Netflix (NFLX) – Get Netflix, Inc. Report Chief Executive Reed Hastings predicted four years ago that the company’s next 100 million users will come from India. That has not been the case.
Netflix and its competitor, Disney, have both failed to acquire momentum in the world’s second most populated country.
“The good news is that we have the flywheel spinning in every other important market. What frustrates us is why we haven’t been as successful in India. But we’re obviously heading in that direction “remarked Hastings on a recent earnings call.
Pricing has been a crucial factor in the blunders. Indians enjoy a good show. But they’ve never had to spend nearly as much as a Netflix membership plan, which costs around $8 per month at its most expensive.
“What makes India special is that cable costs roughly $3 per month per family. So, significantly different pricing from the rest of the globe, which has an effect on customer expectations, “Hastings stated.
In India, a linear cable TV or pay TV subscription package that contains a bundle of more than 100 television channels costs an average of $1.73 per month.
It’s hardly surprise, though, that Netflix aggressively reduced its costs in India in December. Its most basic package in India currently costs $2.65 per month, while its most expensive premium option costs little more than $8. The entertainment behemoth’s mobile-only viewing package has an even lower entrance price of of $2 per month.
“We felt it was the right time to decrease our prices there, to increase accessibility to all of that sort of — those incremental value or features that we’ve been trying to deliver to the market to more Indian consumers,” Netflix Chief Operating Officer and Chief Product Officer Greg Peters said last month, following the company’s fourth-quarter earnings report.
“And, once again, we’re looking at it from the prism of long-term revenue maximization… And so, in this situation, we’re anticipating that, while we’ll have lower average revenue per member as a result of the price cuts, we’ll make up for it with more subscriber increases “Peters said.
Netflix has stated that preliminary evidence after the announcement of these new price tiers supports their premise of revenue maximization through increased subscriber numbers.
Netflix reported higher-than-expected fourth-quarter results in January, but forecasted slow subscriber growth for the first three months of the year due to “Covid overhang” in key international countries.
The price decrease also comes at a time when Netflix has unable to break into the Indian user market, despite operating in the country for six years. According to third-party statistics supplied by research company Media Partners Asia, their overall paid subscriber base in the South Asian nation is pitiful 5.5 million.
Netflix does not break down its subscriber base by nation.