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Netflix Just Made an Aggressive Move in This Huge Market

By Harsh Chauhan – Dec 22, 2021 at 2:40AM

Key Points

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The streaming giant could begin gaining momentum in the region as a result of major price cuts.

Netflix (NFLX 2.08%) considers India one of its most important markets for the future with the streaming specialist believing it could score 100 million subscribers in the country. However, the company is still far from reaching that target due to intense competition from more affordable streaming services provided by the likes of Amazon and Disney.

Netflix reportedly has just five million paid subscribers in India, compared to Disney+ Hotstar's 46 million and Amazon Prime Video's 19 million. The company's premium pricing has turned out to be a stumbling block in this market, but Netflix is now looking to turn its fortunes around with an aggressive strategy to attract more subscribers.

Hands holding a mobile phone displaying a movie.

Image source: Getty Images.

Netflix drastically cuts prices in India

Netflix has reduced the price of its subscriptions in India by 18% to 60%. The mobile-only plan that was previously priced at 199 Indian rupees ($2.61 at the current exchange rate) per month has been reduced 25% to 149 rupees ($1.95). Meanwhile, the standard plan, which offers content on any two devices in 1080p resolution, saw its monthly price drop 23% to 499 rupees ($6.54).

The top-of-the-line premium plan now costs 649 rupees ($8.51) per month, down from 799 rupees ($10.48), for 4K content streaming on up to four devices simultaneously. The basic plan allows users to watch content on any one device in 480p resolution, and it saw the biggest reduction -- Netflix will now charge 199 rupees per month, compared to the earlier price of 499 rupees.

The streaming giant is now in a better position to tap into the fast-growing video streaming market in India, especially as rivals have raised prices. Amazon increased the price of its Prime service in India by as much as 50% with an annual subscription now costing 1,499 rupees ($19.66), up from 999 rupees ($13.10). The price of Amazon's monthly plan also went up about 40% to 179 rupees ($2.35).

Disney raised prices for its Disney+ Hotstar service earlier this year by introducing new subscription tiers. The base subscription now starts at 499 rupees ($6.60) per year, up from 399 rupees. But even then, it is still far cheaper than what Netflix charges.

Given the price-sensitive nature of this market, Netflix's reductions could turn out to be a big deal for its Indian expansion in the long run.

A smart move that could reap long-term gains

Though Netflix is still a small player in India based on subscriber count, the company's premium pricing has helped it corner a substantial revenue share of that market. Research company Media Partners Asia estimates Netflix has a 14% share of India's online video streaming revenue, compared to Amazon's 7%.

However, in a country with a per capita gross domestic product of just $1,927, there is likely greater potential in Netflix's decision to make its subscription plans more affordable and accessible to a wider swathe of this audiences.

The recent changes should pave the way for stronger growth from the Indian video streaming market, which is still in its early phases of development. Video streaming in India will generate $1.5 billion of revenue this year, a number that will increase to $4.0 billion in 2025 and $12.5 billion in 2030, according to third-party estimates. Netflix has made a smart move by casting a wider net for viewers, a strategy that should help it progress toward its ambitious goal for 100 million subscribers.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool owns and recommends Amazon, Netflix, and Walt Disney. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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