Business Foundations Capstone

Subscription Video On Demand Service

(Snapdeal)

Oscar Fernandez
9/10/2015
Situational Analysis
Product or Service–
Describe the product or service you are developing a strategy for

Digital Goods – Entertainment (Subscription Video on Demand)

The service for which we seek to develop our strategy consist in the offering of Digital Goods in the
Entertainment category to the Indian market. The service will be based on a SVoD protocol
(Subscription-based-Video-on-demand services) which is the protocol used by the global industry
leaders in this segment (Netflix & Amazon Prime Instant Video) and will be offered by Snapdeal, the
service will operate exclusively through the internet, the portal will be accessible using a web interface
(Web Browser) as well as through a proprietary application available for all Smartphones, Tablet, PC,
Smart Televisions and Gaming Consoles.

The content we are looking to market through this service consists primarily of TV Shows and Movies,
the current offering for these services in India is very limited due to certain restrains which involve high
initial investments, licensing costs, legal processes, licensing agreements, technical barriers
(deficiency on internet penetration, lack of reliable broadband connection across the country) and
Cultural barriers.

Given the restrains mentioned to access this market, India is still one of the most attractive markets
for digital goods. The primary reason being the high volume of internet users, the constant yearly
growth of new users and most importantly the lack of an all in one subscription based video on
demand service that offers a diverse and rich variety of content.
Product or Service–
Describe the product or service you are developing a strategy for

The current internet penetration in India could be considered low at a mere 19.19% of the
population, making the service limited to a certain section of the Indian population. While still
considering this section of the population low, with the constant yearly user growth and the
current market size of 243 million active internet users. With a country starving of decent
entertainment, it is a very lucrative and attractive market to offer Digital Goods in the
entertainment category.

Source: Internet Live Stats

External Environment –
Relevant economic, social, political, legal, technological trends

Economic Perspective
India’s economy has been significantly stable since the introduction of the industrial reform policies in
1991. Which has lead to the increase in the international trade sector with top partners being the
United States, European Union and the UAE.

According to the IMF World Economic Outlook of April, 2015. India ranks seventh globally in terms of
GDP at current prices and is expected to grow at 7.5 percent in 2016.

India’s economy has witnessed a significant economic growth in the recent past, growing by 7.3 per
cent in 2015 as against 6.9 per cent in 2014. The size of the Indian economy is estimated to be at Rs
129.57 trillion (US$ 2.01 trillion) for the year 2014 compared to Rs 118.23 trillion (US$ 1.84 trillion) in
2013.

The International Monetary Fund (IMF) and the Moody’s Investors Service have forecasted that India
will witness a GDP growth rate of 7.5 per cent in 2016, due to improved investor confidence, lower
food prices and better policy reforms.

According to Mr. Jayant Sinha, Minister of State for Finance, Indian economy would continue to grow
at 7 to 9 per cent and would double in size to US$ 4–5 trillion within a decade, becoming the third
largest economy in absolute terms.
External Environment –
Relevant economic, social, political, legal, technological trends

The Gross Domestic Product (GDP) in India expanded 7.50 percent in the first quarter of 2015
over the same quarter of the previous year. GDP Annual Growth Rate in India averaged 6
percent from 1951 until 2015, reaching an all time high of 11.40 percent in the first quarter of
2010 and a record low of -5.20 percent in the fourth quarter of 1979.
External Environment –
Relevant economic, social, political, legal, technological trends

Social Perspective
According to (U.S. CIA, 2010. U.S. CIA Factbook), the social landscape of India has experimented
certain neglect. The major concerns for the country include:

1) Establishing an effective and affordable healthcare system

2) Ensuring an adequate supply of safe drinking water
3) Controlling communicable diseases
4) Improving the education system, specifically the literacy rates.

In 2007, India ranked 128th out of 177 countries in human development. During the past decade, this
ranking has declined while the economy has grown at record rates. As an example, the gap of annual
earnings between those of the upper income groups and lower income groups has become more
noticeable over recent years.

