In its quest for international dominance, Netflix may be hitting a snag in one sought-after market.
India is considering censoring both Netflix's (NFLX) - Get Free Report and Amazon's (AMZN) - Get Free Report streaming services in the market, Reuters reported on Thursday. Both companies have sought to expand their presences in the fast-evolving Indian market. Netflix shares were up 2.91% on Thursday following a third-quarter report in which it beat earnings and subscriber growth estimates for the third quarter, but issued weaker-than-expected guidance for the fourth quarter. Amazon shares were up 0.86%.
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The censorship discussion was sparked by complaints filed with Indian law enforcement in recent months, which claimed that streaming content from Netflix and Amazon was obscene or offensive. The complaints included an allegation that the Netflix series "Sacred Games" included derogatory or offensive content; another complaint, filed by an Indian politician accused Netflix of defaming Hindus with some of its programming.
For Netflix, international expansion is the linchpin of its overall growth strategy -- and Netflix has staked a claim in India by producing localized programming and testing lower price points. In 2018, Netflix CEO Reed Hastings told an audience that its next 100 million subscribers would come from India.
In its shareholder letter on Wednesday, Netflix said that as of the first quarter of 2020, it would be breaking up its user base into four regions: Asia Pacific (APAC), Europe, Middle East & Africa (EMEA), Latin America (LATAM), and the U.S. and Canada (UCAN)
Netflix also wrote in the letter that "Sacred Games," a thriller exploring the criminal underworld of Mumbai, is its most popular show in India. In addition, it recently rolled out a lower-priced mobile plan in India in July, along with similar plans in the Philippines and Malaysia.
"Our approach with pricing is to grow revenue and so far, uptake and retention on our mobile plan in India has been better than our initial testing suggested. This will allow us to invest more in Indian content to further satisfy our members," the company said.
The streaming market in India is projected to grow by 80% between 2019 and 2022, according to Indian management consultancy RedSeer. And Netflix is far from the only streaming player betting on original content to capture the market.
In India, both Netflix and Amazon compete with a range of services, such as Hotstar and Walmart (WMT) - Get Free Report -owned Flipkart, which recently introduced a video services that features Bollywood entertainment and content from a range of regional production companies and distributors.
It is possible that the Indian government will opt not to enact any censorship regulations -- but if it did, it wouldn't be the only clampdown on tech or content companies based overseas. Amazon has run to its own roadblocks in India, namely as a regulation enacted earlier this year that limits foreign e-commerce marketplaces.