Netflix has cut subscription prices in 116 countries following the success of its business model in India.
Customer engagement and revenue growth
It has achieved a 30 per cent growth in customer engagement and 24 per cent revenue growth year-on-year in India after it launched a cheaper plan here.
It had, for the first time, reduced subscription prices in the range of 20-60 per cent to appeal to the Indian market.
India a “big prize”
Ted Sarandos, co-CEO, said during an earnings call, “India is a big prize because it’s an enormous population of entertainment-loving people and we have to have the product they love.
So we are doing the creative part and getting the pricing better and there’s always lots of promise to continue to grow in India.
It is a very specific market in terms of (the fact that) they like local content, but also you are seeing their local content is travelling more than ever.”
He highlighted the success of local content such as RRR and Gangubai Kathiawadiand said, “We can do quite well in India. We are a long way from that, we are still investing in it and I think that we will ultimately do great in India.”
Price reduction
Taking cues from the success of lower pricing in India, the company in Q1 reduced prices in 116 more countries.
Learning from this success, we reduced prices in an additional 116 countries in Q1,” Netflix said in its earnings report for March 2023 quarter.
“These reductions — combined with an improved slate — helped grow engagement in India by nearly 30 per cent year-on-year while F/X (forex) neutral revenue growth in 2022 accelerated to 24 per cent (versus 19 per cent in 2021).
The countries where it slashed the price contributed less than 5 per cent to its total revenue during financial year 2022.
Prioritise adoption over revenue
“We believe that increasing adoption in these markets will help to maximize our revenue in the longer term,” the company said.
Global net income declined by about 18 per cent to $ 1,305 million in the quarter ended March 2023 from $ 1,597 million in the same period a year ago.
Revenue however, grew 3.7 per cent to $ 8,162 million during the reported quarter from $ 7,868 million in the March 2022 quarter.
Paid membership globally grew 4.9 per cent on YoY basis to 232.5 million.
Forecasts
The company expects its net income to slump by about 1.6 per cent to $ 1,283 million in the April-June 2023 quarter.
It forecasts its revenue to increase by 3.4 per cent to $ 8,242 million.
Ad-based plans
While it was earlier against ads on its platform, it has now started advertisement-based plans with lower subscription price points compared to its initial plans.
“Engagement on our ads tier is above our initial expectations and, as expected, we’ve seen very little switching from our standard and premium plans,” Netflix said.
Upcoming Indian content on the platform includes period drama Heeramandi, Zoya Akhtar’s The Archies, returning seasons of Delhi Crime, Mismatched, The Fabulous Lives of Bollywood Wives, Kota Factory, and She besides originals with Kareena Kapoor Khan and Anushka Sharma.