India also ranks 142nd in the world for GDP expenditure on education by investing only 3.2% toward
these programs. This fact, along with their low literacy rates of 61% total (73% male, 48% female),
places India at a significant disadvantage with other developed and developing countries. For
instance, the U.S. literacy rate is 99% for both male and female, while China’s statistics show 92%
overall rate, with 96% men and 88% women. This data reveals two major problems for India:

1) Over 400 million citizens are unable to communicate effectively and

2) Unfair and unequal opportunities for women.
External Environment –
Relevant economic, social, political, legal, technological trends

Indian Social System

Population: In 2009 India had a population of approximately 1.15 billion ( 2nd largest in world) with a
growth rate of 1.407% ( 93 highest in the world).

Working population: The working population is conformed by 31.1% Children age (0-15 years),
63.6% of age (15-65 years) and 5.3% of age (65+ years). The median working age is 25.3 years.

Urban Population: In 2008 29% of the Indian population lived in a urban environment, with an
average urbanization growth of 2.5 % per annum (2005-2010).

Religion: The Indian religious system is diversified, conformed by 80.5% Hindu, 13.4% Muslim,
2.3% Christian,1.9% Sikh and 1.9% others.

Language: As with Religion, language is very diversified in India and is distributed as follows (Hindi
41%, Bengali 8.1%, Telugu 7.2%, Marathi 7%, Tamil 5.9%, Urdu 5%, Gujarati 4.5%, Kannada 3.7%,
Malayalam 3.2%, Oriya 3.2%, Punjabi 2.8%, Assamese 1.3%, Maithili 1.2%, other 5.9%).

Literacy Rate: 61% Total (73% Male, 48% Female).

External Environment –
Relevant economic, social, political, legal, technological trends

Political Perspective
India is one of the biggest democracies in the word running on a federal form of government. The
political environment is greatly influenced by factors such as government’s policies, politician’s
interests, and the ideologies of several political parties. As a result, the business environment in India
is affected by multivariate political factors. The taxation system is well-developed and several taxes,
such as income tax, services tax and sales tax are imposed by the Union Government. Other taxes,
such as octroi and utilities, are taken care of by local bodies. Privatization is also influenced and the
government encourages free business through a variety of programs.

According to (U.S. CIA, 2010. U.S. CIA Factbook), The political landscape in India in contrast with it’s
social environment shows signs of stability, as Prime Minister Manmohan Singh and his Indian
National Congress party were re-elected in 2009, which marks a first for the Indian government.
Conversely, terrorism and poor relations with its neighbors continues to be a dilemma, most notably
with Pakistan. The unrest with Pakistan includes fighting over the rightful claim of Kashmir, which the
U.S. Central Intelligence Agency (CIA) recognizes as the world’s largest and most militarized dispute
over territory.
External Environment –
Relevant economic, social, political, legal, technological trends

Legal Perspective
According to (U.S. CIA, 2010. U.S. CIA Factbook), India’s legal system is very comprehensive, with
taxation policies that encourage foreign direct investment. The judicial system is fair, equitable, and
transparent by design. However, lack of resources and inefficient processes has caused a massive
backlog in cases, which undermines India’s credibility on a global stage. Furthermore, the country
continues to rank high on corruption and displays a lack of will to counter this trend, as most political
battles are focused on religion and the caste system.

Technological Perspective
According to (Bertsch, Andy, James Ondracek, M. Saeed, Sonnie Bates, and ABM Abdullah.
"Business Environment in India: An International Perspective.") India’s technological landscape is a
driving force in the success of the nation. The demands for research and development continue to
outpace the number of qualified graduates with science and engineering degrees. Furthermore, the
government’s strategic plan gives priority to expanding R&D in universities and increasing
opportunities in the scientific fields of study.

India currently has wireless 3G and 4G technology which has facilitated several of their technological
projects given the limitation of the wired internet infrastructure in some areas. Furthermore, the
country also possesses one of the strongest IT sectors in the world, promoting constant IT
development, software upgrades and other technological advancements. Recently, India has also
attempted to launch their satellites into space.
External Environment –
Relevant economic, social, political, legal, technological trends

Leaving aside the limitations of the current wired internet infrastructure, India is currently growing at
a steady pace in the technology field. The smartphone penetration is rapidly growing given the
continuous reductions in costs to acquire mobile devices and data services (Mobile Internet). India
is going digital and mobile, partially fixing the issue of unreliable internet access and opening the
doors to a wider spectrum of users which also have a demand for digital entertainment.
External Environment –
Nature and extent of demand (demand elasticity & size of the market)

Receptiveness of the Market

Given the current scarcity and demand of rich and diverse digital entertainment in India, the offering of
a service that successfully satisfies this demand with an attractive, practical and easily accessible
approach would be very well accepted by the market.

