India a big prize, have to get pricing and payment methods right: Netflix co-CEO Ted Sarandos

Netflix’s co-CEO Ted Sarandos has called India a big prize where it is important for the global streaming giant to get pricing and payments methods right, noting that a price reduction in December 2021 increased user engagement by 30 per cent and revenue growth of 24 per cent in 2022 compared to the year prior.  

“We have to get the pricing and the payment methods right. India is a big prize because it's in an enormous population of entertainment loving people and you just have got to have the product that they love and it's in a product that you can do business with them together. So, we're doing the creative part and we're getting the pricing better and there's always lots of promise to continue to grow in India,” Sarandos said on Wednesday early morning at the earnings call after the streamer announced its January-March quarterly result.  

In December 2021, Netflix slashed prices in India by 20-60 per cent across its plans amid stiff competition from other streaming platforms which offered their plans for significantly lower prices. “These reductions – combined with an improved slate – helped grow engagement in India by nearly 30% year on year while F/X 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,” the streamer informed its shareholders in a letter with the results announcement. 

Netflix, which was positioned as aa premium streaming player in India, launched its cheapest plan for India at Rs 199 per month in July 2019. In December, it slashed the price of this plan to Rs 149.  

In his first earnings call since Co-Founder Reed Hastings handed over the reins to him and other co-CEO Greg Peters to move into an Executive Chairman role, Sarandos pointed out that India is a very specific market where the viewers like local content, but a lot of Indian content is also travelling across the world. He was referring to films such as the Oscar winner RRR and Alia Bhatt-starrer Gangubai Kathiawadi.   

“As the content opportunity continues to scale and our ability to access the market and thrill those audiences continues to grow, we could do quite well in India. We are a long way from that. We are still investing against it and I think that we'll ultimately do great in India,” he added.  

Pointing to India as an example where price cuts have brought in higher revenue, more net paid subscriber additions and higher engagement to the streamer, Group CFO Spencer Neumann said they have introduced price cuts in 116 additional countries in the January-March quarter.  

“We're not saying every market is going to play out like that but that's what it would look like in success,” he said, adding that these countries are not material to their business anytime in the near term and represent less than five percent of our revenue.