Hindi Film 101: The Streaming Wars and How We Got Here Part 5, The Take Over of America

Second to last section!  And all about the American market (boring!), but you have to understand this market first before you can understand how the methods are being exported to India and Indian content.

Usual Disclaimer: I have no special knowledge, this is just how it looks to me based on the research I have done.





In America, as I said in my last section, there was a desperate need in the market for streaming content.  This wasn’t something created, this was something which surprised even the corporations providing content and they had to scramble to catch up.  And then they did catch up, Hulu is maintained by TV channels that now provide their content there and receive payment for it from us, the consumer.  Netflix provides streaming content that they previously offered on DVD.  Amazon Prime, they transitioned from selling DVDs of TV shows and movies to selling the digital files.  All of this is what “we”, the consumers, asked for.


But large corporations like this, their business plans are like sharks, they have to keep moving forward or they die.  Partly because they are publicly traded companies, they borrowed money from investors to get started and now they have to make a massive profit, a constantly growing profit, to be able to pay it back.  Which means they couldn’t be happy with just the “easy” consumers, the ones who flocked to them with no effort, they need more and more and more.


Netflix and Amazon Prime are both American companies that started with an American consumer base.  In a 2014 study, internet penetration was put at 87% for all adults in America, and 97% for young adults.  Average speed was 8.7 mbps.  Which is enough to constantly stream two HD videos on two separate devices, while still using a third device for regular non-streaming content (I know this because I do it all the time, I’m doing it right now).  And that is not counting people who have access to two sources of internet, both wired broadband from a router and direct wireless through their phone and/or tablet.

Image result for laptop and tv

(This, is every young person in America.  Plus add in a smartphone to the side giving you alerts)

This isn’t to say that, even in America, coverage is universal.  I experienced that change myself recently in a small way, I moved from a neighborhood with increasingly high rents to one with a nice stable rent base.  And discovered that the shift from an up and coming young people filled neighborhood to one with families and a slightly lower income base came with a shift to much worse internet speeds.  I’m with the same plan from the same company, but the maintenance and updates to their power grid is clearly much less of a priority in a neighborhood where most households can’t afford/don’t bother with high speed internet.

Image result for wolfies chicago

(I was warned about this, my friend Dina lived in this neighborhood her whole life and until recently wasn’t even able to stream youtube videos on her home computer.  Although I also wondered if it was because the giant hotdog blocks the signal since she lives next door to this)

If I had moved from a city to a rural farm, no doubt the shift would be even more dramatic.  But that’s the thing, in America you wouldn’t move from a city to a farm.  In America, 80.7% of the population live in urban areas.  Not necessarily major cities, but cities nonetheless, ones where there is a strong infrastructure to support things like internet access.

And so when Netflix and the other companies began looking for customers for their new streaming products, they had a whole country ready to go already.  And they were helped along by the stupidity of the old media.  As cable television saw their audience leaving, they reacted by hiking the rates on the remaining consumers.  The average cable bill has risen 8% per year every year since 2010.  Based on my own experience, I canceled cable at first because I simply could not afford it, back in 2009.  I started it again when I could afford it, in 2014, only to discover that in the intervening years almost everything I might want to watch on TV was now offered online, and so I canceled again simply because there was nothing I needed there.

The problem is, Netflix and Amazon Prime built themselves on the assumption that they would continue to grow.  And at a certain point, they hit the limit of the American market and growth had to flatten.  And yet they continued to spend massive amounts on creating new content, trying to attract new subscribers.

There are three kinds of content offered by streaming services.  Non-exclusive content, things that you are glad to see there, that will keep you from going to another service just for the convenience of finding them, but which won’t necessarily make you sign up to begin with.  If I want to watch Frasier, I can login to my Netflix OR my Amazon Prime OR my Hulu.  It’s everywhere.

Image result for frasier

(Because it is THE BEST)

And then there are the semi-exclusive options. The most common option.  Almost every movie or TV show will be available on a streaming service or, alternately, for a one time charge on a different service.  You can watch Jab Harry Met Sejal as part of your streaming package on Netflix, but you can also watch it by purchasing it on youtube, on googleplay, or on iTunes.  This is great for the content creators, they can essentially sell the same product 4 times over, once for exclusive streaming, and then 3 more times to the one time pay services non-exclusively.  And it might add up to a reason for someone to subscribe to Netflix, or another service, if you start to see how you can actually save money through a subscription fee.  This is where Amazon Prime really shines, it only takes purchasing a few episodes of a show, or a searching for a few popular movies and noticing that blinking “free for Prime subscribers!” button to convince you that you could be saving money if you had a subscription.