Market Size
The addressable market size consists of 19.19% of the Indian population or 243 million people which
represent the current amount of active internet users in India.

Market Segmentation
The market for Digital entertainment goods is segmented in two parts:
1) Wired internet users.
2) Wireless internet users.

Market Elasticity
Contrary to the inelastic trend of western digital entertainment subscribers, the Indian market can be
considered a very elastic market for digital subscription services. The reason of the market’s elasticity
can be attributed to the limited purchasing power of the average user as well as the vast availability of
Digital content through other sources (illegal) which has always been the preferred alternative to
access digital content in India.
External Environment –
Industry structure (entry/exit barriers)

Entertainment Industry in India

According to the ("Spotlight on India’s Entertainment Economy." Ernst & Young.) report, The Indian
Media & Entertainment industry was valued at US$16.3 billion in 2010. The industry is forecast to
grow at a compound annual growth rate (CAGR) of 12% to reach a value of US$25.8 billion in the
next four years.
External Environment –
Industry structure (entry/exit barriers)

Industry Structure (Digital Entertainment - SVoD)

Hungama
Spuul

Sony LIV /
Others Digital LIV Sports
Digital Entertainment
Eros Now Entertainment BigFlix Competitors
Leaders (India) (India)

Hotstar Ditto TV
Box TV
External Environment –
Industry structure (entry/exit barriers)

Market Barriers
Entry Barriers
• Economies of scale
• Strict licensing regulations
• High Capital Investment
• Distribution Channels
• Government policies protecting local media and entertainment industries
• Weak customer loyalty

Exit Barriers
• Highly specialized infrastructure
• Long term assets and/or liabilities
• Government policies intended to maintain employment levels
• Specialized workforce
External Environment –
Industry structure – Competition (nature of competition, profile of competitors (background, resources, etc.),
market shares, & stage of product life cycle)

Industry Structure
Nature of competition:
The current nature of the SVoD (Subscription based video on demand services) industry competition in
India is an Oligopoly. The current entertainment offerings are very similar with a small number of
service providers and relatively high entry barriers.

Stage of product life:

The current stage of the product life cycle in which the SVoD (Subscription based video on demand
services) industry as a whole is situated in the Indian market would be the Introduction Stage, in this
stage companies are focused on attracting customers by raising awareness and interest in their
product offerings, getting customers to try the products through sale tools (Trials), strengthening or
expanding distribution and setting price objectives that would allow the company to recoup their
investment within the reality of the market. This stage ends when sales indicate that the target
customer accepts the product. The following stages are growth, maturity and decline/product extension.

Indian
(SVoD)
Industry
External Environment –
Industry structure – Competition (nature of competition, profile of competitors (background, resources, etc.),
market shares, & stage of product life cycle)
Industry Structure (Leading Competition)
Service Content Library
• Movies in Hindi and English
• TV content primarily from Sony, Big Magic and
library content
• 1000+ movies from most major production
houses in India in Hindi and regional
languages.
• Hindi and Regional TV content, primarily from
Viacom18.
• 2000+ movies in 13+ languages.
• 3500+ movies, Including all of Eros
Internationals movies from most studios
across Hindi and regional languages.
• TV shows from mainstream Hindi and regional
channels.
Pricing Models
• Free ad-supported content.
• Starter pack at INR99/month with
limited ads.
• Subscription package at
INR199/month.
• Free ad-supported content.
• USD $4.99/month for premium
content.
• Free ad-supported content.
• Packages start from INR199/month
for a 7 day trial to INR999 for a 6
month package.
• Free ad-supported content.
• Subscription pack INR100/month.
Profile
BoxTV, is a website and over-the-top (OTT)
subscription service offering on-demand
video streaming. The service is available in
India, Singapore, the United Arab Emirates,
the United Kingdom and the United States
and is aimed at Indian users and the Indian
diaspora in those countries.
Spuul offers an over-the-top (OTT) service
across Web, mobile/tablets (iOS, Android),
smart TVs, and Chromecast to stream and
download feature-length movies, short films,
and TV shows in Hindi, Tamil, Telugu, and
other Indian regional languages. The service
is available worldwide.
BigFlix is the first Indian Video on demand
portal, it offers a wide array of films, movie
trailers and reviews on and about Indian
entertainment. Movies are available in
different genres like action, comedy, drama,
romance etc. and cater to several Indian
languages like Hindi, Telugu, Tamil and
Bengali. BigFlix has the higher market share.
Eros Now International PLC is an Indian
motion picture production and distribution
company, based in Mumbai. It is a leading
global company in the Indian film
entertainment industry. Eros co-produces,
acquires and distributes Indian language
films in multiple formats worldwide.
External Environment –
Marketing Channels

