.

- Intellectual Property Rights and Patents Protection – Before

entering new market Netflix Svod should focus on the
environment for intellectual property rights.

- Preparedness for 5G Related Infrastructure – Countries across

the world are trying to prepare themselves to install 5G
infrastructure. Netflix Svod should assess to what level the local
market is prepared to roll out the 5G connectivity.

- Research and Development Investment Levels – If there is high

level of investment in technology development sector then there
are high chances of building a self sustaining ecosystem that
drives innovation. Netflix Svod can leverage such a situation to
hire the best people in business.

- Likelihood of Technology Disruption – If the country is hub of

technology companies then there is a high chance of technology
disruption among various industries. Netflix Svod has to assess
whether it can live with the fast pace of technology disruption in
its industry.

Environmental Factors that Impact Netflix in India: The Way

Ahead

Environmental factors are fast gaining traction not only among

consumers but also among regulators and policy makers. Climate
change and changing ecosystem is leading to the extinction of
more than 20% of species on the planet by the turn of this
century.

- Level of Consumer Activism Regarding Environmental Concerns

– Netflix Svod needs to know the level of consumer activism
regarding environmental concerns is. It will help Netflix Svod in
both developing environmentally friendly products and thwarting
PR stumble blocks.

- Environmental Regulation Impacting Absolute Cost Advantage

Dynamics in the Industry.
- Corporate Social Responsibilities Culture – Are Netflix Svod
present CSR efforts applicable in the new market or does it needs
to have new initiative to cater to the prospective market.

- Waste Management – What is the policy of waste management

in the prospective market and how Netflix Svod can adhere to the
waste management requirements in that market.

- Influence of Climate Change – How climate change will impact

Netflix Svod business model and supply chain. For example if the
supply chain is not flexible it can lead to bottlenecks if shipments
from one part of the world are delayed because of sudden climate
shift.

- Recycle Policies – What are the recycle policies in prospective

market and how Netflix Svod can adhere to those policies.

- Focus & Spending on Renewable Technologies – How much of

the budget is spend on renewable energy sources and how Netflix
Svod can make this investment as part of its competitive strategy.

Legal Factors that Impact Netflix in India: The Way Ahead

Legal factors often govern – conditions to enter the market, laws

to operate in the market, and procedure to resolve any dispute
with other stakeholders. If the legal system is not strong then
Netflix Svod can face numerous challenges – from consumer
petitions to shakedowns from authorities.

- Independence of Judiciary and Relative Influence of Government

The judiciary independence often reflect both strength and
credibility of the institutions in the country.
- Adherence to Common Law – Is the country following common
law which is uniform for all parties – whether domestic or
international. If there is arbitrariness in the judicial process then
Netflix Svod can’t be sure of the judgments.

- Consumer Protection Laws – Netflix Svod needs to know what

are the consumer laws, what is the rate of enforcement, what is
the attitude of authorities towards consumer protection laws, and
what is the role activist groups in enforcement of consumer
protection laws.

- Transparency in Judiciary System & Processes – Transparency is

essential for fair and consistent decision making. If the process is
consistent and transparent then Netflix Svod can plan ahead with
greater conviction.

- Time Taken for Court Proceedings – Even if the country has best
of the laws, it doesn’t mean much if they can’t be enforced in a
timely manner. Netflix Svod should do a primary research
regarding how much time it often takes to conclude a court case
in the country given the sort of legal challenges Netflix Svod can
face.

- Securities Law – What are the securities law in the country and
what are the conditions to list the company on national or
regional stock exchange.

- Employment Laws – What are the employment laws in the

country and are they consistent with the business model of Netflix
Svod. For example Uber employment system is not consistent
with French laws and it is facing challenges in the country.