One of the most requested Netflix (NASDAQ: NFLX) features may soon be ready for launch. The only caveat: U.S. subscribers won't be able to use it.
Changing the channel
A little over a year ago, Amazon.com (NASDAQ: AMZN) started letting its Prime members download streaming content directly to their device. That enabled customers to access Prime Video on planes, trains, subways, and other areas where internet connections were either slow, intermittent, or both.
Netflix, however, came out and said it wouldn't follow suit. The reasoning, at the time, was that
The change of tune follows Netflix's expansion to 130 new countries at the beginning of the year. Some of those countries don't have the same internet infrastructure enjoyed in Netflix's domestic market. That requires a change of strategy for Netflix.
The growing need for international subscribers
Netflix's domestic growth has slowed to a crawl in the past couple of quarters, increasing subscribers by just 530,000 over the past six months. While management expects domestic subscriber growth to bounce back in the fourth quarter, it still doesn't expect to add as many new users as last year. The bulk of Netflix's subscriber growth going forward will come from international markets.
Allowing subscribers to download content to their devices in countries where internet connections are subpar should add a lot of value to the service. That ought to increase subscribers and reduce churn in those countries.
It's worth noting that Netflix is charging a substantial amount for its services, even in countries with significantly lower standards of living. For example, in India, Netflix charges about $7.50 per month -- which is very close to its lowest-priced plan in the United States. Providing as much value as possible for its asking price is key to increasing uptake.
Will Amazon undercut it?
As mentioned, Amazon Prime already lets subscribers download content to their devices. Amazon launched Prime in India earlier this year for just $15 per year, and it's getting ready to launch Prime Video in the country as well. What's more, Amazon won't charge any extra to Prime members to stream or download its videos.
What remains to be seen is whether the quality of Amazon's content will live up to what's available through Netflix, and which appeals more to consumers in the country. Netflix is working to bring internationally acclaimed films and TV series to India, while Amazon is looking to provide more local content. Netflix will also have to compete with other local streaming platforms.
Allowing customers to download content only brings Netflix's utility up to par with the competition, including Amazon. It needs to provide maximum value to justify its relatively high prices. While Netflix should be able to procure the content it needs to attract subscribers, it needs features such as downloading to keep them.
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