Marketing Strategy:
The current approach/channels used by Indian SVoD companies to market their offerings are:

Web Ads

Email

TV Commercials

Social Media

Printed Ads

Other
External Environment –
Marketing Channels

Marketing Strategy (Successful Channels):

Social Media
With social media growing in India at a rate of approximately one user per second and with a total
number of active social media users of 134 million (10%) of the total Indian population, Social Media
has become one of the most successful channels used by SVoD service providers to market their
offerings.
External Environment –
Marketing Channels

Marketing Strategy (Successful Channels):

Web Ads
Taking in consideration the high number of internet users within the Indian population combined
with the average time spent daily on the internet by device per user, the strategic use of web
based ads has been one of the most successful channels on customer acquisition for SVoD
service providers in India.
External Environment –
Marketing Channels

Marketing Strategy (Successful Channels):

Email
The use of email based ads/promotions is one of the most effective and least difficult to execute
marketing strategies on a global context. With India the case is not remotely different, with tailored
offers and service test trails being offered directly to the user within the same platform that the
goods offered are delivered (Internet), email advertising has been a top channel for SVoD service
providers to market their offerings and acquire customer subscriptions in India.
Internal Environment –
Resources (Top management, Marketing, Production, Finance, research & development)

Company resources required to support the opportunity

Top Management
Within the required company resources to launch the project/opportunity the approval of Top
Management is key, the involvement and approval from the top executives of the firm which
represent and protect the interest of the stakeholders as well as determine the company’s goals,
objectives, strategies and future projections is indispensable for the opportunity. Their input and
expertise is very valuable for the successful development of the project.

Marketing
The involvement of the marketing department is an elemental and deciding factor on the success of
the project. A successful marketing strategy can make the difference in terms of reaching the correct
audience, business promotion and sales/subscriptions. With an elastic market and low customer
loyalty, a proper marketing campaign is key for success.
Internal Environment –
Resources (Top management, Marketing, Production, Finance, research & development)

Finance
The finance department is an invaluable resource and key element on the successful development
of the project. The department will provide input on available financial resources and support,
formulation of a financial strategy as well as being responsible for conducting regular financial
analysis and research.

Research & Development

The R&D department can be considered as one of the main pillars of the project, it will be
responsible for developing the complete infrastructure and support platform in which the platform will
operate, responsible of the development of potential new products and procedures as well as the
constant improvement of the existing offerings. The involvement of the R&D department is key for
growth and sustainability.
Internal Environment –
Brand diagnosis (current brand positioning, current pricing strategy, current distribution strategy, & current
promotions strategy)

Positioning
Within the Indian online market Snapdeal is currently positioned as the best advertising and discount
platform. For product and service providers it acts as a great advertising platform and for consumers
it acts as a low price online market. Snapdeal focuses on selling exclusively genuine quality products.

Pricing Strategy
The pricing strategy used by Snapdeal aims to offer good value for money to consumers and remain
highly competitive in the market. (High Quality Goods at Low/Affordable Prices).

Distribution Strategy
Snapdeal uses an inventory-free strategy, it is focused on a merchant based supply chain which is
conformed by more than 150,000 individual merchants who list their stock of products. Snapdeal sells
an average of 25,000 products daily and offers to ship them to over 4000 Indian towns and cities.

Promotions Strategy
Snapdeal implements a promotional strategy based on coupons, giveaways, promotional codes and
deals. Promotional offers are seasonal and on constant rotation, Snapdeal primarily delivers
promotions through Social Media, Email and Website/App (Discounts & Deals).
Internal Environment –
Problem definition & Critical Factors

Beneficial factors for the proposal within the organization

• Technology centric organization. Snapdeal is a technology focused company, the
proposed opportunity is an extension of their current offerings.

