India price cuts drag Netflix's average revenue per member down 2% in APAC

Excluding India, APAC ARM grew 4 per cent in constant currency terms, Netflix said on Wednesday, when announcing June quarter results

The sharp price cuts announced by streaming giant Netflix in December 2021 across its subscription plans in India caused a drop of two per cent in its average revenue per member (ARM) for the Asia-Pacific region, it said on Wednesday when announcing its June quarter results. The company follows a January-December financial year. The two per cent drop is over the same period last year.

In December, the streaming service had slashed its mobile-only plan by 25 per cent to Rs 149 a month. The basic subscription plan, which allows access to all content on any one device, was slashed by 60 per cent to Rs 199 a month. Some other plans saw a drop of 18-23 per cent in prices.

Excluding India, the ARM in the region grew four per cent in constant currency terms over last year in the June quarter, the company said, pointing to challenges the company faces in India, as it attempts to shore up subscriber numbers here.

To put things in perspective, Netflix is estimated to have a subscriber base of 5.5 million in India, according to industry sources. Disney+Hotstar is estimated to have a subscriber base of 50 million, and Amazon Prime Video, 20 million.

While Netflix said on Wednesday that it had added 1.08 million paid members in APAC, largely in India, for the June quarter, as compared to 1.09 million additions in the March quarter and 1.02 million additions in the same period last year, experts said the streaming service still remains a comparatively small player in terms of subscribers to Amazon Prime Video and Disney+ Hotstar in the country.

Globally, Netflix lost 970,000 subscribers in the second quarter of 2022, which is the largest subscriber drop it has witnessed to date. In the first quarter, it had lost 200,000 subscribers, the first in over a decade.

However, the quarterly drop in subscribers seen in the April-June period was still an improvement from a two-million customer loss it had forecast in April 2022 for the second quarter. The service expects to return to customer growth in the third quarter of 2022, with a forecast of adding one million members during the period.

APAC is also approaching the size of Netflix's Latin American business, it said on Wednesday, having clocked $908 million in revenue during the June quarter, a 23 per cent increase over last year.

In the pecking order of markets, APAC remains the smallest region for now, trailing the US and Canada (UCAN), Europe, Middle East and Africa (EMEA) and Latin America for Netflix. But the streaming service has been investing in content initiatives including local productions and movie acquisitions in markets such as India as it competes with big rivals here.

Also, since the first quarterly drop of 200,000 subscribers in January-March, the company has taken several measures to realign its strategy in a competitive market. This includes cracking down on password sharing, laying off employees, and announcing a lower-priced ad-supported streaming service, which is a departure from its earlier position of not advertising on the platform.

On Wednesday, Netflix said it plans to launch its ad-supported service in early 2023. Last week, the company announced Microsoft as its global advertising technology and sales partner for the ad-supported service.