Over the summer, dominant video streamer Netflix (NASDAQ:NFLX) launched a deeply discounted mobile plan in India, costing just 199 Indian rupees per month, or approximately $2.81 based on current exchange rates. The plan does not include ads but can only be viewed on a mobile device in standard definition. The mobile-only service joined the regular Basic, Standard, and Premium tiers that Netflix offers in the world's second-most-populous country.
Netflix is now testing yet another way to entice Indian consumers to sign up.
Discounts for longer plans
Reuters reports that Netflix is exploring longer commitments in an effort to attract subscribers. Offering discounts for longer-term subscriptions is common practice in subscription businesses. In this case, consumers can sign up for three-, six-, or 12-month plans that can snag discounts of 20%, 30%, and 50%, respectively, according to the report. By way of comparison, Disney offers a one-year subscription for its Disney+ service for $70, which represents a 17% discount compared to subscribing at $7 per month for 12 months.
"We believe that our members may value the flexibility that comes from being able to pay for a few months at once. As always, this is a test and we will only introduce it more broadly if people find it useful," a Netflix spokeswoman confirmed to the outlet.
As is often the case, Netflix's success in the market will hinge on its original content offerings. CEO Reed Hastings recently confirmed that the tech company will be investing a whopping 30 billion rupees ($420 million) in localized content as Netflix chases an estimated 100 million subscribers in India. Netflix already has a few original series tailored for India such as Sacred Games, Leila, and Delhi Crime.
The earmarked spending represents a small portion of the $15 billion that Netflix expects to spend on original content this year, but comes as rival Amazon.com (NASDAQ:AMZN) has similarly been aggressively expanding its original content offerings in the country, wooing Bollywood talent while simultaneously investing heavily to grow its e-commerce business -- and Prime member base.
The mobile-only plan is "performing better" than expected
When asked about the performance of the mobile-only plan in India on the last earnings call, Chief Product Officer Greg Peters elaborated on Netflix's experimental approach to finding the right product offerings for any given market.
"We think about revenue as the guiding principle as we do these different tests and trying to figure out, what is the right set of plans that have the right benefits, the right features that are delivered at the right price for the subscribers in any given market," Peters said, while acknowledging different markets have varying levels of personal income. Tests in one market can inform Netflix's strategic decisions in others.
"And so we've been very, very happy with the mobile plan [in India]," Peters added. "It's actually performing better than we tested."