• Out of the box thinking on business development.

• Good funding was/is received from investors as company grew/continues to grow.

Hindering factors for the proposal within the organization

• The existence of other internal proposals previous to the submission of the
opportunity might delay the launch/focus of the project.

• Lack of capable internal infrastructure to support the opportunity.

• Financial resources to support the opportunity.

Segmentation, Targeting & Positioning
Market Analysis & Segmentation –
Who is/are the market?

Market Segments
The SVoD project is aimed to the same market segment as it’s parent company (Snapdeal) within but
not limited to India. There is the possibility to expand to other markets in the future.

Demographic Segments
• People in the age group of 16 to 60 years typically conform this segment.
• Individuals who are either college students or people who have recently started earning.
• Individuals having moderate to high family income.

Geographic Segment
• Indian urban and rural class with access to a reliable internet connection (Web or Mobile).

Psychographics Segment
• People in the Indian upper middle class and above.

Behavioral Segments
• Internet savvy users.
• People who are not afraid to make online transactions.
• People who want to try new products or services.
Market Analysis & Segmentation –

What does the market buy?

The targeted market purchases tangible/intangible goods and services.

When does the market buy?

The targeted market buys when it needs or wants a product or service.

Where does the market buy?

The targeted market buys through physical stores or through the online marketplace based on the
following factors: Availability, Price, Urgency and Distance.

Why does the market buy?

The targeted market buys in order to satisfy a demand or need.
Market Targeting –
Who is/are the target audience(s)?

Target Audience
The service we are looking to offer to the Indian market is destined to target a mass market of
consumer-paid streaming subscription service of movies and TV shows with aims to have the largest
number of subscribers regardless of age, sex, background, preferences, religion or beliefs. The
nature of the industry does not typically allow segmentation due to the wide variety of content for all
audiences.

Although our SVoD (Subscription based video on demand service) targets a mass market within India,
our approach is focused on satisfying individual subscribers needs within the target audience in order
to retain them long term (Loyalty). The preferred audience are tech savvy individuals in college or
graduates, belonging to the Indian upper middle class and above, located in a urban environment with
availability to reliable internet access and within the age bracket of (18-40 years) primarily due to
higher income levels which represent a higher market share and a higher index of loyalty.
Market Positioning –
Proposed brand positioning

Positioning
The main priority of SVoD (Subscription-based-Video-on-demand services) customers is to receive a
convenient, affordable, fast and personalized streaming service with a wide variety of content (Movies
and TV Shows). Our offering focuses on positioning itself as the provider of choice within the Indian
market by providing a mass market service that is convenient, affordable, fast, personalized, with a
wide variety of content catering the demand of the Indian market at an attractive affordable cost
making it a more viable, practical and cost effective solution to the customer than pirating content.

The successful execution of opportunity would enhance and expand Snapdeal’s brand, the company
will not only offer the Indian e-commerce marketplace tangible goods and services but also digital
entertainment which opens the doors to the offering of other digital goods (expansion). A strategy
similar to the one followed by one of the segments top industry leader in North America and Europe
(Amazon).

In terms of brand positioning the opportunity would position Snapdeal at the top within it’s direct
competitor (Flipkart) by becoming the leading Indian e-commerce marketplace of tangible goods and
digital entertainment. The incorporation of digital services (Entertainment) offers the company a
competitive advantage over the competition by diversifying it’s digital service portfolio which once fully
expanded (Books, Audiobooks, Music, Cloud Service, App Store) will place the company as the
leading all in one Indian solution for goods and digital services, similar to the market position of
Amazon in North America (Leader).
Market Positioning –
Communication objectives

Goals and objectives of communications

Raise brand awareness
Brand awareness will be raised through a series of channels and strategies directed to the target
audience which include Social media involvement, sponsoring industry related events and causes,
implementation of referral incentives and mass advertising.

