Netflix cuts its prices in 30 countries
Netflix is slashing its prices in several of its smaller markets in the latest turnaround in the video-streaming service’s efforts to keep its recently revived subscriber growth afloat amid stiffer competition and inflationary pressures that are urging more households to rein in their discretionary spending.
The lower prices that began Roll out early this week affect more than 30 of the approximately 190 countries where Netflix’s streaming service is available – an expansion that has allowed the company to add almost 231 million subscribers. Areas with lower prices include the Middle East markets in Yemen, Jordan, Libya and Iran; European countries such as Croatia, Slovenia and Bulgaria as well as markets in sub-Saharan Africa.
Netflix isn’t changing its prices in any of its largest markets, including the United States, where it’s regularly increased its prices over the past four years to offset the cost of a programming offering that includes popular shows like The Crown. and “Stranger Things”.
Although Netflix has established itself as the largest video streaming service, it still vies with other well-funded competitors like Apple, Amazon, and Walt Disney Co. for viewers. At the same time, persistently high inflation is causing more and more people to cut their budgets.
Those factors helped Netflix lose nearly 1.2 million subscribers in the first half of last year, prompting the company to introduce an ad-supported option on its service that costs just $7 a month in the US — less than half the price of popular plan. That helped Netflix rebound in the second half of last year when it gained 10 million subscribers, a rebound that made its longtime CEO and co-founder Reed Hastings comfortable enough to step down last month.
In another bid to gain more subscribers, Netflix has begun cracking down on the rampant password sharing that has allowed an estimated 100 million people worldwide to use its service for free. Netflix earlier this month cracked down on the practice in Latin America and several other countries, including Canada, New Zealand, Portugal and Spain. By the end of March, new rules for using the same password in multiple households are to be introduced in the USA.
Netflix’s new co-CEO Greg Peters hinted during a quarterly conference call last month that the company is exploring ways to gain more subscribers in its smaller markets, though he said nothing specifically about lower prices as bait. “There’s a lot of people around the world in countries that we haven’t penetrated deeply, and we have more opportunities to attract them,” Peters said.
In the same conference call, Peters also noted that Netflix sees little need to cut prices in markets like the U.S., where its service has already proven itself for longtime subscribers. “We see ourselves as an irreplaceable commodity,” said Peters.
Even so, Netflix lost 920,000 customers in the US and Canada last year and had 74.3 million subscribers in that region at the end of December. Despite dwindling subscribers, Netflix’s price hikes in the US and Canada helped boost revenue in the region by 9% last year to nearly $14.1 billion. Financial gains are becoming increasingly important for Netflix as it now places more emphasis on earnings growth after it has become more difficult to attract more subscribers.
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