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Netflix 'just getting started in India,' may drop prices, show more local content to lure viewers

Tenzin Pema
18th Oct 2018
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HotStar, Amazon Prime, Voot, and JioTV better watch out. Video streaming giant Netflix says its “just getting started in India”. The company is all set to take on competition in India with more multi-lingual content, lower pricing models, and more bundling options.

At its quarterly earnings call on Wednesday, company executives said they were “super encouraged” with the growth they’ve seen in India, with Netflix CEO Reed Hastings saying the company will take it “one million at a time” when it comes to subscriber growth in the market.

“There’s over 300 million mobile households and almost twice that in mobile subscription, so there’s a huge market,” said Hastings.

In the past, Hastings has said on more than one occasion that the next 100 million subscribers for Netflix will come from India. The company has made a big push in India with original shows like ‘Sacred Games’ and ‘Ghoul’, as well as the film, ‘Love Per Square Foot’.

“We’ll take it a million at a time and figure out how to expand the market as we grow,” Hastings said, after signaling possible options could include “expanding from beyond English into Hindi and then into many more languages, more pricing options, (and) more bundling.”

Lower pricing options likely

Speaking about the pricing models, Chief Product Officer Greg Peters said Netflix will experiment with other pricing models, including providing lower pricing options than the ones currently in place.

“We’ll experiment with other pricing models. Not only for India but around the world that allows us to sort of broaden access by providing a pricing tier that sits below our current lowest tier, and we’ll see how that does in terms of being able to accelerate our growth and get more access,” Peters said.

“But even with the existing model, I feel we have a long, long runway ahead of us in India,” he added.

The appeal of local content

Netflix, which reported robust subscriber growth in the third quarter, did not provide separate subscriber numbers for India.

What it did say, however, was that it had “incredible success” with ‘Sacred Games’ and was able to drive greater viewer engagement through its original content focused on the Indian audience.

“What we were really able to do was take this product that was maybe less known in India when we launched and make it feel more local, more relevant,” said Chief Content Officer Ted Sarandos.

Still, growth in this high-potential market will not come overnight, the company said.

“We’re super encouraged with India and the growth we’ve got early on, but we know it’s going to be somewhat of a tough market,” outgoing Chief Financial Officer David Wells said.

Saif Ali Khan in the Netflix series, Sacred Games
A still from the Netflix series, 'Sacred Games'

Paid net adds vs total net additions

Separately, in a move that could be reflective of membership trends emerging from markets like India, Netflix said free trials in some markets do not yield more subscribers or higher revenue.

“We are learning that no free trial may result in greater revenue in some markets, so free trial count at the end of a quarter will likely be a less insightful predictor of future growth than in the past,” the company wrote in its letter to shareholders.

As such, Netflix will focus on providing forecasts on paid net adds rather than total net adds, which includes both free trial and paid membership.

“Paid net adds are more steady, as total net additions can be skewed by free trials of varying quality. This skew adds noise to our membership forecasts in a way that isn’t material to revenue or the business,” the company wrote in the letter.

Netflix will stop including free trial memberships in its forecasts from 2019. In 2020, it will stop reporting on end-of-quarter free trial count.


 

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