Netflix Co-Founder Reed Hastings Calls Company's Lack Of Success In India "Frustrating"

Netflix, the streaming entertainment giant, added 2.58 million paid members in the Asia Pacific area in the fourth quarter of 2021, the most in over a year, thanks to robust growth in India and Japan. India has proven to be a difficult market to break into as the service tries to establish itself in the country amid fierce competition.

In a recent investor call, Netflix co-founder, president, and co-CEO Reed Hastings stated that the firm's lack of success in India is "frustrating," but that the company is "absolutely pushing in there."

The Los Gatos-based company saw its stock plummet after announcing that it expects to add only 2.5 million new news subscribers in the current quarter, the lowest for the first quarter in nearly a decade, added 2.6 million new paying subscribers in the Asia Pacific region in the last quarter as compared to 2 million in the same quarter last fiscal, with robust growth in both Japan and India.

While Netflix has never disclosed the number of Indian members, market estimates place the number between 4.3 million and 4.5 million, a fraction of competitors Disney+Hotstar, which is almost 36 million, and Amazon Prime Video having over 17 million.

Netflix Reducing Prices For Indian Market

Netflix had reduced its prices in India in December to make the service more accessible to a larger range of customers. However, many experts feel that the move will only increase the number of users who were already using the service due to account sharing.

During a webcast on Thursday, Netflix's chief operational and product officer, Greg Peters, said the price change is the consequence of a number of actions the company has taken in India over the years. While Netflix expected a reduction in average revenue per member as a result of the price cuts, it is expected to make up for it by adding more subscribers.

"We've been operating there and learning more about Indian clients' tastes, etc.," Peters explained, "and that's broadening the service offering across multiple dimensions." We decided it was the perfect time to lower our prices there, to make it more accessible to everyone, and we're doing it from the perspective of long-term revenue maximization."

"I think it's still too early to think about India." And some of these impacts, such as retention, take a few months to obtain a clear picture of," he said. "However, the early data we're seeing strongly suggests that the lens of revenue maximization through these modifications is a positive read."

Netflix's Lack of Success In Indian Market

Hastings previously stated that India's pay-TV pricing, which is roughly $3 per month per household, is unusual. He stated, "Rarely different price from the rest of the world, which has an impact on consumer expectations."

Netflix, the first global OTT provider to launch in India in 2016, began hiring and investing in original content after two years. Hastings announced in 2018 that the firm would spend Rs. 2,000 crore on content in India over the next two years, more than the combined programming budgets of the top four Hindi general entertainment networks. On the other hand, many of the shows and films have yet to attract large audiences.

Netflix Group CFO Spencer Neumann noted on the investor call that while the company has a "terrific business" and a "terrific business model" that scales effectively, it is also extremely difficult in every country.

"Every country has a different adoption curve, and we talk about product-market fit, but even if everyone enjoys movies, television, and games, it's a really specialized situation. Around the world, entertainment is still largely regional. So it's both global and local, and we have to figure out what that is." In response to a question on India, he stated.