Netflix has started to seriously think about cutting its prices in India – which seems to be a contra call at a time it has announced its intention to raise prices in the US, Brazil, Mexico and some parts of Europe.
Greg Peters, Netflix’s chief product officer, said in a conference call on Tuesday: “We’re quite certain that we should do something to find a price tier that’s lower than the existing lowest price tier to broaden accessibility. We think that they’ll be important to adding members in India.”
Peters was responding to a question asked by Eric Sheridan of UBS – who conducted the conference call – whether a “mobile-only, maybe lower-priced product could open up a lot of demand in the developing world”.
Netflix has three monthly price points in India: Rs 500 for a basic service, Rs 600 for a standard bouquet, and Rs 800 for its premium service.
The basic service does not provide a high definition (HD) and ultra HD viewing experience but it can be viewed on multiple devices including a laptop, television, phone and tablet.
The Netflix service is steep in comparison to rival Amazon Prime’s content which is available at Rs 129 a month, or Rs 999 a year.
Peters said: “We’ll see what the right mix of features is, because there is a bit of a magic to try and get the right set of features at the right price point in a way that the consumer can relate to…it has to be sort of natural and intuitive to the consumer that this is what they’re getting. So we’ve got more work to go do there, but it’s something we're highly focused on.”
At the conference call, chief content officer Ted Sarandos said Netflix had been “super encouraged …with Love Per Square Foot and Sacred Games, where not only do we get a lot of viewing in India but it just took an incredible position in the zeitgeist where people were talking about and writing about the excitement of a show of the quality of Sacred Games.
“And then recently we followed it up again with Delhi Crime that people are loving in India and (which) is getting watched outside of India as well.”
Netflix founder and CEO Reed Hastings said the company had been able to add 9.5 million subscribers during the first quarter around the world but did not break down subscriber additions by geographies.
“It's a phenomenal start. So (we have made) steady progress, basically the same as many prior quarters cranking away on amazing content, amazing service and steady growth around the world,” Hastings added.
Peters added: “We're really providing stories that Indian consumers really love, it's an opportunity for us to look at how we broaden the accessibility of the service then to more and more Indian consumers. And so part of that is making sure that we have the right payments models in place and innovating and testing about our new models to make the Indian consumer feel like they have existing ways of paying that are natural to them that they can use to pay for Netflix.”
The price cuts in India, when and if they happen, will be designed to stem the loss of subscribers when Disney Plus launches its services.
In the first quarter, Netflix profits had risen to $344 million as sales rose 22 per cent to $4.5 billion. Total revenue is expected to increase to $4.9 billion in the second quarter with income growth was forecast to slow to $249 million.
Sarandos said with the addition of “another dozen original films in India”, the subscription-based streaming over-the-top (OTT) service had started to see that “investment in local language content in India payback in the form of excitement and member growth and hours growth that's encouraging us to keep going.”