Netflix (NFLX) is all in on a country that's been historically difficult for its competitors: India.
The country brought in the second-highest net subscriber additions for Netflix in the second quarter and was also the third highest in terms of revenue growth, the company said on Thursday.
The streaming giant credited its localized content strategy and product mix as key drivers to attracting, retaining, and monetizing members in the area.
Although Netflix did not disclose exact subscriber or revenue figures for the Indian market, revenue for its Asia-Pacific region jumped to $1.05 billion in the quarter from $919 million in the year-ago period.
"What's going on in the quarter has been this ongoing build," Netflix co-CEO Ted Sarandos said during the company's earnings call. He called out the success of shows like "Heeramandi," which was created and directed by celebrated Indian filmmaker Sanjay Leela Bhansali.
"It's our biggest drama series to date in India," Sarandos said, adding original films and licensed films like Kiran Rao’s "Laapataa Ladies" and Vikas Bahl's "Shaitaan" have also outperformed in the country.
"We pick [the content] well, we program well, we improve the product mix, the market fit. We improve engagement. We grow members. We grow revenue. It's the same formula everywhere else," he said. "There's certainly plenty of room to grow in India, as long as we keep thrilling our audiences there."
India, which boasts a population of more than 1.4 billion, has become a media hotspot, with projected TV and streaming-related revenue growth of 11% in 2024. That compares with much more muted growth in other developing countries, according to analytics firm Ampere Analysis.
But the market has been a hard one for US media companies to crack. First, it’s difficult for companies to create a direct relationship with Indian consumers, who largely rely on mobile operators to gain access to streaming services due to limited broadband infrastructure.
Indian consumers also have a relatively low willingness to pay for streaming platforms thanks to free, ad-supported models from local content providers and rampant piracy.
Recently, two of Netflix's competitors scaled back on ambitions there. Disney (DIS) said in February that it would effectively give up its ownership of the network Star India by merging it with Indian telecom giant Reliance Industries. It will hold a minority stake in the entity.
Two weeks later, Paramount Global (PARA) said it was selling its 13% stake in Indian media company Viacom18 to Reliance for about $517 million.
But Netflix and even fellow tech giant Amazon (AMZN) — both of which boast significantly higher free cash flow levels compared to their legacy media counterparts — have been able to make inroads with higher-income Indian consumers by offering localized content.
"The real story in India has been the growth of the middle- to higher-income consumer," said Mihir Shah, vice president of research firm Media Partners Asia, told Yahoo Finance in March. "That's a segment which many of the tech platforms [like] Netflix and Prime Video are really dominating."
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance