In its earnings call with investors, on a question about taking a more aggressive approach in emerging markets with lower price points in countries like India, Netflix’s co-founder, chairman, president & CEO Wilmot Reed Hasting, said that the company is very happy with the results of its price of INR 500 to INR 800 in India, and that in there no near-term plans for lowering the pricing.
Besides, Netflix’s continued to add most of its new subscriber from outside of US in the Q1 2018 with over 5.46 million net subscriber additions compared to 1.96 million subscribers additions in the US. Netflix recorded global net additions of 7.41 million, up 50% from the same period last year. Netflix’s international segment now accounts for 50% of revenue and 55% of memberships.
Youtube is a challenge
On a question of what’s the big challenge for Netflix, Hastings said that “We’re a fraction of the hours of viewing of YouTube. We’re a fraction of the hours of viewing of linear TV. We’ve got some great momentum, and we’re very excited about that, but we have a long way to go in terms of earning all of the viewing that we want to.”
Surviving price increases
Most of the international growth came as Netflix started producing larger originals outside the US like the German series Dark. So much so, that price increases across the world didn’t really impact Netflix. In the EU and Australia, Netflix raised prices by roughly a euro, around ₹100 last year. In the US, its mid-tier plan underwent a dollar increase too.
Still, year-over-year, the quarterly additions have grown consistently. (Of course, Netflix probably won’t dare hike prices in India, even though it’s been burdened with 18% GST now, a shock that it has for the moment chosen to absorb.)
Netflix’s revenue grew 43% year over year in Q1 FY18, it said in a statement that this is the fastest pace in the history of its streaming business. The company’s operating margin of 12% rose 232 bps year over year.