Netflix is testing a cut-price mobile-only subscription as it explores new packages aimed at widening its appeal in Asia and other emerging markets.
CEO Reed Hastings told Bloomberg last week that the company would test lower-priced packages and it hasn’t taken long for those experiments to come to light. The first reports are from Malaysia, where Netflix quietly rolled out a mobile-only tier priced at RM17, or around $4, each month. That’s half the price of the company’s next cheapest package — ‘Basic’ — which retails for RM33, or around $7.90, per month in Malaysia.
A Netflix spokesperson confirmed the Malaysia trial. They added that similar trials are “running in a few countries” although they declined to provide details. It remains to be seen if this new subscription tier will roll out to other parts of the world.
The move makes sense for Netflix. While it has added plenty of international users — those outside of the U.S. represent 79 million of its total base of 137 million customers — I have argued in the past that it is missing out on even more customers because its rigid pricing is too expensive in many parts of the world. Indeed, to prove that point, a number of rivals in Asia price their services more aggressively.
Rivals including fast-growing Hotstar in India, iFlix — which is backed by Sky and covers 28 countries — HOOQ and Viu are priced from $3 upwards per month. While it isn’t clear how many users they are pinching from Netflix, there’s clearly a pricing disparity which this new mobile-only offering goes some way to addressing. It also hones on millions of mobile-only users in India and other parts of Asia.
Aside from offering cheaper options, Netflix is also doubling down on local content in Asia. India is a key focus and the company this month revealed a slate of eight new Netflix Original movies and one new series from India.
The mobile-only package isn’t the first time Netflix has tinkered with its pricing strategy.
The company tested a strategy to bypass Apple’s App Store with its own web-based payment system over the summer. Rather than using in-app payments for billing, and in turn paying Apple a 30 percent share of the spoils, this approach enabled Netflix to collect all the money for itself. More money is better, of course, but the cost is that the user experience is clunkier without the App Store and that may put some prospective customers. It isn’t clear how well the test performed for Netflix.