Netflix India's Profit Soared In FY23, But It Faces Tough Competition in Subscriber Race

Netflix, Inc NFLX India experienced a significant financial boost in FY23, with its revenue climbing by 24% to reach ₹2,214 crore (roughly $266.67 million). 

Reduced subscription rates and an expanded range of titles fueled this increase. The company's net profit soared by 75%, going from ₹20 crore (roughly $2.4 million) in FY22 to ₹35 crore (roughly $4.21 million), the Economic Times cites regulatory filings. 

Despite these impressive gains, these financials do not encompass Netflix's content investments in India, recorded under Los Gatos Production Services India LLP. 

Los Gatos registered a gross turnover of ₹3,191 crore (roughly $384.4 million) in FY23, most of which originated from service exports.

Netflix's affordable pricing, introduced in December 2021, resulted in a 30% increase in user engagement and a substantial rise in paid subscriptions in 2022. 

In India, Netflix's subscription plans vary from ₹149 ($1.80) for mobile-only access to ₹749 ($9.02) for premium services. Additionally, the company implemented measures to curb password sharing among users in various countries, including India.

Regarding operational structure, Netflix Entertainment Services India LLP handles revenue from subscriptions and spends on marketing and distribution. 

In contrast, Los Gatos focuses on content production and licensing, receiving revenue from Indian shows streamed in international markets. Los Gatos' inventories, including licensed content and titles under development, grew to ₹2,269 crore (roughly $273.37 million), up 25% in FY23.

Netflix encountered significant challenges in expanding its presence in the Indian market. Despite its global success, Netflix's strategy of reducing subscription costs has yet to be as effective in India, where it faces stiff competition from local giants.

Competitively, Netflix holds about a 4% market share in India, with roughly 6.5 million subscribers. This contrasts Walt Disney Co DIS Disney+Hotstar's dominant position with a 33% market share (about 50 million subscribers) and Amazon.Com Inc AMZN Amazon Prime Video's 12% market share. 

Despite the growth in Netflix's ad-supported plans in other markets, this model has not yet been introduced in India. 

In 2023, Netflix inked a partnership with Jio Platforms, India's leading telecom provider, to expand its presence in the Indian market. This collaboration involves integrating Netflix's streaming service with two of Jio's prepaid plans. 

This strategy aligns with Netflix's efforts to adapt to the Indian market's unique dynamics, where the pay-as-you-go model is more common than the traditional subscription model prevalent in Western markets. 

Price Action: NFLX shares traded higher by 0.31% at $483.60 premarket on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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