Netflix is revising its subscription rate across 116 counties following similar price cuts in India helped the company to grow user engagement and accelerate its revenue. The company its first-quarter earnings for 2023 said that in India low priced subscriptions saw a 30 per cent growth in customer engagement and 24 per cent revenue growth year-on-year. In 2021, Netflix reduced subscription prices in the range of 20-60 per cent to suit the Indian market and deepen its penetration.
The OTT giant in its earnings report released on Tuesday said, "These reductions — combined with an improved slate — helped grow engagement in India by nearly 30 per cent year-on-year while F/X (forex) neutral revenue growth in 2022 accelerated to 24 per cent (versus 19 per cent in 2021). Learning from this success, we reduced prices in an additional 116 countries in Q1."
"We believe that increasing adoption in these markets will help to maximize our revenue in longer term," the company said.
"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 maximize our revenue longer term," Netflix further added.
This comes as the OTT player looks to attract new customers, 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.
Netflix's Q1 report showed that its global net income dipped by about 18 per cent to $1,305 million from $1,597 million in the same period last year. However, the revenue grew 3.7 per cent to $8,162 million during the quarter from $7,868 million in Q1 of 2022.
Globally, Netflix's paid membership grew 4.9 per cent to 232.5 million year-on-year. The company also forecast its net income to decline by about 1.6 per cent to $1,283 million in the second quarter of this year while revenue to increase by 3.4 per cent to $8,242 million.
During the conference call, Netflix CFO Spence Neumann said that this move is the next step in the company's evolution of a better product marketing fit and pricing fit.
"When we did our global launch in 2016, it was pretty much across the board a bit of a skim approach and not particularly sophisticated in terms of our pricing," Neumann said adding that not every market "is going to play out like that(India), but that’s what it would look like a success"
Crackdown On Password Sharing Delayed To Q2
The company said that it is delaying a wider launch of a crackdown on unsanctioned password sharing to the second quarter to make improvements. However, it said that the crackdown seems to be working after being launched in the last quarter in four countries, including Canada, New Zealand, Spain, and Portugal.
Netflix said the crackdown on password sharing or what the company calls paid sharing, will reach more countries, like the US, by late Q2. Earlier, the company was expected to roll out paid sharing in the US and some other markets by Q1.
Through paid sharing, members will have the option to pay an extra fee if they want to share their Netflix account with people they don’t live with. Members will however be able to continue watching content on their account while traveling.
"While we could have launched broadly in Q1, we found opportunities to improve the experience for members, which we think will lead to even better results," CFO Neumann said.
According to Netflix, over 100 million users use accounts they don't pay for, which hampers the company's ability to make investments, enhance the service for its paying subscribers, and expand its business.