Video streaming giant Netflix has claimed that its strategy to reduce prices in India is bearing fruits. Top company officials have said that the platform has seen a bump up in its subscriber base following the reduction in the subscription price. Further, the engagement on the platform has also seen a nice uptick.
"The product fit incorporates subscription prices and willingness and ability to pay. So we have seen a nice uptick in engagement in India. So we're definitely taking it in the right direction," Netflix Co-Chief Executive Officer and Chief Content Officer Ted Sarandos told analysts during the Q1 earnings conference call.
Netflix Chief Operating Officer and Chief Product Officer Greg Peters noted that the incremental subscribers are largely behaving similar to the subscribers it has added over the last 12 months. "So not a fundamental difference. And really, this was a bet in terms of long-term revenue maximization, which is sort of how we think about the top level, the valuatory model we have for these things," he added.
Peters is gung-ho about the upcoming content slate in India. "And we're really excited about a bunch of titles that were coming down and thought there was an opportunity to broaden the audience that got to see those titles. And so we've seen that effect definitely take hold where we have an additional bump in subscribers that will now get to see that content," he said.
He also believes that the quality of local Indian content will help Netflix to win more subscribers due to the word-of-mouth publicity from its current users. "And the bet is that those folks will enjoy those titles and that they will talk enthusiastically about those titles to their friends, their family, their co-workers, and that will lead to another sort of positive momentum on the flywheel of sign-ups," Peters stated.
In December 2021, Netflix had rolled out new pricing by deeply discounting its original subscription plans. The price of the mobile plan has been cut down to Rs 149 a month from Rs 199 earlier. The Basic plan, which was priced at Rs 499 per month, has been brought down to Rs 199 a month. The Standard plan is now priced at Rs 499 compared to Rs 649 earlier. The Premium plan pricing has been reduced to Rs 649 from Rs 799.
Speaking at the Morgan Stanley Technology, Media & Telecom Conference recently, Netflix CFO Spence Neumann had said that the service is relatively overpriced in the price-sensitive market. Frustrated with slower subscriber growth in the country, Netflix had, in December 2021, slashed subscription prices across plans to step up the new customer acquisition.
"We dropped prices in India as we were overpriced relative to the market there. Not necessarily relative to the competition, but relative to the kind of dynamics in that market with disposable income, discretionary income, and income levels," Neumann had said.
Earlier, Netflix Co-CEO Reed Hastings had said that a lack of success in India has frustrated the company. "The great news is in every single other major market, we've got the flywheel spinning. The thing that frustrates us is why haven't we been as successful in India. But we're definitely leaning in there," Hastings said during the Q4 earnings conference call.