Netflix working on cheaper mobile-based service to gain subscribers

Netflix has been trying for some time to find a way to gain more subscribers in India and crack a model so as to offer its services at a lower price point while fighting growing competition from other video streaming services. It may have now found an answer — a mobile-only lower-price product. Though the model is still being experimented with, the company said.

“I think that's a great example of something that we're trying out, we're not positive that's the right model, but it's — 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 that accessibility. We think that they'll be important to adding members in India,” Greg Peters, chief product officer, Netflix, said during the company’s post earnings call. “So all of that's an ongoing effort that we think is a great match for the broadening of the Indian content catalog that we have.” To do this, the firm needs to get the 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 consumers, said Peters. “So we've got more work to go do there, but it's something we're highly focused on and anticipate we'll make more progress in.”

At present, the California-based company’s basic monthly subscription plan is priced at Rs 500, the standard plan costs Rs 650 and the premium plan is sold at Rs 800 in India.

Experts believe it makes a lot of sense for Netflix to come up with a low-priced mobile-based platform. They point to a Cisco report according to which the number of smartphone users in India is expected to double to 829 million by 2022 from 404.1 million in 2017. The proliferation of smart devices is also expected to propel India's per capita data consumption to nearly 14 gigabytes by 2022 from 2.4 GB in 2017. By 2022, the smartphone data consumption will increase by five times, according to the report.

Netflix, whose major global rival includes online streaming venture Hulu, competes with players such as Hotstar, Amazon Prime, and Reliance JioTV in the Indian market. Hotstar claims it has more than 100,000 hours of drama and movies in nine languages, and coverage of every major global sporting event. The firm reached 300 million monthly active users four years after launch.

Netflix is valued $157 billion and has around 148 million subscribers globally. India is a big market for the company, which said its investment in local language content was paying rich dividends in terms of users growth as well as the average time spent on the platform. “That's encouraging for us to keep going,” said Ted Sarandos, chief content officer, Netflix.

The firm said it has been “super encouraged out of the gate” with romantic comedy Love Per Square Foot, and thriller Sacred Games, which not only got a lot of viewing in India on Netflix but has also emerged as a leading show in terms of quality. Recently, Netflix followed it up with drama Delhi Crime, which has also been hugely appreciated globally.

For Netflix, providing stories that Indian consumers really love is an opportunity to look at how it broadens the accessibility of the service to Indian consumers. A part of that is making sure that Netflix has the right payment models in place, said Peters. “This includes 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,” he said.