Last year, Netflix cut its base price in India to accommodate a 15% service tax. Now that GST has been implemented, that tax has been increased from 15% to 18%. And again, Netflix has silently absorbed the tax, without changing its total pricing. The most expensive plan, which cost ₹695 before taxes, is now priced at ₹678, with other plans undergoing similar adjusted cuts. As a result, Netflix’s revenue per user has gone down by 2.5% in India.
It’s unclear whether this price change is temporary; the company may increase its pricing slightly to adjust for this loss. Netflix didn’t have any immediate comment to offer — we’ll update this post if they provide a statement.
Incidentally, Australia started levying tax for cross-border digital services on July 1, on the same date as Netflix’s price cut in India. But in Australia, right before this tax was implemented, Netflix hiked prices by 20%, even though the tax was only 10%. MediaNama has asked Netflix about its reasoning for this difference in approach. Australia isn’t the only country where Netflix has passed on the tax burden to subscribers; last year, the company did the same thing for its subscribers in New Zealand, when that country’s GST came into effect. In New Zealand’s case, however, Netflix’s price hike was pretty much equal to the tax rate.
While Netflix has maintained that it won’t change how much the service costs in India, it now looks like the company is as unwilling to increase prices as it is hesitant to decrease them. As of this January, the company had only between 2-3 lakh subscribers in the country, as we reported earlier this year; so it makes sense that Netflix is more cautious about hiking tariffs in a price-sensitive country like India where it has room for a lot more subscriber growth.