Netflix to Launch Cheaper Mobile-Only Plan for India

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The streaming giant is responding to more affordable offerings from rivals such as Disney's Hotstar and Amazon.

Netflix plans to roll out a more affordable mobile-only plan for India in a bid to take on rivals such as Amazon Prime Video and Disney's Hotstar.

The move follows several months of testing a cheaper plan, considering Netflix's current basic subscription costs $7.27 (500 rupees) while Amazon offers an annual subscription at $14.5 (1,000 rupees) per month or about $1.2 per month, which is the same charged by Hotstar for its premium service. Hotstar also offers a reduced VIP service for $5.29 (365 rupees) per year.

Netflix did not confirm the prices for the mobile-only plan when contacted by THR. However, when the company was first testing this plan for India (and other countries such as Malaysia) in March, it was priced at $3.63 (250 rupees) per month, which was still three times higher than what Hotstar and Amazon charge per month.

The mobile-only plan was announced in the company's Q2 earnings letter to investors Wednesday stating, “We believe this plan, which will launch in Q3, will be an effective way to introduce a larger number of people in India to Netflix and to further expand our business in a market where Pay TV ARPU is low (below $5). We will continue to learn more after launch of this plan.”

Netflix's response to a highly price-sensitive market like India comes in light of how market leader Hotstar continues its blistering growth since the service launched in 2015. According to Media Partners Asia, Hotstar has grown to become the second-biggest video service in India by revenue, with a 23 percent market share, trailing only YouTube but decisively topping Netflix's 14 percent slice of the market and Amazon's 6 percent.

Hotstar offers a heady mix of sports, especially the country's favorite game, cricket, and multilingual entertainment content that includes both originals and television shows drawn from parent network Star India's vast library. The streamer set new records with the recently concluded ICC Cricket World Cup where the semifinal match between India and New Zealand peaked at over 25 million viewers.

As India's digital market booms driven by cheaper data plans pioneered by telecom giant Reliance Jio, mobiles are driving India's demand for video consumption. According to MPA, mobiles constitute 88 percent of devices used to consume video.

India's online video audience reached 225 million in 2018, a figure that consultant KPMG India projects will double over the next five years to 550 million — a user base 67 percent larger than the entire population of the United States (where the number of online video users stands at 227.5 million).

Meanwhile, as part of its second quarter announcement Wednesday, Netflix said that its total paid memberships grew by 2.7 million from April to June, less than half of the 5.5 million it added during the same period last year. In fact, it lost around 130,000 subscribers in the U.S., where it has more market penetration. The company, which now has just over 151 million total paid members, had projected additions of 5 million during the period and Wall Street, per FactSet, was expecting 5.1 million new subscribers.