netflix india: ET GBS: India set to get bigger slice of Netflix content budget, says co-CEO Ted Sarandos

“In India, we’ve had the best year of our existence,” he said. “Our content watching grew by 30% last year in India and our revenue grew by 25%.”

Engagement is the key measure of success, Sarandos said, and growth indicators have to start with this.

“Do people care enough to spend their viewing time with you? Are they spending their screen time with Netflix? That’s why that engagement metric is so important,” he said during the session, Cracking The Content Code. “It wouldn’t have happened if it wasn’t tied to that engagement lift. Subscriber numbers make nice headlines, but they’re not a real business metric. You know– what is behind that subscriber number? Is there engagement? Is there revenue? Is there profit with Netflix? Yes, there is.”

The company plans to plough more resources into India.

“You are basically trying to constantly get just ahead of or just behind the growth in the market and figure out what’s working and keep investing,” he said. “So I would say that we are going to be investing more and more in India as we continue to grow engagement and revenue.”Netflix has a strong slate of content coming up for India, he said.“This idea of really getting into the grid into the rhythm and the groove of local tastes and local desire,” Sarandos said. “I think we’re better at that than we ever were. I think the reason that we can get there is that our team that runs India, runs it from India.”

Key to success in the country was having teams on the ground with a feel for what people want.

“A lot of companies that try to run India out of California get frustrated early on because they just don’t learn anything. Here, our team really does understand the local culture and the local storytellers. And they themselves are part of the local audience–that gives us a large advantage. That’s why we’ve invested so heavily on not just production in India, but we have 250 people in an office in Mumbai. We have an office in Delhi. These are people who really care about making great content in India.”

Netflix has produced 100 original projects in India so far with 28 of them last year. Sarandos said the India team is getting better everyday.

“What I figured out early on when we started launching in various countries is that you didn’t learn much in one country that was helpful in the next country,” he said. “You have to be there, you have to be on the ground, and you have to understand consumer tastes and you have to understand the culture. You have to understand the history of the industry.”

He cited new Netflix release The Romantics, about the legacy of Yash Chopra, as an example.

“You have to understand creators in that country,” he said. “What are the challenges to getting movies made and series made? And in the case of India, I think India has got this beautiful, rich cinema culture and it was not that much around television at that time when we first got here. So, Sacred Games was our kind of early attempt to say, well, what if you took the principles of cinema and infused them into television and the Indian audiences loved that.”

His top priority is reigniting growth at the company, Sarandos said.

“There has been a lot of discussion about the streaming business in the last six months,” he said. “People are openly questioning whether this is a good business. Of course, it’s a great business, because this is what consumers want. The world is moving to streaming and on demand and away from linear television, away from paid television and away from transactional movies.”

On the platforms’ ever-growing breadth of content, Sarandos compared its ambitions to an Indian thaali.

“Like a thaali, where there is a little bit of everything–I think that is what people want, right?” he said. “I think sometimes you want a drama. Sometimes you want a comedy. Sometimes you want it all in the same movie, and we want to be able to provide that. Do we want to replace all television? Well, we want to be your choice.”

Netflix would like to be all things to all people.

“We want to make your favourite show, and your favourite film. And so right now, you do that by navigating through 500 cable channels to land on one and what we’re saying is, not only can you find that on Netflix, we’ll help you find the things that you love,” he said. “And there’s tremendous value in being very good at figuring out consumer tastes and helping them navigate through the world of enormous choices.”

Sarandos said revenue and profit come next after engagement in the streaming business.

“I think it’s quite simple. Number one is engagement. Do people watch and how much do they watch when it comes to engagement? We’re clearly leading that around the world,” he said.

“The second one is revenue. Do people pay? Do they think it is worth paying for this content that they are watching? The third is profit. Is it profitable? And among all of our peers, we are profitable. Netflix is a profitable company globally, and our major competitors are not. So if you look at subscriber counts and all those kinds of things, those are sub metrics. The real metrics of the business are engagement, revenue and profit,” he added.

Sarandos said the company started investing in a lot of breadth of content early on and that investment has paid off.

“The reason why we didn’t lose money was that we never took our PnL to zero to grow this business. We grew it soundly by really focusing on consumers. You can grow infinitely as long as you keep those members happy,” he added.