Netflix has just taken an aggressive step in this huge market


Netflix (NASDAQ: NFLX) sees India as one of its most important markets for the future, with the streaming specialist estimating it could score 100 million subscribers in the country. However, the company is still a long way from achieving this goal due to intense competition from more affordable streaming services provided by groups like Amazon and Disney.

Netflix would only have five million paying subscribers in India, compared to 46 million for Disney + Hotstar and 19 million for Amazon Prime Video. The company’s premium pricing has proven to be a stumbling block in this market, but Netflix is ​​now looking to turn the tide with an aggressive strategy to attract more subscribers.

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Netflix drastically cuts prices in India

Netflix has reduced the price of its subscriptions in India from 18% to 60%. The mobile-only plan that was previously priced at 199 Indian rupees ($ 2.61 at the current exchange rate) per month has been reduced by 25% to 149 rupees ($ 1.95). Meanwhile, the standard plan, which offers content on two devices at 1080p resolution, saw its monthly price drop 23% to 499 rupees ($ 6.54).

The premium premium package now costs Rs 649 ($ 8.51) per month, compared to Rs 799 ($ ​​10.48), for 4K content streaming to up to four devices simultaneously. The basic package allows users to watch content on any device with 480p resolution, and it has seen the biggest reduction – Netflix will now charge 199 rupees per month, down from the previous price of 499 rupees.

The streaming giant is now in a better position to tap into India’s rapidly growing video streaming market, especially as its competitors have raised prices. Amazon has increased the price of its Prime service in India by up to 50% with an annual subscription that now costs 1,499 rupees ($ 19.66), down from 999 rupees ($ 13.10). The price of Amazon’s monthly plan also increased by around 40% to 179 rupees ($ 2.35).

Disney increased the prices for its Disney + Hotstar service earlier this year by introducing new subscription levels. Basic subscription now starts at 499 rupees ($ 6.60) per year, down from 399 rupees. But even then, it’s still a lot cheaper than what Netflix charges.

Given the price-sensitive nature of this market, Netflix’s cuts could prove to be a big deal for its long-term Indian expansion.

A smart initiative that could bring long-term gains

Although Netflix is ​​still a small player in India based on the number of subscribers, the company’s premium pricing has helped it capture a substantial share of the revenue in this market. Research firm Media Partners Asia estimates that Netflix owns 14% of online video streaming revenue in India, compared to Amazon’s 7%.

However, in a country with a gross domestic product per capita of just $ 1,927, there is probably greater potential in Netflix’s decision to make its subscription plans more affordable and accessible to a wider range of this audience. .

The recent changes are expected to pave the way for stronger growth in the Indian video streaming market, which is still in its early stages of development. Video streaming in India will generate $ 1.5 billion in revenue this year, a figure that will rise to $ 4.0 billion in 2025 and $ 12.5 billion in 2030, according to third-party estimates. Netflix has made a smart move by launching a wider network for viewers, a strategy that should help it move towards its ambitious goal of 100 million subscribers.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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