Netflix says user engagement up in India even as global subscribers log out

The fall worldwide was the first in over a decade, though the streaming service was making good progress in APAC, it said

Streaming giant Netflix on Wednesday said it was seeing an “uptick” in user engagement in India, even as it lost 200,000 subscribers globally in the first quarter of 2022. Netflix follows a January-December accounting year.
 

The firm also projected that it will shrink by another 2 million customers in the second quarter. As a result, the stock plunged 37 per cent by 9.45 pm IST on Wednesday.
 

The uptick in India, the company said during an investor call, was led by both local content initiatives as well as affordable subscription packs, prompting a wider set of users to try out the service in India. Netflix did not say who these users were, though it did admit that it was making good progress in the Asia-Pacific (APAC) region, where it was seeing “nice growth” in a variety of markets including Japan, India, Philippines, Thailand, and Taiwan.
 

APAC remains the only bright spot for Netflix, according to analysts, where it added 1.09 million paid subscribers in the first quarter.
 

In December 2021, Netflix, considered a premium service, slashed its mobile-only plan by 25 per cent to Rs 149 a month. While the basic subscription plan, which allows access to all content on any one device, was slashed by 60 per cent to Rs 199 a month. Some other plans saw a drop of 18-23 per cent in price.
 

“The product fit incorporates subscription prices as well as willingness and ability to pay. So, we have seen a nice uptick in engagement in India. We are definitely taking it in the right direction,” Netflix Co-Chief Executive Officer and Chief Content Officer Ted Sarandos said while addressing investor queries on its India strategy.
 

‘Frustrating’
 

In January, Reed Hastings, Netflix’s co-founder, president, and co-CEO, had admitted that the streaming service’s lack of success in India was “frustrating”, though it was still “leaning in there” for the future.
 

The streaming service lags in terms of subscribers in India, according to industry sources, at 5 million versus that of Disney+ Hotstar, which is estimated at around 36 million and Amazon Prime Video, which is estimated at around 17 million.

“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,” Netflix COO Greg Peters said on the call.
 

The optimism by the Netflix management regarding India comes amid muted guidance on subscriber additions in other parts of the world. Netflix cited four main challenges hampering its service including the impact of connected TVs and other technologies on the pace of growth of its addressable market; mass password sharing; increased competition from new streaming services; and macroeconomic factors such as inflation and the conflict between Russia and Ukraine.
 

According to Hastings, Netflix was working on a plan to monetise sharing of its content. “There are over 100 million households that are already choosing to view Netflix. They love the service. We have to get them to pay to some degree,” he said.

Advertising
 

Netflix also indicated that it had plans to create a lower-priced version of its service that has advertising, a big change for the company after years of only offering its movies and TV shows commercial free.
 

“Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” Hastings said on the call. “I’m a bigger fan of consumer choice, and allowing consumers who would like to have a lower price and are advertising tolerant to get what they want, makes a lot of sense.”

(With additional inputs from Bloomberg)

 Number of subscribers of key streaming services in India

Disney+ Hotstar: 36 million

Amazon Prime Video: 17 million

Netflix: 5 million