India price cut brings down Netflix’s regional ARPU

The 25 per cent price cut Netflix announced in India in December 2021 across four plans have brought down its Average Revenue per Membership (ARM) in the APAC region for the April-June quarter by 2 per cent year-on-year. Excluding India, ARM in the region grew 4 per cent in constant currency terms, according to the company’s letter to shareholders released late on Tuesday. 

“ARM in APAC was -2 per cent year-over-year on a foreign exchange neutral basis, due to the impact from our price decrease in India last December as well as plan mix, which was partially offset by higher ARM in Korea and Australia. Excluding India, APAC ARM grew 4 per cent year-over-year on a constant currency basis,” the letter read..  

Netflix has reported an ARM of $8.83 from APAC in April-June. This is a 9 per cent fall from the $9.74 it saw in the year-ago quarter and 4 per cent fall from the $9.2 it witnessed during January-March period. 

The 25 per cent price cut across its four plans in India came two-and-a-half years after it launched its cheapest plan in the country at Rs 199 per month in July 2019. That plan is now available for Rs 149 a month, while its top tier plan is available for Rs 649 per month instead of Rs 799. 

Even Netflix’s most basic plan works out to about Rs 1,800 a year, while rivals Disney+ Hotstar and Amazon Prime Video have priced their annual plans at Rs 1,499. Amazon Prime had, in fact, raised its price by 50 per cent in December.  

During the April-June quarter, Netflix added 1.08 million subscribers in APAC, taking its total subscriptions in the region to 34.80 million. Last quarter, it added nearly 1.1 million members in APAC. 

Also read: Why India content becomes key for Netflix before AVOD roll-out

Even assuming a chunk of those additions came from India, it still doesn’t take its estimated 5.5-million-strong subscriber base in the country within touching distance of Disney+ Hotstar’s 50 million or Amazon Prime Video’s estimated 20 million. Founder and Co-CEO Reed Hastings had said he wants to acquire 100 million subscribers in India. 

Globally, Netflix fared better than expected because the million subscribers it lost during the April-June quarter was lower than the 2 million it had estimated it would lose. In the corresponding quarter of the previous financial year, the streamer had added 1.5 million subscribers, according to its results. It expects to add 1 million subscribers globally in the July-September quarter compared to the 4.4 million it added in the corresponding quarter of the previous year. 

Netflix says its APAC revenue grew 23 per cent year-over-year, excluding foreign exchange impact. In absolute terms, the $908 million revenue it has reported from its APAC business in April-June is a jump of nearly 14 per cent compared to the year-ago quarter, but a small dip from the $917 million it reported last quarter.  

Region-wise, APAC accounts for the smallest slice of the revenue pie. But it is approaching the size of its LATAM business, the company said. 

Netflix, for which nearly 60 per cent of its revenue comes from outside the US, also said that it is facing significant headwinds because of the strengthening of US dollar against all currencies.  

Also read: Why Netflix’s content is still missing the mark in India

Also read: Netflix’s India Problems are Many. What can the OTT Major Do?