Shares of Netflix fell after the company released a quarterly report on October 20 with only 2.2 million new subscribers. At the same time, over the last week, stock growth has resumed and since the beginning of the year, the share price of Netflix has risen by 59%.
The company’s management and analysts cited the fact that in the previous two places the growth in the number of new subscriptions was a record, as users chose Netflix as entertainment, an alternative to closed cinemas during the pandemic.
Netflix does not seem to see any problems with expanding its user base, as last week it announced another price increase for the standard subscription package in the US by $ 1 per month, and for the premium – by $ 2 per month. Thus, even if the rate of adding new subscriptions decreases, a higher subscription fee, a high level of engagement and a very low level of unsubscriptions will increase Netflix’s revenue and profits in the current and future quarters.
Commenting on the latest quarterly report, Netflix’s vice president of development in the Asia-Pacific region Tony Zamechkowski said that almost half of the growth in new paid subscriptions came from the Asia-Pacific region, the largest share of all regions.
The reason for the success is the addition of subtitles and duplication of content in regional languages such as Hindi, Malay, Korean, Japanese, Thai and Indonesian Bahasa. Netflix has also made the program’s interface available in local languages. There is no such diversity in any international streaming service, which gives Netflix an important trump card for conquering markets and competing with local companies.
In addition to duplicating existing content, Netflix continues to invest in creating new original content for specific markets. Thus, Netflix spent $ 400 million on the development of original content, as well as licensing the content of other companies for the Indian market for the period from 2019 to 2020.
Netflix is taking similar steps in South Korea, which had 3.3 million subscribers as of September 30.
Netflix’s growth in India and other regions is based on the proliferation of high-speed Internet and partnerships with mobile operators.
The availability of a Netflix subscription with one package of the tariff plan with the Internet is also the basis of growing demand. In the markets of India, Malaysia, Indonesia, the Philippines and Thailand, subscribing to Netflix at a mobile rate can cost users less than $ 5 per month. This is very different from Netflix’s premium prices in markets such as the US, where a standard subscription costs around $ 14.
Netflix has stated that it will continue to invest in markets such as Japan, (South) Korea, India, Indonesia, as it sees significant growth potential.
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