Gain new subscribers

Subscriber acquisition will be achieved by an effective marketing campaign driven to offer potential
customers incentives, benefits and test trails of the service with an automatic subscription strategy at
the culmination of the established trail period, Developing partnerships with OEM manufacturers and
ISP’s to include our app on supported devices sold in India

Customer Retention/Satisfaction
For the company to achieve a strong customer retention the first step is analyzing the competition
and adjusting the service according to the gaps within the market. The second step is listening to
customers and establishing an effective co-creation culture. The third step is analyzing data use and
making strategic changes according to found behaviors and trends.
Operations Plan
Operations Plans –
Describe your plan for cost, quality, variety and responsiveness of the new line

Distribution Channels
The primary distribution channel for our SVoD service is Online Video on Demand Streaming to
media devices such as Smart Phones, Tablets, Smart Televisions, PC and Gaming Consoles.

Operational Flow
The core operations of the service, responsible for delivering the content to the customer will be
designed using a direct business to customer model (b2c) where content is requested by the user
through our portal/app, then transferred to the data center where it is processed through our servers
by an algorithm that optimizes it to be streamed back on the best video and audio quality supported
by the customers internet connection/device. Customers can also opt to download content before
watching which allows them to watch in full HD quality without requiring the device to be connected to
the network aiding bandwidth insufficiency to stream content at full HD quality.

To ensure a seamless integration between core operations and successful customer experience the
implementation of support operations is required, support operations will be responsible for customer
support and infrastructure maintenance/content update. For this division, Snapdeal’s customer
support and maintenance departments will be expanded to successfully fulfill customers inquiries and
perform regular maintenance/content update for both (Marketplace and Digital Entertainment).
Marketing will be handled by Snapdeal’s marketing division.
Operations Plans –
Describe your plan for cost, quality, variety and responsiveness of the new line

Operational Diagram
Below is a representation of the fundamental elements that conform the operational aspect of the
service.
Financial Plan
Financial Plan –
Estimate of costs and revenue for the new line

Subscription Service Cost

The main income stream for the service will be received from paid subscribers, the service will be
offered at an attractive rate of USD $2.99/month = INR ₹199.56/month.

Projected Costs Breakdown

Bellow we can appreciate a graphic representation of costs that are directly proportional to the
amount of active paid subscribers (Costs are estimated and subject to change).

Net Income
(11%)

General & Administrative

(7%)

Streaming Content Cost

Taxes (Production Studios)
(14%) (48%)

Marketing (Free Trial Subscriptions)

(4%)

Content Delivery Network (DataCenter)

(16%)
Financial Plan –
Estimate of costs and revenue for the new line

Initial Investment
The initial required investment to launch the project will be focused on expanding Snapdeal’s current
infrastructure to support the Digital Entertainment branch as well as funding legal and operational
costs consisting of: Restructuring of Internal Departments, Required PP&E, Software Development,
Workforce Training, Legal Fees, Initial Marketing Campaign and working capital. The initial required
investment is estimated to be US$25 million for the first year. The initial founding campaign aimed at
Snapdeal’s investors/stakeholders is intended to raise US$100 million to support the development of
the project over the course of 4 years.

Initial Required Investment (USD $)

Restructuring of Internal Departments $ 3,300,000.0
PP&E $ 2,500,000.0
Software Development $ 2,000,000.0
Workforce Training $ 2,600,000.0
Legal Fees $ 9,100,000.0
Initial Marketing Campaign $ 3,000,000.0
Working Capital $ 2,500,000.0
TOTAL $ 25,000,000.0
Financial Plan –
Estimate of costs and revenue for the new line

Revenue & Net Income

For the first year it is expected to very conservatively capture 5% of the Indian market (Internet Users)
which equals to 14.2 million subscribers at a linear annual growth rate of 27% (Average annual
market growth rate).
2016 2017 2018
Market Size (Million Users) 283 313 346
Subscribers (Million Users) 14.2 19.9 27.9
Market Share 5.00% 6.35% 8.06%
Revenue $ 42,308,500.00 $ 59,427,745.00 $ 83,430,478.30
Streaming Content Cost (Production Studios) $ (20,308,080.00) $ (28,525,317.60) $ (40,046,629.58)
Content Delivery Network (DataCenter) $ (6,769,360.00) $ (9,508,439.20) $ (13,348,876.53)
Marketing (Free Trial Subscriptions) $ (1,692,340.00) $ (2,377,109.80) $ (3,337,219.13)
General & Administrative $ (2,961,595.00) $ (4,159,942.15) $ (5,840,133.48)
EBTDA $ 10,577,125.00 $ 14,856,936.25 $ 20,857,619.58
Taxes $ (5,923,190.00) $ (8,319,884.30) $ (11,680,266.96)
PP&E Depreciation Expense (Linear 18%) $ (450,000.00) $ (450,000.00) $ (450,000.00)
Software Amortization Expense (Linear 25%) $ (500,000.00) $ (500,000.00) $ (500,000.00)
Net Income $ 3,703,935.00 $ 5,587,051.95 $ 8,227,352.61

