Why Netflix needs more than cheap plans to drive massive growth in Africa • Techpoint Africa
In September, Netflix unveiled his plan to start testing an inexpensive mobile-only subscription plan in Nigeria. Priced at 1,200 ($ 2.65) per month, this plan will be added to the three existing plans – Basic, Standard and Premium – when it is rolled out.
This is part of Netflix’s strategy to expand into its rapidly growing market in sub-Saharan Africa. This seems a necessary step given the peculiarities of the African market, in particular the low standard of living.
To achieve the expected increase in the number of international subscribers, the global media company has decided to make subscriptions relatively affordable in the region.
Prior to Nigeria, Netflix started this trial in South Africa and Egypt. He also liaised with network operators in South Africa to enable users without a bank account to subscribe with airtime or prepaid vouchers.
However, this is not unique to Africa, as growing broadband internet markets and developing economies are also gaining attention. Before focusing on Africa, India was Netflix’s first stop for inexpensive mobile-only plans where it tested a 50% discount for its 3, 6 and 12 month subscriptions.
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Seeking to gain users from its high-priced competitors – Amazon and Disney – the US company began testing a $ 2.8 mobile plan in India over a year ago. The subscription excludes TV broadcasting and can work on one device (smartphone or tablet) at a time.
In 2018, Netflix had around 1.2 million subscribers nationwide. The plan was launched a few months after the testing phase, and by the end of 2019 there were two million subscribers on the platform.
In July 2020, a new affordable plan – Mobile + – has been introduced. Capped at $ 4.70, compared to $ 7 and $ 11 for traditional subscriptions, Mobile + allows users to stream to phones, tablets, and computers only.
Netflix’s decision to make the plan available to more users will depend on the feedback it receives from the three-month testing period. But then, there are still 98 million subscribers according to Reed Hastings, CEO of Netflix projection for years to come.
In addition to its price cuts, Netflix has been involved in local movie scenes in these countries. For example, it has placed over 40 original Bollywood series, movies and shows on its platform since July 2018.
Netflix’s interest in Africa was evident in 2018 when it acquired Nigerian production Lionheart. Before that, he had only allowed popular Nollywood releases after they were shown in theaters. A case in point is The wedding party – Nigeria’s highest grossing film.
In February 2020, the video streaming giant released its first fully produced African series, South African Queen Sono. Subsequently, he launched Netflix Naija and, before the pandemic, revealed plans to free nollywood originals.
Clearly, what Netflix seeks to achieve with all of these actions is unleash the growth potential of Africa’s promising tech economies.
Go through a 2019 report, South Africa had about 152,000 subscribers. And with Luxembourg (52,151 subscribers) occupying the last position in the top 50, it’s safe to say that Nigeria probably had less than 50,000 subscribers who missed out on the top 50. Nonetheless, the African market contributed to the massive increase in subscribers registered after the first quarter of 2020.
Over the next five years, Netflix is expected to have 3.6 million subscribers on the continent. Given the slow but steady growth observed with India despite the incentives, this progression can also be observed in the African market. Although there are more competitors in India relative to its population, Africa also has its share of rivalry.
Internet penetration is fueling the media streaming market, but …
Netflix entered the African market in 2016, taking all 54 countries in one fell swoop. It’s a movement of global expansion includes India and many other countries with a burgeoning subscription video on demand (SVoD) market.
Rather, the attraction was the result of increased internet access, which makes these locations excellent for streaming products. And although Netflix has become the largest media streaming platform in the world, it has not been accepted by the mainstream in Africa.
The major of Netflix rivals in Africa are Showmax – MultiChoice’s streaming platform – and YouTube.
Showmax has been successful in attracting local and foreign clients by providing access to a range of local African content. It does this as a standalone platform or as an incentive by subscribing to MultiChoice’s DStv Premium plans.
But the competition cannot be blamed for Netflix’s weak growth because in the African market, content is essential but pricing is a driving force.
Even though Netflix tried to get ahead of this with its discounts, price cuts and promotional tactics, the challenge is greater than that and the economic reality has a huge influence. And according to Jason Njoku, that’s why he moved his startup, IROKOTV – which offered the cheapest subscription package – outside of Nigeria earlier in the year.
There is also the question of the availability and affordability of the Internet to consider. Given the growth trend over the past four years, five years may not be enough to reach the $ 3.6 million target.
Marked in the ‘Next Billion’ market like India, Africa has some prospects, but it’s probably best not to expect too much too soon.