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NEW DELHI: Netflix, the American streaming service, lost 200,000 subscribers in the March-ended quarter, as its operations remained suspended in Russia while slower growth rates, higher competition, and account sharing by users made for lower subscriber acquisition. The company, however, said its markets in India along with Japan, Philippines, Thailand and Taiwan were seeing “nice growth".
The Asia and Pacific region saw 1.09 million net paid member additions over the past three months. These numbers were, however, lower than the 2.6 million added during October-December, prompting Netflix founder and chairman Reed Hastings to say that the company may consider advertising-led model for the streaming service for lower priced plans.
“We’re trying to figure out over the next year or two. But think of us as quite open to offering even lower prices with advertising as a consumer choice," he said.
The strategy is already working for rivals like Hulu and Disney, Hastings said during the company’s earnings call. And while consumers will still have the ad-free option, the company will also cater to those wanting to pay lower prices, he added.
In December, Netflix had slashed rates by 18-60% across plans in India, in an effort to woo wider audiences and deepen penetration. Netflix’s mobile-only plan, earlier priced at ₹199 per month, now comes for ₹149. The basic plan that allows access to all content on any one device costs ₹199 versus ₹499, and so on.
“One way to increase the price spread is advertising on low-end plans and to have lower prices with advertising. And those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription. But as much I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense," he said.
Calling the move a bet in terms of long-term revenue maximisation, Gregory Peters, chief operating officer and chief product officer, at Netflix said during an earnings call that the company is excited about a bunch of titles that were coming out in the country and thought there was an opportunity to broaden the audience that got to see them.
The product fit incorporates subscription prices, willingness and ability to pay, said Ted Sarandos, co-CEO, chief content officer and director at Netflix, adding that the company has seen “a nice uptick in engagement in India."
In the coming months, Netflix will launch local productions in collaboration with popular actors and directors in India such as Sanjay Leela Bhansali (Heeramandi), Vishal Bhardwaj (Khufiya) and Zoya Akhtar (an Archie Comics adaptation), besides second seasons of hits like Mismatched, Masaba Masaba, Fabulous Lives of Bollywood Wives, among others.
In a letter to shareholders late Tuesday, Netflix said, “It’s increasingly clear that the pace of growth into our underlying addressable market (broadband homes) is partly dependent on factors we don’t directly control, like the uptake of connected TVs (since the majority of our viewing is on TVs), the adoption of on-demand entertainment, and data costs. In addition to our 222 million paying households, we estimate that Netflix is being shared with over 100 million additional households. Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets - an issue that was obscured by our covid growth," the letter added.
Netflix also said that the rise of many new streaming services as well as macro factors, including sluggish economic growth, increasing inflation, geopolitical events such as Russia’s invasion of Ukraine, and some continued disruption from covid are likely having an impact on subscriber growth as well.