Netflix (NASDAQ:NFLX) has begun quietly testing a lower-priced mobile-only package in Malaysia that costs around $4 per month, which is about half the cost of the basic package in that country. A spokesperson told TechCrunch that similar trials are "running in a few countries."
The move could be to address the fact that Asian rivals offer lower-priced services. For example, Hotstar, iFlix, HOOQ, and Viu cost a mere $3 a month (and up), news reports indicate. Netflix also is beginning to offer more local content in Asia and has said it plans eight original movies and one series in India.
The Netflix strategy fits with data reported in Limelight Networks' (NASDAQ:LLNW) global "State of Online Video" report, released earlier this fall. The numbers indicated that while computers still lead online viewing globally, smartphone viewership is growing, and in certain Asian countries - including India, the Philippines, Singapore, and South Korea - smartphones are already the preferred streaming device.
"Certain countries … don't have such a robust broadband infrastructure and are using mobile device as their primary," said Mike Milligan, senior director, product and solution marketing, Limelight. "They have it wherever they go, and get the quality they need. Video online for these folks, whether mobile or at home, is a real convenience."
Limelight also found consumers globally to be very conscious of price. More than half of the respondents said that price is the No. 1 reason they would cancel a streaming video subscription. Due to the importance placed on cost, people might be receptive to a mobile-only service from Netflix, Milligan said. "Not having (video) on the big screen and not (having) higher quality might be enough for some people."
Interestingly, the Limelight numbers indicate that worldwide customers are still subscribing to only one streaming service on average, so capturing their attention is important. Only 27% of respondents reported subscribing to more than one service, despite having multiple options available to them.
The top frustration when watching online is rebuffering, and streaming to mobile adds challenges caused by switching from one cell tower to the next. "For the content distributor, we want to make sure we give the best quality experience," Milligan said. He noted that some of the companies Limelight works with measure rebuffering based on geography and cause.
"They take those things seriously and know that it affects customer satisfaction," Milligan said.
