A few months ago, Netflix pulled the plug on its offer of free trial for new users. But now it is giving new users a chance to use Netflix for a month for Rs 5 in India.
The streaming platform had launched the mobile only plan at Rs 199 in 2018, keeping in mind the price sensitiveness of the Indian market.
In India, while the popularity of streaming platforms is increasing, the number of paid subscribers is still low.
A study by Counterpoint Technology Market Research revealed that just 10 percent of the total over the top (OTT) users pay for their content.
In such a scenario, a subscription video on platform (SVOD) platform like Netflix needs to experiment with different pricing models.
"The OTT (over the top) platform space is getting crowded which is forcing players to enrich their content offering while competing on price. This is not as great for customers as it may first appear as they have limited media wallet which they now need to allocate very dynamically as a function of their content preferences," said Utkarsh Sinha, MD - Bexley Advisors.
Soon, India will see a new entrant in the video streaming space with Hotstar Disney Plus launching on March 29 with the content from Disney Plus set to be bundled with Hotstar's premium plans.
However, Sinha believes that while Disney Plus will boost Hotstar, Netflix's new offer should not be seen as an attempt to counter it.
"It is unlikely that the new offering is a knee-jerk reaction. In fact, it (new offering) is likely a considered response to what they (Netflix) have learnt from their experiments with low-price offering in India, and their several free offerings," he said.
It is these tests and trials of different pricing that will help Netflix lure a bigger paid subscriber base which is expected to reach 55-65 million (5.5-6.5 crore) by FY24, according to a KPMG 2019 report.
The report also pointed out that subscription revenues saw a 3x increase in FY19 with a total of Rs 12 billion. The contribution of direct subscription was higher in this total with 65 to 70 percent share and the rest coming from telco partnerships.
Experts believe that the video on demand market is expected to record double-digit growth from subscription revenue in the next five years.
Currently, despite the video OTT space remaining highly focused on the ad-based model (AVOD), subscription-based market (SVOD) continues to grow significantly.
A December 2018 PwC report points out that advertising-led platforms are a Rs 4,500 crore industry whereas subscription services are a Rs 1,500 crore business.
Hence, Netflix has a lot of room to grow especially with its focus on more Indian originals. The company invested Rs 3,000 crore in the country in 2019-2020.
Plus, OTT platforms are positioning themselves in such a way that people relate them to cable television where they have to pay for content services.
This is why experts believe that such a positioning could drive the growth in paid subscriber base which was expected to see a 50-80 percent growth in 2019. In 2019, the paid user base more than doubled from 2017.