Netflix plans to launch a cheaper, mobile-only plan in a major market
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Though there were a few bright spots in Netflix’s earnings report today, investors didn’t react too kindly to the company’s big miss on adding new subscribers. With Netflix anticipating 5 million new subscribers for the quarter, the streaming giant only managed to add about 2.7 million new subscribers. As a point of contrast, Netflix during the same quarter a year ago managed to add nearly 5.5 million new subscribers.
Netflix, though, does have a few plans designed to boost overall subscriber numbers. Aside from its tried-and-true strategy of rolling out an endless amount of fresh content, the company’s letter to investor disclosed a plan to roll out a more affordable and mobile-only streaming plan for users in India. So whereas the base plan for Netflix plans allows users to consume content via HDTVs, computers, and mobile devices, the new discounted plan will only work on smartphones.
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Netflix said the new streaming tier will begin rolling out this quarter, though it failed to provide any specifics.
The company’s letter to investors reads in part:
After several months of testing, we’ve decided to roll out a lower-priced mobile-screen plan in India to complement our existing plans. 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.
It stands to reason that this mobile-only tier will not have an HD viewing option. Further, it’s not clear if tablets will be considered mobile devices for purposes of the plan.
The focus on overall new subscribers is interesting given that subscriber churn doesn’t seem to be much of an issue for the company. Further, and on a related note, subscribers are seemingly sticking with the service even after a series of high-profile price increases. At the end of the day, Netflix’s ability to boost revenue should matter more than any given increase in new subscribers over an arbitrary three-month period. In a way, the laser-like focus on new subscribers is akin to the obsession investors continue to have with iPhone unit sales.
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