-Netflix slashed the prices of its services in India by 20 to 60 per cent in December 2021, as the competition from other digital content streaming companies intensified
-The company, which reported a lower-than-expected subscriber gain for the first quarter, has been testing ways to reduce account sharing in Latin America, and rolled out a plan to charge such users
New Delhi, NFAPost: Netflix is planning to redesign its pricing strategy to offer varying degrees of services and features at different price points to customers across the world, Moneycontrol (MC) has reported. The development comes after the video-streaming company tasted success in India through a similar price revision exercise.
The Indian experience
Netflix slashed the prices of its services in India by 20 to 60 per cent in December 2021 as the competition from other digital content streaming companies intensified in the country.
The price cuts, on top of an improved list of the available content on the platform, helped Netflix grow engagement in India by nearly 30 per cent year-on-year. Additionally, revenue growth increased to 24 per cent in 2022 as compared to 19 per cent in 2021, the report stated.
The company said in a statement that “Learning from this success, we reduced prices in an additional 116 countries in Q1. While they represented less than 5 per cent of our FY22 revenue, we believe that increasing adoption in these markets will help to maximise our revenue longer term.”
The price cuts have been commissioned to attract new customers while retaining the existing ones. Reportedly, Netflix registered a slowdown in its growth after a pandemic-led bump in subscribers.
The password-sharing problem
Moreover, the company has been looking for ways to crack down on password sharing in select countries for the past few months.
To this end, Netflix is planning the rollout of a paid password-sharing option that will allow users to share their accounts with people they don’t live with. This will carry an additional cost. This feature has been rolled out in four countries so far, which include Canada, New Zealand, Portugal, and Spain, in 2023.
Netflix estimates show that there are over 100 million people who use their services but do not pay for them, the MC report said. This hampers its ability to improve investments and features for subscribers that pay Netflix.
Netflix sees stronger second half on password-sharing crackdown in US
Meanwhile, Netflix Inc. said it will begin cracking down this quarter on US viewers who share someone else’s account, predicting plans to charge such customers will boost growth in the second half of the year.
The company, which reported a lower-than-expected subscriber gain for the first quarter, has been testing ways to reduce account sharing in Latin America, and rolled out a plan to charge such users in four additional territories in the first quarter.
Netflix estimates that more than 100 million people use an account they don’t pay for, and analysts see paid sharing as a large potential source of new customers or sales. The company had planned to begin charging for password sharing in the US in the first three months of 2023. Now it says it will do so in the next couple months.
In addition to forecasting a pickup in the second half of the year, Netflix raised its free cash flow forecast for 2023 to $3.5 billion.
In Canada, one of the markets where the company has cracked down, the paid member customer base is now larger.
