Amidst the intensifying competition, the price of Netflix subscriptions in India has been slashed further.
Taking a cue from the success of its business strategy in India, Netflix, the well-known OTT entertainment player, has decided to slash the price of Netflix subscriptions in 116 countries. The company first launched low-cost subscription plans in India in December 2021. Since then, the company has recorded a 30% YoY increase in customer engagement, as well as a 24% YoY growth in revenue.
However, it’s the first time when the company has decided to make such a steep cut in subscription prices, ranging between 20%-60%, in order to strengthen its market presence in India.
It’s important to note that the prices of Netflix subscriptions are already the lowest in India compared to most countries where the OTT player has made its services available to consumers. By slashing it further, the company has hinted that a mobile-first strategy is the top most priority in the near future across the markets.
“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,” Ted Sarandos, the co-chief executive officer said during an earnings call.
Sarandos has attributed the success of historical dramas, especially RRR, and Sanjay Lela Bhansali’s Gangubai Kathiawadi, both streamed following their theatrical premieres, as proof that the platform’s ability to reach millions of consumers is unparalleled.
Netflix’s mobile-only plan, previously priced at 199 dollars per month, is now priced at 149 dollars. In addition, the basic subscription, which allows access to all content on one device, is now priced at 199, instead of the previous 499.
Is Netflix India success a real reason behind price cut?
Undoubtedly, the adoption of a mobile-first strategy in India at a very reasonable price has helped Netflix gain market share and eat into the market of other competitors.
But, the other more convincing reason behind the price drop is the crackdown on password-sharing practices that Netflix is gearing for.
Just a day before Netflix revealed a broad rollout of its strategy to crackdown on password-sharing practice in coming months. It is aligned with an objective to fish out freeloaders and increase the number of paid subscribers on its platform. It will also help the company to book more revenue in future quarters and offer an enhanced personalised experience to every user.
However, to ensure the plan’s success, Netflix has revisited its pricing strategy to make the transition more convincing for free and paying users.
Netflix is all set to start executing its paid-sharing plan in the US, Canada, New Zealand, Portugal and Spain from Q2 2023.
Netflix is now preparing the other markets by dropping subscription prices before the launch of paid-sharing plans which are meant to discourage people from password sharing.
In parts of Asia and Europe, Latin America and sub-Saharan Africa, and the Middle East, as well as sub-Saharan Africa, prices have been reduced.
As households are actively cutting corners in the US – the home market for Netflix – to deal with rising living costs amid the market downturn, Netflix is under pressure to sustain its growth. In addition, the rising competition from rivals, especially Disney Hotstar and Hulu, makes the market conditions even more challenging.
Netflix’s global net income for Q1 2023, ending March 2023, declined 18.3% YoY, reaching $1.3 billion. However, Netflix’s revenue increased 3.7% YoY to $8.16 billion (roughly Rs. 671 crore).