And finally there are the true exclusives.  Just a few years back, these were the same kind of content as listed above.  I signed up for Amazon Prime originally because it was the only source for BBC shows.  Now, those same shows are available as part of a Prime subscription OR as a one time Amazon purchase OR as a purchase through other services.  And the same is true for most content, what used to be exclusive to one service is now only exclusive in one manner.

The goal is to find something that is already so popular, and would be so expensive to purchase otherwise, it will drive people to streaming.  Friends on Netflix, Seinfeld on Hulu, the kind of thing that you will watch over and over again and is far to expensive to buy on an episode by episode basis.  And of course it HAS to be a TV show, a movie for the American market is not that kind of rewatchable, you would simply purchase it once rather than bother with a streaming account.  But these TV shows are far too expensive for streaming services as well.  And too rare, the kind of content that is massively popular and also just massive is not something you can find easily.

And so there is the pinnacle of the streaming pyramid, the “original” shows.  I put “original” in quotes, because streaming services have begun pretending to have more of these than they do by labeling shows of the second category, the exclusively-subscription-streaming, as part of that.  Shows that were made by an international company and never broadcast on American television, and Netflix or Hulu or Prime purchased the streaming rights, but not the exclusive rights.  A true “original” show is one that was planned and filmed and funded directly by a streaming service, which they can control utterly and make sure it will never be available elsewhere.

If you are looking at customer acquisition and retention, the first two categories have a more long term effect.  The shows that are available everywhere, they will provide neutrality, you won’t lose a subscriber because of them.  Either lose them because they chose a competitor to begin with, or because they chose to drop a subscription they already have in preference for a competitor.  On top of that you have those subscription exclusives.  They may give you a slight advantage, someone choosing to start a subscription with you over another service because of this particular show.  Or choosing to keep your service and drop another because of this show.  And this is something that can happen every day for decades, there is no one moment when Friends will be drastically more popular than it was the day before.  You just let it keep chugging along and slowly acquiring new subscribers without you needing to do anything extra besides just keeping it there.

Image result for friends

(Just keep this on the homescreen, remind people you have it, and your subscriber numbers stay stable)

But it is that last category that can get you the sudden burst.  Because it is new content, and new means people want to watch it now, while it is still fresh.  And you are the only resource for it.  An ad campaign, a series of interviews of the stars, just like for a movie release.  And then thousands, millions of new customers, just in a day, just for this one content.  And once you have them, you use your other content to keep them hanging around.

I have a new understanding of this pattern of leaps forwards and then stabilizing thanks to running this blog.  And also a new understand of how fragile those leaps forward can be.  My Sacred Games coverage is the most popular content I have ever published, purely in terms of views and visitors.  But I’m not going to be keeping any of these people.  They aren’t commenting, they aren’t looking through the archives.  It’s a big push forward, that will lead to an immediate fall back once they have what they want.

In contrast, my Sanjay Dutt Hindi Film 101 was slightly more popular than my usual Hindi Film 101’s and acquired a fair amount of comments on each post.  And it has continued to chug along as new people find it.  It’s not a huge leap forward, but it kept people sticking around and interested who might have drifted away, and it continues to attract the occasional new reader, a new reader who then browses through my archives.

Image result for lagaan

(Lagaan, or Devdas, had a similar effect on the international market for Indian films.  A big burst of attention, but in the long term it is K3G that keeps them coming back, brings in viewers for more than just this one film, and keeps bringing in new viewers)

It’s not about the big showy splashy attraction that brings in the audience, it’s about converting that audience to regular subscribers.  And that’s where streaming services are now stumbling.  They realized that they had swamped the market for the basic offerings, and to bring in new customers, they needed the big splash.  So they made the big splash, the “Original” shows with the massive investments both in production and in publicity.  And it worked, they dragged in new subscribers and new eyes.

But the bubble has to burst.  Netflix is lagging in the American market, stock just fell 13% as the newest numbers came out.  Not “lagging” because it is losing to another provider, but simply because the market isn’t there for it any more.


Let’s take one small moment to look at what this revolution has meant for the American market.  There’s my friend Dina, trapped behind a giant hotdog with no high speed internet connection.  She is cut off from content, stuck taking buses to libraries to rent DVDs if she wants to watch anything, or borrowing them from me.  And now completely cut off, more and more we go to DVD stores asking for things only to be told they were never released, they are only available streaming.

