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Netflix testing cheaper basic plan in India, minus TV support

Netflix is testing a Rs 349 “Mobile+” plan in India that is similar to its existing Rs 499 Basic plan. Androidpure first reported the plan on Saturday. Like that plan, Netflix will only allow one stream at a time; but HD video is allowed, and TVs are not supported. This is an interesting pricing experiment for Netflix, since it has plans that are low in price and low on features, and high in price, and high on features — the pricing gap between the Standard Definition mobile-only Rs 199 plan and the Rs 499 basic plan is significant.

If this price resonates with Indian customers, it would be a boon to both Netflix, which might make a little more from subscribers who would otherwise be sharing their account — the Mobile+ plan costs more than a two-screen plan split between two people, but not more than a four-screen Ultra-HD plan split among four people. Netflix declined to comment on the plan, beyond this statement: “We launched the [Rs 199] Mobile Plan in India to make it easier for anyone with a smartphone to enjoy Netflix. We want to see if members like the added choice this offer [the Rs 349 Mobile+ plan] brings. We’ll only roll it out long-term if they do.”

Netflix Mobile+ plan

Netflix’s new Mobile+ plan for India. (Screengrab)

If the plan is a success, it might replace the Rs 499 basic plan altogether, since the current test hides the plan by default for new sign-ups. Existing subscribers cannot currently switch to the Mobile+ plan.

Solving for ARPU — our take

How Netflix thinks about revenue per subscriber: One interesting comment from Netflix’s earnings call was around average revenue per user, or ARPU. Netflix VP of Investor Relations Spencer Wang said, “We don’t narrowly manage towards an ARPU number or an ARPU growth number. Our orientation is really on optimizing for revenue.” That may be a curious stance to have at first glance, but it makes sense — Netflix frequently uses the term “households” to describe viewership, like cable TV companies, which underlines the fact that a single subscription is typically used by multiple viewers, whether it’s a family or a group of friends splitting the monthly charge.

Does ARPU matter for Netflix? Multiple viewers per account essentially makes Average Revenue Per User a much lower number than the revenue per subscription. And this means that Netflix’s mobile-only plan makes perfect financial sense, even if it drags down the per-subscription revenue metric by a fair bit. As of Q2 2020, Asia Pacific as a region gets Netflix an ARPU of US$8.96 (Rs 670), while India’s second most costly plan costs less than that, at Rs 649. This indicates that Netflix India subscribers are almost always getting the pricier plans, or that they are just too few in number to pull down the regional ARPU average with mobile subscriptions, in spite of being APAC’s most populous country. In either case, a more feature-rich price-conscious plan in India is something that’s worth following keeping an eye on for the OTT industry, as that could ease the streaming service’s biggest hurdle in India — affordability.

In April, we pointed out that there was a market to be addressed between Netflix’s Mobile and Basic plans, a pricing gap that Netflix could benefit from filling. Now that Netflix has done so — for the moment — and it seems to make enough financial sense, the only question is this: will people subscribe?

Update: An earlier version of this article misstated who originally broke this story. The story was broken by Androidpure on Saturday. 

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