Video streaming platform Netflix reportedly plans to revisit its pricing strategy to offer a range of price points and feature sets to customers across the world, after a similar price cut in India helped the social media firm to grow user engagement and accelerate its revenues in the country.
Netflix effected a 20-60 percent reduction in the prices of its services in India December 2021 amid intense competition and a rising appetite for digital content in the country.
These reductions, along with an improved content slate, helped grow engagement in India by nearly 30 percent year-on-year, while revenue growth increased to 24 percent in 2022 versus 19 percent in 2021, the company said in a letter to shareholders, Moneycontrol reported.
“Learning from this success, we reduced prices in an additional 116 countries in Q1. While they represented less than 5 percent of our FY22 revenue, we believe that increasing adoption in these markets will help to maximize our revenue longer term,” the company said.
The move is seen as the company’s renewed efforts to woo new customers while retaining existing ones, especially in international markets such as India.
The company witnessed a slowdown in the growth of its paid member base after a pandemic-driven subscriber bump.
The company reportedly added 1.75 million paid members in Q1, 2023, missing analyst estimates of 2.06 million additions.
During the company’s earnings conference call on April 18, Netflix CFO Spence Neumann termed the move on refining pricing strategy as the next step in the company’s evolution of a better product marketing fit and pricing fit with an aim to grow its penetration in these markets as well as deliver better medium and long-term revenues.
Neumann also said these price cuts are not material to their business anytime in the near term. “It’s a lot of countries, but it represents less than 5 percent of our revenue. So it’s something that will hopefully benefit us over the long term,” he said.
Incidentally, the latest move comes even as the company has been piloting various ways to crack down on password sharing in select countries for the past few months and rolled out the paid sharing option to four countries including Canada, New Zealand, Portugal and Spain in Q1 2023.
Netflix estimates that over 100 million people use an account that they don’t pay for, which the company says undermines its ability to invest in and improve the service for its paying members, as well as build its business.
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