Should Netflix Launch a Freemium Model in India?

Considering the assumption stated, let’s assume that a user would get to see 2-3 episodes of “Sacred Games” for free and to view it further, he/she needs to subscribe to Netflix. 

I would want to state the goal of making Netflix freemium. 

• Increase in acquisition: By an increase in the acquisition, I mean more users would sign up to Netflix. 
• Increase in revenue: By an increase in revenue, I mean the more signed-up user will subscribe. Freemium model with a large user base would bring more revenue from advertisement. 

I would like to analyze the impact of this decision on: – 

• Users 
• Netflix 
• Market 

Users 

Pros:  

• Users can see many sample contents before deciding to subscribe. This is worth considering the Indian market, where people evaluate a lot before making a purchase decision. 
• Users can sign-up to Netflix without inserting card details. This would help in onboarding many users. 

Cons: 

• Unlike musical subscription; a user won’t be able to judge the value delivered by Netflix until he/she watches a complete season/show. 
• Netflix’s heart is its recommendation system. It may not function well as the complete user viewing history wouldn’t be known. 

Netflix 

Strengths 

• Netflix makes its own content and partners with studios to produce great content. 
• It can attract great talent due to its brand. 

Weakness 

• Netflix content production needs cash flow. It wouldn’t be possible without cash reserves. 
• Freemium model would be difficult due to licensing norms. 

Market  

Opportunities: 

• Most broadcasters in the OTT space have strong partnerships with advertisers. So, it is not very difficult to get advertising even for original content. 

Threats 

• Various over the top platforms like Sony LIV, Voot and Hotstar whose parents are Sony, Viacom 18 and Star produce their own content. It is increasingly putting pressure on Netflix to produce its own content to acquire and retain users. 
• Netflix’s reach is limited to urban India. Netflix doesn’t have a plethora of services like live sports and vernacular content to bind a large user base to it. 

Recommendations 

• Netflix’s USP is high-value content and its recommendation system. Without exploring and consuming the entire value; a user will not convert to the subscriber. 
• For vast user acquisition; Netflix can broaden its content to vernacular languages and by gaining exclusive rights of live content and premier TV shows than trying a freemium model. 
• Netflix pricing strategy was more in a pro to the US than India. In the US, the monthly cable cost is 100$ whereas Netflix monthly subscription costs 15$. Cable in India costs only an average of 4-6$ per month. Netflix has rightly launched a mobile-only subscription plan of Rs.199 (2.8$). This will boost user acquisition and in turn revenue. 

Netflix already has 30 days free trial subscription for its user. Its strength lies in its original content and recommendation system. It should continue to do so and that needs money. Freemium may not be the way forward but a right mix of pricing and localised content can help Netflix to achieve its goal; user acquisition and revenue. 

If at all, it wants to launch the freemium model, advertisement can be explored for compensating revenue.

Waiting for your feedback/suggestions on this. :)