Netflix has lowered its prices in over 100 countries over the last few days and it’s hard not to wonder the reason why you have chosen those territories and left others out. There it weighs a lot that Spain is not one of the beneficiaries, while its strategy to end shared accounts as we knew them until now has come into operation.
A clear strategy
From the platform itself, they have not wanted to go into many details beyond confirming that it has lowered prices in several countries, but what is clear is that it has applied it in places that represent a fairly small number of its customers. In fact, it is expected to affect around 10 million of its subscribers, which means just over 4% of Netflix usersas reflected by Ampere Analysis.
The truth is that from Netflix they had already dropped lately that they were going to be flexible in terms of the price of access to the platform in those markets where it still had a strong margin of growth. Come on, what they could lose on one side they will surely end up gaining on the other, just as Toby Holleran de Ampere Analysis explained to The Hollywood Reporter:
Virtually all of the markets where the price drop occurred are emerging markets, so this can serve as a means of driving subscriber growth: if Netflix drops its price by 20 percent, but translates into a 30 percent increase percent subscribers, that’s a net positive from a revenue standpoint. It could also increase the number of potential Netflix viewers in the future, which could put you in a good position if you decide to launch the ad-supported plan later.
It was already obvious that everything was part of a strategy on the part of Netflix, but that is completely clear. To this we must add that the platform fee in many countries is in North American currency. and “the strength of the US dollar in many of the markets where Netflix prices are denominated in US dollars: some countries could experience a significant increase in the cost in local currency, making the subscription less attractive and possibly leading to a loss of customers“.
This leads to the fact that this price reduction policy is not going to be something that it plans to apply equally in other countries, since someone very well informed about it has clarified to Indiewire that this movement by Netflix is still a way of adjust to reality there are countries that can absorb price increases, but not other places with weaker economies. And like it more or less, Spain is among the first, as has already been demonstrated on many occasions.
In fact, Netflix already made it clear in its last quarterly announcement that it did expect some initial cancellations in response to its fight against account sharing, but it was also clear that revenue was going to finish growing soon after compared to what they were achieving before introducing this controversial change. For now, all they have achieved is create confusion, while the drop in prices in other countries has been poorly received by Wall Street.
At the time, it was surprising that the platform almost accused those who shared an account with people who did not live in the same house of not being able to invest more in making good series and movies, but in the end it all comes down to monetization. At Netflix they believe that they can get more money in many markets that way, while in others the potential audience needs that price reduction, especially if you want to get more subscribers in those markets with a clear potential for it. As simple as that.