Decoding Netflix’s ‘bold’ new Rs 199 made for India mobile-only subscription plan

“Our missed forecast was across all regions, but slightly more so in regions with price increases,” Netflix co-founder and chief executive Reed Hastings wrote in his letter to shareholders reporting the US-based video streaming giant’s recent quarterly financial earnings. Netflix didn’t add nearly as many new subscribers during Q2 2019 as it had projected it would – only 2.7 million people signed up and paid for the service, as opposed to the expected 5 million. 

For a company that’s based on subscriber growth, you can say that’s quite a slump.  

Netflix may have lost subscribers this quarter in the US – which is a first for the company in years – but it witnessed significant growth in global markets – particularly in India. Which is where it’s looking to expand now – something that the company has also been very vocal about. It will be banking heavily on its expertise, it’s exhaustive catalogue of originals - India originals. Thirteen new films and nine new original series are already in the pipeline. But it’s doing something else to ensure, it’s reaching out to even more people. Something different. Something anti-Netflix. 

Enter the Rs 199 made for India mobile-only subscription plan 

Last we heard, Hastings “had no plans for cheaper prices in India.” But that’s not to say, Netflix wasn’t considering a cheaper option for India. Hastings has also (almost always) maintained that Netflix would think about other things – including possibly a shift in price strategy – as the Internet matures and more people come online.   

There are over 300 million mobile broadband users in India and each one of them is a potential subscriber. Indians are now apparently spending 30 per cent of their phone time - and over 70 per cent - of their mobile data - on entertainment, according to a FICCI-EY 2019 report. And Netflix wants to be their primary source of entertainment. But it can’t do that without an affordable subscription plan. A basic Netflix subscription costs around Rs 500 (per month) in India, whereas Amazon offers video, audio and shopping plus fast deliveries at Rs 999 a year. 

Netflix started testing a new Rs 250 mobile-only subscription plan in India around March-April. On Wednesday, July 24, the company officially rolled it out for all. “The beauty of Netflix is that it doesn’t have a top-down approach. Everything is hypothesis and test driven in the sense that we try more than 400 different tests a year. We had our hypothesis that we can address and speak to a new type of Netflix member here in India through this plan, we tested it and I think we’re all very happy with what we saw,” Ajay Arora who is director for product innovation at Netflix tells me.  

The new made for India mobile-only plan will support one concurrent stream and will allows users to view content in standard definition (480p) quality across mobile and tablets (one mobile/one tablet at a time). Downloads and smart downloads will be allowed, but users can’t cast or mirror content on larger screens like smart TVs – Netflix believes, those looking to do that should opt for its basic subscription plan. 

The important takeaway though is that it’s its most affordable plan in the whole world, although Netflix is open to bringing it to other markets basis of feedback in the future. “It wasn’t a pricing angle thing (at all). Knowing that India is a key market, (the goal was) how do we broaden it? How do we broaden access to Netflix? That’s the backdrop. Then we looked at the Indian consumer’s behavior and we found that the Indian consumer is very mobile-centric – you have so much mobile watching, so many mobile sign ups. It was never really a price thing, but about how we build a product or feature that talks to a new audience that we weren’t attracting before,” Arora explains. 

But the real surprise was, Netflix didn’t launch it at Rs 250/month. It got “bolder” and launched it for even less – Rs 199/month. “This is one of the cases where the results were better than what we had expected – in terms of engagement. We were happy that it really did broaden the audience and based on what we saw, we said, let’s be bold and take it down to Rs 199 and increase the audience even further.” 

India – the next big thing 

India is clearly the next frontier for Netflix and its recent expansion spree in the country is proof of that. Something that arch rival Amazon is doing as well. Both the companies approach localization differently though. While Amazon has been quite aggressive, Netflix is taking each day as it comes.   

Netflix has partnered Airtel, Videocon d2h and Vodafone in India to make its content easily accessible across direct-to-home and mobile platforms. And it is actively working to innovate on payments. 

“Localization is a broad category. If you come to Netflix, can you pay with a local currency? Are you introduced to Netflix through local partnerships? Can you find locally relevant content? As we go through the whole concept of localization, sometimes we can focus on only one aspect, is when you open the app, is the app language done yet and for many of these Indian languages, they’re not yet but it’s very much part of our journey. When will we have localized user experience, that’s part of the journey, we’re not just there yet.” 

The same is true about building a dedicated R&D center here. “We have a pretty sizeable India team now and they’re amazing eyes and ears. They send feedback to the product development team. In fact, so many insights and ideas from India have translated into big features, from smart downloads to how we optimize experience for entry-level phones. I think we’re doing that already but whether we’ll have a development team here, maybe one day, we just don’t know yet,” Arora says.  

As Netflix works to become “more accessible to more consumers,” and ensuring “viewing experience is great across all devices,” we’ll see more and more announcements coming.  

Also Read:  Netflix Clears The Air On Rs 250 Mobile-only Beta Plan For India