But the Dinas of America are fewer and fewer.  And for those of us with good internet, the world of entertainment has become our own personal time machine.  We can go anywhere in the world, to any era of entertainment, whenever we want.  And we can then watch it at any speed we want, all the episodes together or spaced out, or half now and half when we are in the mood again a year from now.  And delivered directly into our heads, you can see them on any device in your house, carry them room to room on your phone, let them leap from phone to TV and back again, no matter where you look, there they are, your personal performers.  Mass media has become an extension of our own brain, our own desires, the “mass” part of it has almost been removed, it feels as though shows are created just for us.

Maybe that’s part of the reason these big “original” releases are so popular?  It gives us the feeling of being part of a community again, watching Friends on Netflix is a lonely business, it may be the most successful and popular show in the world, but is there anyone watching it right now, at the same time you are?  But watching the new season Unbreakable Kimmy Schmidt is a community experience, you can go on the internet and watch the reactions, talk about it at work, feel like you are part of something greater than yourself, at least for a little while.


16 thoughts on “Hindi Film 101: The Streaming Wars and How We Got Here Part 5, The Take Over of America

  1. Ironically I dislike most of the original series. There is something super self-conscious about the whole THERE IS NO MPAA OR CENSORSHIP BOARD, HERE, HAVE ALL THE BOOBS AND VIOLENCE!!! I hit the wall watching the first episode of Transparent when I saw a completely gratuitous scene where one of the daughters stripped all her clothes off. Orange is the New Black is another awful one, jokes about lesbian rape, um… I’m not a prude but I don’t need to see sex and violence for no reason other than to create cut quotes for critics and ads.

    Most American entertainment does nothing for me at this point which makes me grateful to have the international options through streaming (presumably you get into that in your final installment of the series).


    • Oh shoot, I didn’t get into the international options! I focused on streaming in India instead of America.

      Now you are making me think about the streaming serieses. There are very few I love and watch over and over again, compared to old broadcast shows now available on streaming. I will rewatch Frasier and Parks and Recreation and Midsommer Murders endlessly, but I will only watch The Crown once.

      On Thu, Jul 19, 2018 at 7:32 PM, dontcallitbollywood wrote:



  2. Oh goody, something I know enough about to comment on :). One piece I think you leave out is the economics of the streaming platforms. There are advantages to the subscription model – it has a steady, predictable stream of revenue, and if you can get your “churn” rate low enough (number of customers who leave after they’re acquired, Netflix is very low) you have a nice built-in customer base that you can learn about and figure out how to keep feeding to make them happy. The problem with subscription in media, though, is that distribution platforms generally have to go license their content from the companies that control the rights – publishers for ebook platforms, music studios for Spotify and Pandora, movie studios for Netflix and Amazon. The streaming platform generally does some complicated math to figure out how much to pay the content provider for each view (and decide what constitutes a view), and has to strike a delicate balance between paying enough that content providers want to be in business with them, but not so much that the streaming platform has no profit. The bigger the content provider, the more leverage they have over the streaming platform, and ironically the more successful the platform the more money the content providers want to extract. This puts a Netflix in the difficult position of either having to pay out most of its profits to content providers or losing access to a significant number of shows and movies that will keep customers happy.

    The original productions solve this problem in two ways: they belong to Netflix so Netflix will never lose access, and Netflix doesn’t have to pay out to another company each time a customer views the original show or movie. This second point is especially important. The downside of the subscription model for media companies is that the more your customers watch, the more expensive your business becomes. The subscription fee is set at a price that will attract a maximum number of customers without losing Netflix money on what they have to pay out to content providers for the activity of that user. But people watch different amounts of shows and movies on Netflix, and the price is the same for everyone. For the streaming platform, customers who pay in but don’t watch much are great for subscription revenue (i.e. profit) but bad for engagement and keeping content providers happy. Customers who watch constantly are bad for profit but good for engagement. With original productions, the only cost to Netflix is the original sunk cost to make the show or movie. They can then take that content and promote it with all their customers and encourage really high viewing numbers, because that makes for good engagement at no added cost.

    Last point – to go back to your question of who is the customer, which I think is a really interesting through line in this series of posts. The positive part about original content from streaming platforms like Netflix is that the customer is the viewer, and they are trying to make shows and movies that will create a strong bond with the audience. (This is arguably less true of Hulu, which is still ad-driven. And Amazon’s model is a whole other can of beans, a collection of services meant to capture the highest possible percentage of your overall spending across all consumer products.) For a company so new to production, the stuff they make is good. I definitely agree there’s a bubble – so many new shows and movies getting made! it’s not sustainable – but hopefully they’ll have a chance to learn quickly and figure out a production model that works before the market settles into whatever shape it will hold until the next big disruption.

