![]() Largely, no one wants to be reminded every month that they are leaking money to Netflix. Compare that with monthly billing where the only habit the user is building is that of payment, not a consumption pattern.įurthermore, annual plans might allow Netflix to give better prices and higher discounts, making the value proposition a lot sweeter for people who currently keep subscribed throughout the year, but pay monthly. ![]() Paying an annual price for Netflix feels like an investment and a commitment and the sunk cost aids habit formation. Secondly, when you pay yearly you build a habit of at least opening Netflix once or twice a week if not more, to check what's new. (No, releasing episodes weekly might not be such a great idea to prevent this problem.) Especially when it is super easy to cancel and then resubscribe, why wouldn't I cancel and just come back on demand, when I feel like it? The result is that users cancel subscriptions and only resubscribe for a month or two when some hot release is doing the rounds on social media, only to cancel their subscriptions again once they're done watching the show. And that kind of quality is hard to deliver month on month for anyone, let alone Netflix. With so many options, quality beats quantity when it comes to habit-formation and memorability. But if you had to evaluate monthly, you'd be hard-pressed to find Netflix delivering any value at all for many months of the year.Īs always, content intensity matters more than content consistency. When you pay yearly, you can justify the yearly price with just two or three good shows, standup specials, or Netflix Exclusive movies you watched throughout the entire year. But honestly, it is quite difficult for an OTT platform to provide a tonne of value to every person every month, especially when they have multiple subscriptions going on.There are some launches during a year that might make it all worth it, but when you ask a person every month indirectly, "Was I worth the ₹649 you paid for me last month?" the answer will most likely be, "No, it wasn't worth it and I wasted that money last month." In fact, ₹649 being deducted from my account every month forces me to evaluate Netflix's value proposition for me in the last month. So it isn't like that monthly subscription is going unnoticed anyway. First of all, the monthly price for a premium plan is ₹649, which isn't cheap by any measure, especially when compared to competing OTT platforms that charge less than half of what Netflix charges. Let me tell you why this definitely doesn't work for India, even if it may work for certain regions. ![]() Netflix started with the monthly model because it thought that the lower monthly payments would hide in a person's credit card bill and a subscription that was going to waste would likely be less noticeable to the user than a yearly subscription that's a much higher one-time payment and might make the user re-evaluate. When you pay monthly, you are reminded to evaluate your Netflix subscription monthly. The competition is already doing it.īut Raj, what are these behavioural reasons you were talking about? Okay, let's get into it. So, it isn't like we are proposing anything new when I say that Netflix should consider focusing on annual plans.
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