
Image courtesy – brand.netflix.com
Netflix, the American content streaming giant, on December 14, announced a major price drop in its subscription plans across board.
The biggest drop, that of 60% was made in rates of its basic plan from Rs. 499 to 199. Other plans such as the mobile-only (Rs. 199), standard (Rs. 649) and premium (Rs 799) were also reduced to Rs. 149, 499 and 649 respectively.

Image courtesy – pinterest.com
But why did Netflix drop the prices? Though, it’s not first time that the streaming giant has cut prices in the country. The scope of the slash ranging across plans is what makes it intriguing.
Netflix India, Vice President (Content) Monika Shergill told PTI “The whole focus is on reaching our larger set of audiences out there, it’s a very organic expansion strategy…” Well, it may be. However, there is more to the story than just organic expansion.
Here are 7 possible reasons that might have played a role in the strategic policy shift :-
1. CONSUMER BEHAVIOUR & AFFORDABILITY

Image courtesy – pinterest.com
One obvious reason certainly, is to increase its reach and general affordability among Indian consumers. Its earlier rates provided a monthly basic plan at Rs. 499, whereas its adversary Disney Hotstar offers the yearly basic plan at the exact same price. This pricing gap seemed to be making Netflix unpopular against its peers. Therefore, the move may very well be to abridge the looming rate gap.
Also, studies in the past have shown that Indians are more likely to use unpaid services like YouTube and Jio-cinema than watch paid content over streaming platforms. Therefore, for Netflix to grow in the country amid booming small platforms with modest rates, it had to amend its aggressive pricing policy.
2. UNTAPPED MARKET

Image courtesy – pinterest.com
Netflix seems to be targeting country’s developing markets in tier II and tier III cities. According to a Times of India report, around 60% of current OTT users come from non-metro cities. Shergill, in an interview with livemint, also confirmed that the new rates were in line with their strategy to go deeper in the country.
In addition, India has more than 700 million smartphone users and about 825 million internet users, majority of which belong to semi-urban and rural areas. Out of this, Netflix has been able to woo only about 4.4 million people. It’s a vast but largely uncaptured market that the streaming platform has its eyes on.
3. COMPETITORS’ IMPACT

Image courtesy – hindibigzot.com
The Indian OTT space is seeing a sustained boom in on-demand content platforms. The smaller players such as Zee5 and SonyLiv are effectively capitalising on their very moderate pricing strategies.
Moreover, the two apparent competitors – Amazon Prime and Disney Hotstar, have a larger foot in the Indian market with 19 million and 45 million subscribers respectively as against 4.4 million of Netflix.
It’s also hardly incidental that Netflix announced price drop, just the day after prime raised its yearly rate from Rs 999 to 1499. Grapevine also has it that Netflix is looking to bank upon Amazon’s customer annoyance after latter’s price raise.
4. VALUE FOR MONEY

Image courtesy – cnbctv18.com
Speaking of competitors, both Amazon prime and Disney Hotstar offer greater value for money in tangible terms. The former provides simultaneous services in video streaming, prime music, library and one-day delivery services. While Disney Hotstar enjoys exclusive rights over sports broadcast. Therefore, to compete with the likes of these two, pricing policy seems first in line to undergo modifications.
5. MARKET SATURATION IN THE WEST

Image courtesy – theculturetrip.com
The slow growth and near market saturation in the key western locations is also a reason why the media giant is looking at opportunities in the developing world.
Netflix is exploring incentive-based approach in markets such as India, Brazil, South Africa to increase its market share and hence compensate the ebbing growth in the western part. What makes India special, though, is the cheap Internet services available in the country unlike other developing markets.
6. THE 100M TARGET
Image courtesy – davemanual.com
Netflix CEO Reed Hastings, at various occasions has opened-up that their long-term target for India is to reach about 100 million users. Currently, it has only 4.4 million active subscribers and the target is nowhere even close to realization. Therefore, a policy change was certainly called for, if the giant is keen to dress-up for the success.
7. TEST & TRY METHOD

Image courtesy – applittools.com
If nothing else, the new pricing strategy is part of the platform’s try and test method to see how the Indian market responds to the change. Netflix co-CEO Ted Sarandos said in an interview with filmcompanion “What [we have] found out is that as good as you can be in one country, it tells you almost nothing about the next one…there’s a trial and error period that we’ve been deep in right now.”
All in all, there is more to the price drop than what meets the eye. Media giants like Netflix don’t make such a move in air. The reasons for the same may range from Indian consumer preferences, modest pricing strategies of adversaries, slow growth in west, market potential in tier II & III towns or what Ms. Shergill said, organic expansion strategy.
Whatever the reason may be, for Indians, ‘Netflix and chill’ just got real again.










