    Liked by 1 person

    • Thank you so much for your comment! Really interesting point. One thing that I have noticed, which I was just talking about with Alicia in another comment, is that I don’t find myself really wanting to rewatch much of the original streaming content. I’m driven in by the ads and want to watch it the weekend it arrives, but then I won’t necessarily go back for rewatches. Which is something they really need to address if they want to ease out of paying outside providers, you can’t just drive in new viewers, you have to also find content that will keep them happy for years to come. The Crown is amazing, but I don’t really feel the need to watch it.

      Something else I didn’t get time to get into is how unusual Hotstar is as a streaming platform. It has content original purchased for TV, so advertising driven. But now it is offered without ads. And the vast majority of it is owned entirely by Hotstar./Star TV so no outside costs. More interestingly, the vast majority are movies, not originally made for TV or streaming. But maybe a better fit for streaming? Since they were originally made for the audience directly, not advertisers, although later purchased based on expectation of advertiser money for the TV channels.

      And for the Indian market in general, that purchased content that drives in viewers and keeps viewers is more movies than TV, which I find fascinating! The rewatchability of Indian films being used in a new way, instead of driving weeks and weeks in theaters, now it is driving years of people being happy to pay a subscription if it means they can rewatch DDLJ any time they want.

      Oh, and on a completely personal note, isn’t our Shahrukh a smart little businessman? Your background info just makes the Red Chillies deal look even smarter, leveraging his popularity in the international market for long term sustainable income for his company in a way a one time satellite TV deal or even DVD rights never would.

      On Thu, Jul 19, 2018 at 10:37 PM, dontcallitbollywood wrote:



      • Yes! I was going to hop over to the last post to talk about international stuff, which I find totally fascinating, but the vertical model you describe for Hotstar is the perfect streaming model, if you are lucky enough to be able to get a critical mass of quality content from your own catalog.

        And in terms of rewatchability – making good stuff, good art, good entertainment, is hard! In any medium. The companies that have been doing it for a long time are generally better at it and have access to the best mix of talent. And definitely agreed on Indian films scoring high on the rewatchability index. And on SRK being very smart to use an exclusive with Netflix to leverage his international audience, probably with a premium profit share for star power + exclusivity.


        • I think maybe the advantage for the Indian market was that there wasn’t the critical mass of TV content available. Even before streaming, to fill out their schedule Hotstar had to buy up tons and tons of movies, in every genre and every language. If I think of their 800 Malayalam movies as only 100 days worth of content for their Malayalam channels, it really doesn’t seem like a lot. But now they have this insane back catelog available to them.

          On Thu, Jul 19, 2018 at 11:01 PM, dontcallitbollywood wrote:



          • It’s a really interesting case, because the production side in India is so advanced, but the distribution is still limited by so many factors – technology, infrastructure, economics, language, education. So you have an amazing catalog of content you’ve amassed for a domestic broadcast audience with certain characteristics and preferences, but now you’ve moved into streaming, which carries with it this whole other audience and set of advantages and disadvantages. Do your 800 Malayalam movies help you scale up with Indian streaming consumers? With the international streaming consumers you can suddenly reach? A big, deep catalog is a huge advantage in any case, but it’s not a seamless transition. By keeping it exclusive, you force customers to come to you, which is clearly working inside India! However you limit the total number of viewers you could reach who are customers of other platforms that could potentially pay you for licensing your content.

            One approach I’ve seen to this dilemma is for the content provider to keep exclusivity inside their home territory, but license rights to international distribution to other platforms. The platforms will only agree to this, though, if there is enough international demand for your content that they can still make enough money or add enough customers in the rest of the world to make it worth their while if they’re going to forego distribution in the primary market for that content.

            Liked by 1 person

          • Oh I wish Hotstar would do that! I love my Hotstar subscription, but it would be really great if I could recommend Premam, say, to someone and tell them it was available on googleplay. But I don’t think they will, they didn’t let their content out to play even when they didn’t have an international option, before Hotstar.us there was no legal way to watch even their most popular content outside of India.

            I wonder if it is something about their funky contracts? The way they have exclusivity over all their content, even something recent and popular like Raid is completely unavailable except on Hotstar, makes me wonder if perhaps they have some kind of unbreakable standard contract and so long as that is the expectation, they can keep it up. But if they made an exception for one film, suddenly everyone would be wanting it.

            The other part of this, from the side of the content creators, is that the initial satellite sales are MASSIVE. Like, easily as much or more than you will make in box office profit. So it might still be worth it if you can make that much up front rather than risk the incremental income you could get from non-exclusive streaming options. That is, assuming part of that massive sale is exclusive streaming rights for the partnered streaming company.

