Netflix’s strategy for developing markets
Netflix (NFLX) has adopted a different strategy to compete in developing markets such as India (EPI). In March 2017, Netflix’s co-founder and CEO, Reed Hastings, noted in a Times of India interview that while the global average for binge-watching a series is four days, Indians are binge-watching shows on Netflix in an average of three days.
This statistic indicates the popularity of Netflix’s English-language shows that have global appeal such as Narcos, Bloodline, and Marvel’s Jessica Jones.
The company has also employed a pricing strategy in international markets, where its plans cost between $6 and $19 per month—closer to its US prices. Netflix noted that as it penetrates more international territories and has to appeal to households with various income levels, it could consider introducing various price tiers in international markets.
However, the company has ruled out introducing an ad-supported offering in these markets since it believes the Netflix brand doesn’t stand for advertising.
In international markets, Netflix offers a mix of 80% content in English and the remaining 20% in the local language. However, it has been flexible about this content mix. In Japan (EWJ), where content in the Japanese language is more popular, Netflix has leaned more toward offering content in Japanese.
Netflix focusing on mobile-friendly initiatives
In the Times of India interview, Hastings acknowledged that in developing countries like India, a large number of Netflix subscribers are streaming videos on their mobile devices.
As the above chart indicates, according to the 2016 International Telecommunication Union (or ITU) Information and Communications Technology report, mobile broadband penetration has reached ~41% in developing countries compared to the global average of 49%.
As a result, Netflix is aiming for data consumption of 100 Kb while streaming videos on Netflix. Currently, streaming Netflix videos uses 200 Kb of data.
Netflix stated that in countries such as India (EPI) that have heavy mobile usage, the company was looking to enter arrangements that would exempt its subscribers from data usage charges.