Netflix India Sees Impressive FY23 Growth: 24% Revenue Surge and 75% Spike in Net Profit

Netflix Entertainment Services India LLP, the Indian arm of the popular streaming service, witnessed a noteworthy 24% year-on-year increase in its FY23 revenue, reaching Rs 2,214 crore. According to regulatory filings with the Registrar of Companies (RoC), the net profit surged by an impressive 75% compared to the previous year, reaching Rs 35 crore.

This substantial growth in both topline and bottomline is attributed to strategic moves by Netflix, including a reduction in subscription plan prices in December 2021. The pricing adjustment led to enhanced customer engagement and a notable surge in subscriber numbers throughout the calendar year 2022. Additionally, in 2023, Netflix took measures to combat password sharing globally, including in India. The platform aggressively promoted its mobile-only plan priced at Rs 149 to further boost subscriber acquisition, as noted by industry experts.

Netflix operates through two entities in India, namely Netflix Entertainment Services India LLP and Los Gatos Production Services India LLP. While Los Gatos manages Netflix's content investments in India, both entities contributed to the overall success. The inventories of Los Gatos, encompassing licensed content and titles under development, experienced a robust 25% year-on-year growth in FY23, totaling Rs 2,269 crore in value.

In November 2023, Los Gatos received a capital contribution of Rs 1,300 crore from the parent entity in the US, bringing the total investment in the firm to Rs 5,700 crore since its establishment in 2019.

During FY23, Netflix Entertainment Services allocated Rs 125 crore to personnel services, marking a 30% increase from the previous year. Meanwhile, other expenses, including marketing and distribution costs, rose by 24% year-on-year, reaching Rs 2,062 crore.

While the FY23 revenue growth of 24% surpasses the 16% growth seen in FY22, it falls short of the remarkable 66% growth in FY21, a period marked by a pandemic-driven surge in digital services consumption.

In a global context, Netflix has introduced ad-supported subscription plans to drive growth. In the September 2023 quarter, the company witnessed a 70% increase in subscriptions for its ad-supported plans globally. However, this model is yet to be introduced in India.

Key Growth Factors:

• Strategic subscription price reduction
• Enhanced customer engagement and increased subscribers in 2022
• Aggressive promotion of the mobile-only plan priced at Rs 149
• Measures to combat password sharing globally, including in India
• Robust growth in inventories managed by Los Gatos
• Capital infusion of Rs 1,300 crore in Los Gatos in November 2023
• Significant increase in personnel services spending and other expenses in FY23.