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YouTube Rolls Out Originals in India: NFLX, AMZN Under Threat?

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The massive ongoing digitization in India has created a booming online video streaming market in the country. Further, feasible data rates in India are fueling the video consumption growth.

In fact, Alphabet’s (GOOGL - Free Report) YouTube is firing on all cylinders to expand its presence in this space to capitalize on the growth opportunities that Indian market currently presents.

Per a report from Statista, revenues from this space are expected to hit $94 million in 2018 and to reach $247 million by 2022 at a CAGR of 27.5% between 2018 and 2022.

YouTube, which remains a dominant player in this particular market of India, is pushing aggressively into original content in a bid to double its user base and adoption rate.

Additionally, the company is planning to unveil its ad-free paid streaming platform, YouTube Premium, in India. Notably, this is a monthly subscription service which features its original series.

Recently, the company has collaborated with renowned music maestro, A.R. Rahman, for its original show named ARRived. Notably, this is a significant step toward gaining subscribers for its paid service as A.R. Rahman’s music strikes a chord with people globally. The show will released soon and will initially be aired on YouTube’s unpaid platform in India.

Notably, YouTube’s first original show in India, UnCricket, based on cricket was extremely successful in the country. It was in Hindi, India’s most widely used language, and was very popular with audiences.

We believe YouTube’s latest move along with its strong position in India puts the initiatives of rivals like Amazon (AMZN - Free Report) and Netflix (NFLX - Free Report) under threat.

Alphabet Inc. Revenue (TTM)


Alphabet Inc. Revenue (TTM) | Alphabet Inc. Quote

Intensifying Streaming Competition in India

The video streaming space in India is highly competitive in nature given the growing penetration of internet and smartphone users in the country, which is giving a significant boost to this sector.

Per a report from India Brand Equity Foundation, the number of internet users in the country is expected to reach 829 million by 2021. Further, the number of smartphone users in India is anticipated to hit 490.9 million by 2022 by growing at a CAGR of 60% between 2017 and 2022, according to data from eMarketer.

A report from Akamai (AKAM - Free Report) suggests that an average person in India spends 12.3 hours a week on watching online video contents. All these factors are aiding in creation of a conducive environment for streaming platforms to flourish.

Apart from YouTube, currently the players include Amazon Prime Video, Netflix, Hotstar, Viacom’s (VIAB - Free Report) VOOT, HOOQ, Eros Now, ALTBalaji, HOOQ, Hungama and YuppTV. All these streaming services are leaving no stone unturned to expand viewer base. These platforms are bringing in Bollywood movies, popular TV serials and reality shows, live streaming sports tournaments as well as original content to entice viewers.

In terms of user base, there are three major players in India which enjoy a large viewership. In 2017, the user base of Netflix, Amazon Prime Video and Hotstar came in at 5 million, 11, million and 75 million, respectively.

Nevertheless, YouTube’s number is way ahead of these figures. Reportedly, it was able to cater to 85% of the internet users in India last year. Its mobile monthly active users were pegged at 225 million. Moreover, its regional viewership got tripled with Hindi, Telugu, Tamil, Kannada and Malayalam.

Can Streaming Initiatives by Tech Giants Stall YouTube’s Advances?

YouTube’s “Originals” and paid streaming service initiatives does not bode well for the growing investments made by Netflix and Amazon on original content in Hindi.

Recently, Amazon, which is gaining momentum in India’s streaming space with the aid of its robust Prime services, released a comedy series in the country called Comicstaan. Further, this Zacks Rank #1 (Strong Buy) stock’s portfolio contains original content for India like Breathe, Inside Edge and a reality show based on musicians — Remix.

Meanwhile, Netflix, which carries a Zacks Rank #3 (Hold), is gearing up to come up with more originals based on books like Bard of Blood by Bilal Siddiqi and Midnight's Children by Salman Rushdie. Notably, the company’s recently released Sacred Games and Ghoul were massive hits in India.

Netflix, Inc. Revenue (TTM)


Netflix, Inc. Revenue (TTM) | Netflix, Inc. Quote

Apart from these two, Alibaba (BABA - Free Report) is trying to foray into this rapidly growing market of India with its strategic investments and acquisition of content streaming platforms in the country. The stock carries a Zacks Rank #5 (Strong Sell).

Additionally, Xiaomi, the Chinese electronic company which has bolstered its presence in India with low range smartphones, has recently teamed up with Hungama to bring music and video streaming to the Mi phones.

Nevertheless, YouTube’s popularity, expanding user base and aggressive strategies poses a major threat to these foreign investments. Currently, its unique user base stands at 245 million per month which is tough for these tech giants to compete with.

Further, its growing portfolio of original contents created by users and rising regional language content creators will continue to help YouTube sustain momentum in the streaming space of India.

Currently, Alphabet carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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