On Wednesday, Netflix announced that it has reduced subscription rates in 116 countries following the success of its low-priced subscription plan in India. The move has come after the company saw a 30% increase in customer engagement and 24% revenue growth year-on-year in India. This has been attributed to the launch of a low-priced subscription plan in India, which was the first time the company had reduced subscription prices in the range of 20-60% to suit the Indian market and deepen its penetration.
According to Netflix’s earnings report for the March 2023 quarter, the reductions, combined with an improved content slate, helped grow engagement in India by nearly 30% year-on-year while revenue growth in 2022 accelerated to 24% (versus 19% in 2021). Netflix said that learning from this success, it reduced prices in an additional 116 countries in Q1, which contributed less than 5% to its total revenue during the financial year 2022.
“We believe that increased adoption in these markets will help to maximize our revenue in the longer term,” Netflix said in its earnings report.
The move to slash subscription rates is aimed at increasing adoption in these markets, which, in the longer term, is expected to maximize Netflix’s revenue. The company hopes that the reduced prices will lead to more subscribers, which will translate into higher revenue.
Despite the reduction in subscription prices, Netflix’s revenue grew by 3.7% to $8,162 million during the reported quarter from $7,868 million in the March 2022 quarter. However, the company’s global net income declined by about 18% to $1,305 million in the quarter that ended March 2023 from $1,597 million in the same period a year ago.
In conclusion, Netflix’s move to slash subscription rates in 116 countries after its success in India is expected to increase adoption in these markets, which will maximize the company’s revenue in the longer term. The reduction in subscription rates has already resulted in higher customer engagement and revenue growth in India, and the company hopes to replicate this success in other countries.