The obtained results indicate that intentionally evaluating the project with a pessimistic approach
(Worst case scenario) it still remains considerably profitable while maintaining a healthy annual
growth rate.
Integration & Evaluation
Timetable of Activities
Market Entry Timeline

Date September October November December January

Investment Campaign (Sept. 15-30)
Legal fees and Permits (Oct. 1-15)
Initial Pre-launch Marketing Campaign (Oct. 1) - (Dec. 31)
Restructuring of Internal Departments (Oct. 1) - (Nov. 15)
PP&E (Oct. 15) - (Nov. 15)
Workforce Training (Oct. 7) - (Dec. 31)
Software Development (Oct. 7) - (Dec. 7)
Delivery Network Contract (Nov. 7) - (Dec. 7)
Production Studios Contract (Oct. 1) - (Dec. 25)
Platform testing (Beta) (Dec. 1-31)
Project Launch (Jan. 1 - ∞)
Evaluation
Success Evaluation
Success will be evaluated using big data and personalized analytics to study relevant quantitative and
qualitative collected data and compare it to the predictions made by the company’s algorithm.
Evaluation Criteria
The criteria used to evaluate success will be the following:
• Relevance: Recommended content and the user’s interest on selecting the recommended content.
• Effectiveness: User’s satisfaction with the system’s output and interaction outcome.
• Accuracy: The system’s precision on predicting how much each user will rate content based on
their preference and history.
Collected Data
Data collection will be focused on the following:
• Search Behavior
• Ratings
• Comments
• Activity

Data Collection Method

Data will be collected through the project’s web interface/app and analyzed by our algorithm at the
company’s Data Center, collection will be done constantly every time each user logs on.
Evaluation
Failure Scenarios
• Market entry of global SVoD leader Netflix, the global leader (Netflix) on the SVoD category has
been going back and forth on entering or not the Indian market. It’s entry would be a serious
thread for the project given the fact that Netflix has a competitive advantage over the rest of it’s
competitors with it’s proprietary shows that have been a huge success as well as a very
streamlined and mature interface and analytics to support it’s content production. To address this
threat the company can either front it by implementing a more aggressive marketing strategy which
would significantly reduce margins or propose Netflix a partnership.

• The government’s frequent tax increase policy, tax rates for digital content have increased
drastically over the past few years. This year (2015) the Indian government increased taxes from
12% to 14% and it’s expected to continue this trend.

• Bandwidth cap, if ISP’s decide to constraint the amount of bandwidth they provide in a scenario
where the amount of internet users grows at a faster rate than their infrastructure’s capacity. In this
situation the best solution is to keep a close relationship with Indian ISP’s and stimulate the
proposal of a contract/deal that excludes the company’s content from the cap limitation, another
solution would be optimizing the content’s bitrate to consume the least amount of bandwidth at the
expense of video and audio quality.
Bibliography
References
• Bertsch, Andy, James Ondracek, M. Saeed, Sonnie Bates, and ABM Abdullah. "Business Environment in
India: An International Perspective.“ 2015.

• Bauman,L., Deal, N., Ishak, P., & Johnson, S. "Netflix Environmental Scan / SWOT Analysis.“ 3 Feb. 2013

• "Digital Media: Rise of On-Demand Content Report." Deloitte India, 2015

• “Indian Media and Entertainment Industry Report 2015”. FICCI-KPMG, 2015

• "India’s Technology Opportunity: Transforming Work, Empowering People." McKinsey Global Institute, 2014.

• Kriete, Logan. ”2013 Netflix Strategic Report”. 2013

• "Spotlight on India’s Entertainment Economy." Ernst & Young, 2011.