Lower priced plan has aided subscriber growth in India: Netflix
MUMBAI: Video streaming giant Netflix has said that the launch of mobile-only plan in India has helped the company to add incremental subscribers. According to IHS Markit estimates in 2019, Netflix had 1.2 million paying subscribers in India.
Speaking to analysts during the Q4 earnings conference call, Netflix Chief Product Officer Greg Peters said that the lower-priced plans have paid rich dividends in India, Indonesia, and Malaysia.
“You’ve got the three countries correct and we’ve seen in the performance across those three countries is that, because we’ve added this price at a lower price point this year at a lower price point, we’ve been able to add incremental subscribers, which is great,” Peters said.
In July 2019, Netflix had launched a mobile-only plan for India priced at Rs 199 per month. The mobile plan allows members to enjoy all of Netflix’s content—uninterrupted and without ads – in standard definition (SD) on one smartphone or tablet at a time.
He further added that the company has also seen an increase in subscriber retention. He also hinted that the lower-priced plans might be rolled out in other markets as well.
“We’ve see increase in retention not only at that mobile plan, but in other plans as well. And net that’s a revenue-positive action for us and so we’re super excited about that. We think that that’s a pretty good indicator that there might be other countries around the world where that kind of offering will work as well,” he stated.
Netflix, he said, has also got a bunch of different other approaches to increase accessibility. “We’re going to try out and we’ll really try and be active and innovative in that area to try and improve the accessibility of the service for more and more people around the world but in a way which we think is long-term revenue optimising as well.”
Netflix chief financial officer Spence Neumann said the company has seen healthy growth in markets like India, Japan and Korea. The company is also increasing content market fit in these markets.
“We’re seeing healthy growth in all of these markets, so across Japan, Korea, India. I mean, all of these markets were increasing that content market fit, we’re getting much smarter about the markets in both — as you say the content we offer, as well as the pricing and packaging and bundling and distribution to our members and payment methods for our members. So I think we’re getting better literally every quarter, every year and that’s playing out in terms of very healthy growth across those markets,” Neumann stated.
The Netflix CFO further stated that the company’s goal is to maximise revenue through initiatives like lower-priced plans. That will help in growing subscribers and revenue even if brings down the blended ARPU (average revenue per user).
“And then with respect to pricing, certainly the pricing is different in every country around the world, but we don’t — we’re not managing to ARPU. We’re managing to revenue maximisation as we talked about earlier. So we’re not going to provide a long-term focus. Obviously, as we have lower-priced mobile offers that’s going to bring down a blended ARPU in a country or in a market. But if we’re doing that in a revenue accretive way we think that’s great for a long-term business. We’re growing subscribers and we’re growing revenue.”
In December, Netflix co-founder and CEO Reed Hastings had said that the company will be spending Rs 3000 crore on creating original content in India to grow its presence in the market. Speaking at the 17th Hindustan Times Leadership Summit, he had said that the aim behind this allocation is to become more Indian in its content offering.
“We are developing our Hindi and local content here. This year and next year, we will spend about Rs 3,000 crore developing content. So you will start to see a lot of stuff hit the screen. We have got about 100 employees in Mumbai… We are really trying to invest in becoming more Indian in the content offering,” Hastings had said.
Netflix’s India unit had posted a 700% growth in its revenue aided by growth in the subscriber base due to investment in local content and marketing. The company reported revenues of Rs. 466.7 crore for FY19 with a net profit of Rs. 5.1 crore.
In FY18, Netflix India’s revenue and net profit stood at Rs. 58 crore with Rs. 20 lakh respectively. However, the FY18 financials is only for seven months starting September last year after the actual transfer to a local distribution entity from Singapore.