Can Amazon Prime Videos entry into India lead to price war?

The video-on-demand (VOD) or over-the-top (OTT) market has been shaken with the entry of Amazon Prime Video this week. At Rs 41.50 per month, Amazon has managed to undercut most players in the market and yet provide video content that has the power to muscle the service to a pinnacle a short span f time. 

Although this is just an introductory offer for Amazon Prime Video's for it to get a foothold into the country, when questioned about how long it is expected to continue Tim Leslie, Vice President, Amazon Instant International said that they are “going to continue to provide Prime at a great value”.

However, the low price at which they have launched in India comes as a direct threat to all the OTT and VOD players in India. One of them is Netflix, which launched earlier in January this year. The basic subscription price is Rs 500 per month and goes on to Rs 800 per month for its premium subscription.

Other OTT players such as Eros Now offers its basic services for free, but the Eros Now Plus is priced at Rs 49 per month and Eros Now Premium subscription is for Rs 99 per month. 

Ditto TV (which is a part of the same group as Zee Business) offers on a monthly basis subscription packages of Rs 20 for 1 month, Rs 60 for 3 months, Rs 120 for 6 months and Rs 240 for a year. Hotstar, on the other hand, charges Rs 199 per month for its premium membership which live sports, movie premiers, etc.

Even LeEco has its VOD services, but it is offered currently for free to LeEco smartphone users for a year. There are many other OTT and VOD players which offer free content or are part subscription driven.

The subscription price of Amazon Prime Video makes it one of the lowest among these top players, in comparison to the content it offers. So the question is will this drive other players in this space to drop their subscription prices?

While Netflix, Eros Now did not respond to an email query sent to them at the publishing this story, Hotstar refused to comment.

Archana Anand, Head of Digital at Zee Digital Convergence said that they are not looking to review or change its subscription charges. “The OTT market is large enough and we have our own strategy in place when it comes to the content on our platform,” she said.

A senior official at LeEco who wished not to be identified said that the currently the content free for users and the company will take a call regarding the subscription charges somewhere around May or June 2017. 

The silence of OTT players or avoidance to admit to competition from Amazon Prime Video's entrance makes it all the more clear that all these players are wary of this giant's entry. 

Can Amazon force them to lower prices of will it increase its own once it gains a sizable market-share?