Netflix is testing a really cheap subscription in India – it costs the equivalent of €2.99 per month. The idea is to appeal to tight budgets with a smartphone and tablet only offer, and to stem the competition from Amazon Prime, Disney+ and other upcoming platforms. Can we expect a similar offer in France?
Netflix may well refuse certain practices such as the broadcasting of advertisements to paying subscribers, but the streaming specialist must make sure that it is profitable.
Of course, Netflix relies first and foremost on the quality of its content and the development of films and series in the markets where it is present.
But the Los Gatos-based company is also betting on a strategy as old as the industrial revolution: market segmentation by price.
A service like Netflix needs a lot of money. Billions of dollars must be used to finance more and more original, high-quality creations to keep interest in the service.
So we have to make sure that we address as many people as possible, and make as much money as possible from each user, taking into account the propensity of each one to pay a certain amount every month.
And since we are talking about a transnational firm, we also have to think about the significant differences in means depending on the country. Until now, Netflix’s international development has not faced much competition.
But this is changing with the rise of Amazon Prime, and the arrival of Disney+ or Hulu – in addition to platforms specific to certain countries such as OCS in France.
Segmenting The Market
Netflix therefore has every interest in “segmenting”, i.e. dividing the mass of its customers into groups. And make everyone pay what they are willing to pay.
That’s why you have three subscriptions in France (€7.99, €10.99 and €13.99 per month). With, depending on the price, a better quality, and an increased number of simultaneous viewings.
That’s also why Netflix is experimenting with an even cheaper subscription in some countries including India.
In addition to India, Netflix has started testing its cheaper subscription in Malaysia. According to Hollywood Reporter, the mobile-only subscription there is a little more expensive, around 4 euros.
For the moment, the offer seems to be especially suited to emerging markets. But it could well find its way into other countries such as France.
At least if we follow the reasoning of Netflix CEO Reed Hastings and other Netflix executives.
“If we have great content from all over the world, people are willing to pay for it… in the United States cable is $75,
In India it’s around $3-$5. In the United States people pay $50 to get access to their mobile. The prices are very low in India, and the market is very big,
That’s why our 199 rupee [€2.99 per month] subscription is very competitive” says Reed Hastings.
The Mobile-Only Offer Is A Hit in India And Malaysia
In India, Netflix is also testing the subscriber retention strategy with discounts based on the length of the commitment, which can be as much as 50% for a 12-month commitment. And this strategy would pay off, according to Hollywood Reporter, in several ways.
The blog quotes Mihir Shah of the analyst firm Media Partners Asia. The latter estimates that thanks to this subscription, Netflix will increase its subscriber base by 50% over 12 months.
As a bonus, she says that these subscribers will not always stay on the cheapest subscription: “We believe that the mobile subscription will only serve as a funnel to reach a wider market target, with the intention of selling them more expensive subscriptions.
Wall Street analysts are of the same opinion, and even suggest adapting this mobile-only subscription to other markets – including non-emerging markets.
In France, We Have To Wait For Competition
So, to answer the question in this article, yes, this cheaper subscription may very well end up in France. Nevertheless, it seems that Netflix must have strong enough reasons to do so.
In India, and in Asia, it must be seen that this offer is a tool to reach a mass of subscribers and revenues inaccessible with offers such as we know them in France.
Nevertheless, at home, it is perhaps the competition from Disney+ (1 euro cheaper than Netflix), Amazon Prime Video (2 euros cheaper than Netflix) and the prospect of the arrival of other services at lower prices than Netflix that could convince the streaming giant to deploy an offer of the same type.