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Netflix (NFLX) to Discontinue its Free Access Plan in Kenya
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Netflix (NFLX - Free Report) recently announced that it is set to discontinue its free mobile plan in Kenya, where users were able to access 25% of its content without a subscription for the past two years.
Netflix is introducing a 4.99-pound ($6.07) monthly subscription plan with advertisements. While countries with lower-middle-income economies like Kenya offer significant potential for subscriber expansion in the streaming services industry, they also present challenges due to reduced purchasing power caused by inflation.
The free plan, which allowed viewers to watch Western and African shows like Money Heist, Bridgerton and Blood & Water, will end on Nov 1.
As part of its plan to attract new subscribers in Africa, Netflix has been investing in producing more locally-produced content from various African regions. Additionally, the company has been collaborating with local telecommunications companies to streamline payment processes.
Here’s Why Netflix is Removing Its Free Plan in Kenya
Following the termination of the free plan, users will have to switch to one of Netflix's paid subscription options if they want to keep using the service. This change may result in a rise in the number of paid subscriptions in Europe, Middle East, and Africa (EMEA) region, ultimately boosting NFLX's revenues in the region.
The Zacks Consensus Estimate for the company’s 2023 paid net membership additions in EMEA region is pegged at 8.29 million, indicating a year-over-year increase of 207.9%. The consensus mark for revenues in EMEA region is pegged at $10.56 billion, indicating a year-over-year increase of 8.36%.
Shares of Netflix have gained 30.9% year to date compared with the Zacks Consumer Discretionary sector’s rise of 4.1% due to a steady rise in subscribers in the previous few quarters.
Netflix has been progressively increasing its footprint in the African market, acknowledging the growth prospects within Africa's streaming sector. This expansion has been driven by factors, such as improved Internet accessibility and the expanding middle-class population.
Initially, NFLX employed a strategic approach of providing free access in specific African nations, including Kenya, to establish a foothold in the market and appeal to a wider audience. Subsequently, the streaming giant has broadened its African content portfolio, garnering global recognition with regionally customized series and movies like Queen Sono and Blood & Water.
The decision to end the complimentary service in Kenya signifies a transition toward a revenue-centric strategy. These potential plans may encompass broader expansion into additional African nations, deepening partnerships with African content creators, investments in Internet infrastructure and revisions in pricing strategies tailored to the local market.
Netflix could encounter increased rivalry from other streaming platforms that provide lower pricing, a broader content library, or enhanced features. This Zacks Rank #4 (Sell) company faces tough competition from Showmax, Amazon (AMZN - Free Report) Prime Video and Disney (DIS - Free Report) .
Showmax, which has an exclusive partnership with Warner Bros. Discovery (WBD - Free Report) for its HBO content, is emerging as a formidable competitor to Netflix in African markets, as its parent company, MultiChoice, is the owner of DSTV, the largest pay TV service in the continent. This has provided Showmax with a competitive advantage due to its deep knowledge of the local market. It also implemented a 37% reduction in subscription fees in Kenya in February.
Amazon Prime Video has been actively extending its presence in Africa, embarking on a significant recruitment effort over the past couple of years. Additionally, the platform has forged collaborations with African producers to increase its catalog of locally produced content. Additionally, Amazon Prime Video presented a 50% discount for students who registered using a valid academic email address.
Disney+, a major global rival to Netflix, extended its presence into multiple African markets in the previous year, including South Africa, Egypt and Algeria. Its exclusive content is famous worldwide and helps DIS penetrate into new markets easily.
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Netflix (NFLX) to Discontinue its Free Access Plan in Kenya
Netflix (NFLX - Free Report) recently announced that it is set to discontinue its free mobile plan in Kenya, where users were able to access 25% of its content without a subscription for the past two years.
Netflix is introducing a 4.99-pound ($6.07) monthly subscription plan with advertisements. While countries with lower-middle-income economies like Kenya offer significant potential for subscriber expansion in the streaming services industry, they also present challenges due to reduced purchasing power caused by inflation.
The free plan, which allowed viewers to watch Western and African shows like Money Heist, Bridgerton and Blood & Water, will end on Nov 1.
As part of its plan to attract new subscribers in Africa, Netflix has been investing in producing more locally-produced content from various African regions. Additionally, the company has been collaborating with local telecommunications companies to streamline payment processes.
Netflix, Inc. Price and Consensus
Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote
Here’s Why Netflix is Removing Its Free Plan in Kenya
Following the termination of the free plan, users will have to switch to one of Netflix's paid subscription options if they want to keep using the service. This change may result in a rise in the number of paid subscriptions in Europe, Middle East, and Africa (EMEA) region, ultimately boosting NFLX's revenues in the region.
The Zacks Consensus Estimate for the company’s 2023 paid net membership additions in EMEA region is pegged at 8.29 million, indicating a year-over-year increase of 207.9%. The consensus mark for revenues in EMEA region is pegged at $10.56 billion, indicating a year-over-year increase of 8.36%.
Shares of Netflix have gained 30.9% year to date compared with the Zacks Consumer Discretionary sector’s rise of 4.1% due to a steady rise in subscribers in the previous few quarters.
Netflix has been progressively increasing its footprint in the African market, acknowledging the growth prospects within Africa's streaming sector. This expansion has been driven by factors, such as improved Internet accessibility and the expanding middle-class population.
Initially, NFLX employed a strategic approach of providing free access in specific African nations, including Kenya, to establish a foothold in the market and appeal to a wider audience. Subsequently, the streaming giant has broadened its African content portfolio, garnering global recognition with regionally customized series and movies like Queen Sono and Blood & Water.
The decision to end the complimentary service in Kenya signifies a transition toward a revenue-centric strategy. These potential plans may encompass broader expansion into additional African nations, deepening partnerships with African content creators, investments in Internet infrastructure and revisions in pricing strategies tailored to the local market.
Netflix could encounter increased rivalry from other streaming platforms that provide lower pricing, a broader content library, or enhanced features. This Zacks Rank #4 (Sell) company faces tough competition from Showmax, Amazon (AMZN - Free Report) Prime Video and Disney (DIS - Free Report) .
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Showmax, which has an exclusive partnership with Warner Bros. Discovery (WBD - Free Report) for its HBO content, is emerging as a formidable competitor to Netflix in African markets, as its parent company, MultiChoice, is the owner of DSTV, the largest pay TV service in the continent. This has provided Showmax with a competitive advantage due to its deep knowledge of the local market. It also implemented a 37% reduction in subscription fees in Kenya in February.
Amazon Prime Video has been actively extending its presence in Africa, embarking on a significant recruitment effort over the past couple of years. Additionally, the platform has forged collaborations with African producers to increase its catalog of locally produced content. Additionally, Amazon Prime Video presented a 50% discount for students who registered using a valid academic email address.
Disney+, a major global rival to Netflix, extended its presence into multiple African markets in the previous year, including South Africa, Egypt and Algeria. Its exclusive content is famous worldwide and helps DIS penetrate into new markets easily.