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A New, Cheaper Netflix Mobile Plan Hits the Market in South Africa
At the end of June 2021, Netflix announced a brand-new mobile plan for tablets and smartphones for South African customers. It is more affordable than the other options, priced at ZAR49 (~USD3.4) compared to ZAR99 (~USD6.8) for the basic plan, ZAR139 (~USD9.6) for the standard plan, and ZAR169 (~USD11.6) for the premium plan. While the mobile plan allows for five different profiles, only one screen can be used at the same time and only one device can have downloads.
This move by Netflix has been introduced as a plan to “make it even easier for anyone with a smartphone to enjoy Netflix,” but Netflix’s announcement actually goes beyond that. The company also announced a new “Play Partial Download” feature which will allow users to watch a movie or series before it has completed downloading to make it easier for users with unreliable wifi to watch Netflix, as well as save data. We looked at consumer trends that explain why Netflix’s move is smart and timely.
COVID-19 has negatively impacted discretionary spending but positively impacted streaming
Netflix’s new announcements come at a time when South Africa is going through another wave of pandemic and social unrest.
According to the Kasi consumer confidence index, consumer sentiment in South Africa has been negatively impacted by the pandemic reaching an all-time low of -84 in April 2020 but has slowly rebounded to -20 in March 2021. One explanation of the muted sentiment is the impact of COVID on discretionary spending. The discretionary spending sub-index dropped to -95 in May 2021 before rebounding to -9 in April of this year. It’s not surprising as the pandemic has resulted in business closure, lockdowns, and restrictions to contain the spread.
While the purchasing power of South Africans has decreased during this time, the demand for online activity and streaming has increased. According to the Kasi retail category index, demand for airtime/data grew significantly during the pandemic. In March, the index for airtime/data was up +0.97 followed by personal hygiene at +0.88. The retail disruption caused by COVID-19 made airtime/data and cleaning-related products essentials. This trend is continuing today as consumers are still faced with the impact of the pandemic and its various waves and variants.
South Africans are still spending time online and streaming, especially in view of lockdowns and curfews when there are few other options. Airtime and data are not only used for streaming but also for getting news, online shopping, and working from home. Usages for mobile phones have expanded greatly during the pandemic.
An Opportune Time for More Affordable Streaming Options
While Western nations have been able to reopen their economies and get people back to work due to high rates of vaccinations, the same cannot be said for Africa nations. As the COVID-19 pandemic continues to devastate African nations and hopes of a strong economic recovery are pushed further out of sight, now is not the time for discretionary spending. However, at the same time, the pandemic has made airtime/data less and less non-essential.
The purchasing power of Africans has decreased during this time, but the demand for online activity and streaming has continued to increase and Netflix has responded to this trend through its cheaper mobile plan. As consumers have less discretionary income, affordability is the most important ingredient for any discretionary purchase. Netflix address this concern with the launch of the cheaper mobile option.
Netflix is making it easier and cheaper to also be able to enjoy some entertainment. The company has long been a frontrunner in the online entertainment business, but this new and expanding strategy is pushing them further into the lead.
Furthermore, Netflix is not only focusing on their South African customers but is rolling out this plan, the cheapest in the region, across sub-Saharan Africa, and in Nigeria
Netflix viewing in South Africa more than doubled from January to November 2020 compared to the same time period in 2019, and Netflix subscribers in Africa vastly outnumber other global online streaming sites like Disney+, Amazon, iRoko, and AppleTV+, as well as the South African service Showmax. Showmax is Netflix’s main rival in South Africa and nearly half of Showmax’s content is original African content. In view of this, Netflix is producing a series called JIVA! about a dancer who yearns to get out of her working-class neighborhood in Durban, South Africa, as well as commissioning many other original African content. It seems like Netflix is pulling out all the stops to stay top of the game in Africa.
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