Global streaming giant Netflix has introduced a series of cheaper pricing plans for selected consumers in South Korea from this month, prompting questions over its pricing strategy applied differently depending on the region.
According to Netflix on Tuesday, the company has rolled out new subscription plans in Korea with prices cheaper than the current scheme. The monthly payment for the basic plan is as low as 6,500 won ($5.70) when consumers limit the use of service to mobile devices.
The new monthly pricing plan is about 3,000 won cheaper than Netflix’s current cheapest billing scheme for South Korean consumers. The streaming service even brought in a weekly billing system that costs just 1,625 won per week.
Netflix indicated the pricing plans are being applied “on a trial basis” until it decides whether to make the scheme available for every subscriber here. Currently, these cheaper pricing plans are only available for a random group of subscribers selected by Netflix.
“We are always looking for ways to make Netflix more enjoyable and accessible. We will be testing different options in select countries, where members can, for example, watch Netflix on their mobile device for a lower price and subscribe in shorter increments of time,” Netflix said.
South Korea is the latest country where Netflix has tried out mobile-only subscription with cheaper pricing plans, as the streaming giant applies different pricing strategies depending upon the region.
While US consumers are expected to see their basic plan’s monthly fee increase from $8 to $9 per month this month, Netflix has introduced cheaper mobile-only pricing plans for subscribers in some Asian countries.
Last month, Netflix tried out a mobile-only plan at 250 Indian rupees ($3.63) per month, half its original plans that coast 500 Indian rupees ($7.27). Netflix launched a similar half-price mobile plan in Malaysia in November last year.
“The concept of a ‘trial price’ in different regions is quite a smart strategy,” said an industry watcher familiar with the matter. “It’s like creating a safety net for Netflix when it faces pushback from the price hike.”
“They appear to consider market maturity before implementing pricing plans. While it is difficult to say that South Korea is an immature market, they want to increase its appeal to young smartphone users.”
As the cheapest plan for mobile-only subscription is not available to US consumers, Netflix is seeking to boost its presence in Korea amid growing competition in the streaming service market.
Most Korean consumers subscribing to local IPTV services have been paying from 1,000 won to 2,000 won for sought-after video content. Many of the latest movies and TV shows are only available via such paid services.
According to market research company Nielsen Koreanclick, Netflix boasted about 2.4 million subscribers in Korea as of February, almost five times the number for the same month last year.
“Now Korean consumers can enjoy Netflix content for a week at a price cheaper than one movie available at local providers’ video-on-demand service,” said another industry watcher. “The consequences would be enormous.”