TBI Tech & Analysis: Will scrapping free plan in Kenya pay off for Netflix?

Blood & Water

Netflix revealed plans to end its free mobile-only plan in Kenya, which gave users access to a quarter of its shows and movies without paying and without adverts, earlier this month. Omdia’s Samuel Nkwam explains what this shift in strategy means for the streamer.

The free model, which initially launched in September 2021, will be deactivated in just two days time, on 1 November, and consumers will be required to upgrade to one of the paid plans. Netflix has not disclosed how many free subscribers it gained from the tier.

Under the plan, viewers were able to watch African shows such as Blood & Water, as well as western series including Bridgerton and Army Of The Dead.

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Impact assessment and outlook

The discontinuation marks a strategic shift for the streaming giant, as it pivots from user growth toward profitability, aiming to convert this category of users into paying customers. This development comes after the implementation of other revenue-focused initiatives, such as the introduction of password-sharing paywalls in South Africa, and paid subscription price reductions averaging 37% in Kenya in February 2023.

Netflix is the only major OTT platform in the region to have offered a free tier and Kenya, Netflix’s third-largest market in the region by subscriptions, was the only market trialed.

This may be signaling that Netflix thinks it’s time to capitalize on full monetisation efforts in Kenya, by luring users onto its lower-priced mobile-only tier, which was reduced to KSh200 ($1.34) per month back in February. This is in comparison to Showmax Mobile, which currently costs Kenyan subscribers KSh300 ($2.01) per month.

However, Omdia is forecasting only a modest conversion of free-tier subscribers into paid, given the price-sensitive nature of customers at this end of the market, and the availability of cheaper alternative platforms such as Wi-flix, which offer content catalogs that can compete with the reduced content offering that free Netflix subscribers previously had access to.

The extract above is from ‘TV & Video Industry Developments Impact Brief – October 2023’ and written by Omdia research analyst Samuel Nkwam. The brief is available to read in full here (with a subscription).