            On Thu, Jul 19, 2018 at 11:31 PM, dontcallitbollywood wrote:



          • Interesting about the satellite rights. That would certainly explain why content creators still sell to them, especially if you expect most of your audience to be in India.

            It’s possible that the contracts would not allow sublicensing or redistribution, though that would be unusual. (And probably solvable, if you really wanted to.) It’s clearly not territory, which is a more usual sticking point, if they’ve set up their own international distribution. More likely a business decision than a contracts issue is my (totally uninformed) guess.


          • I have to assume that Hotstar is planning to expand rapidly internationally. I am pretty sure I didn’t imagine it that Premam was on googleplay when I first watched it, so about 3 years ago. And then suddenly it was gone, completely wiped and unavailable. And about 6 months after that, Hotstar.us launched. And now my blog people are telling me that Premam and their other big films are unavailable in other international markets, but Hotstar hasn’t launched an option there yet. So maybe they are pulling back their content first, and then launching the websites later? I guess it kind of makes sense, so by the time they set up their distribution in the new market, they have the exclusive content ready to go.

            For Satellite rights, just for example, Fan had a budget of 80 crore (I think), made about 90 crore at the box office, and once you cut taxes and theater cuts off of that it was probably closer to 40 crore. And then satellite sales were 40 crore all on their own. It was a bit of an upside down film, the satellite rights were sold before it came out when the box office was assumed it would be higher. But it was a nice little security blanket, they could make a very small box office profit and still break even. Even if it had done as expected, closer to 200 crore box office and 100 crore profit, that 40 crore would still make a big difference.

            On Thu, Jul 19, 2018 at 11:48 PM, dontcallitbollywood wrote:



  3. (Oh, and the transaction model, where you buy or rent a specific show or movie, is great for the platforms and content providers because it’s super straightforward – customer pays $, platform gets x%, content provider gets x%. The pricing also guarantees that both parties make more money from a transaction than they do from some small cut of the pool of total subscription revenue. This is why there are always more and better songs/movies/books available for transactional purchase over streaming, and why digital catalogs for purchase are much more stable over time. But there’s no guarantee to the platforms that they’ll keep engagement or hold onto this type of customer, at least until people have built up a big enough library of purchased content that they feel locked in. This is the ideal model (the Apple model), because the digital transaction model is very profitable for the platforms that aggregate everyone else’s content. The maintenance and distribution costs for digital content is so low, and the platforms make money off of every single purchase, no matter how small. The bigger the catalog, the more incremental sales. Content providers, on the other hand, only make money on sales or rentals of their content. This is generally less money than they made per sale on physical products, so to the degree that digital purchases displace physical purchases, they’re making less money on the same products. And if you’re a smaller producer without mass appeal, it’s hard to make the numbers add up.)


    • Thank you! This explains a bunch of things that have puzzled me. For one, why ErosNow let itself be taken over by Amazon instead of remaining independent. It wasn’t the cost of their catalog, I bet it was maintenance of the platform. And it explains why Yash Raj uses the youtube/google outlet for streaming rentals instead of building their own, the way they built their own distribution network and DVDs. Not worth it to be in long term maintenance and promotion of their own platform when they can just use another services structure.

      Balaji is the one taking the biggest risk then, trying to build something all on their own and somehow attract viewers.

      On Thu, Jul 19, 2018 at 10:51 PM, dontcallitbollywood wrote:



      • Yes, exactly. Tech is only cheap at scale. And you’re in a pool with some of the biggest companies in the world – Google, Amazon, Apple – who will always have way way way more money than you. If one of those giant companies perceives you as a threat to a market they have decided is strategically important, they will either acquire you or attempt to squash you like a bug. Even if you benefit from their benign neglect, they have oodles of cash to spend on constantly iterating and improving their hardware, software, and services. It can get very expensive to try to keep up.

        If it were the US, I would assume Balaji is an acquisition play – build a company into a valuable niche and wait for a big company to make you an offer.


        • I don’t know what Ekta Kapoor is planning for ALTBalaji, but I wouldn’t underestimate her. She built Indian TV from the ground up before she was 20, she might be able to pull out such an inspiration of content that she can keep Balaji standing on that alone. Or at least force Hotstar or one of the other TV channel based systems to build a premium option just for her content and create a partnership instead of an outright purchase.

          On Thu, Jul 19, 2018 at 11:11 PM, dontcallitbollywood wrote:



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.