Netflix is going on the offensive and wants to outbid the competition with a new pricing policy. Unlike other streaming providers, the reigning king of services does not want to raise its prices. Instead, it wants to reduce subscription costs. Whether the plan will work out?
Netflix swims against the current
Rising energy costs and inflation are currently putting a lot of pressure on tech companies. Streaming services, for example, are not immune to passing on higher operating costs for power guzzlers like server farms to their customers. Conversely, many people are currently having to turn over every euro twice due to rising food prices and costs. So cancelling a subscription to a streaming service is often the first step to slashing monthly fixed costs. Netflix seems to be afraid of shrinking its subscription numbers and is therefore now taking a different approach. The company has lowered its subscription prices in more than 36 countries. Sometimes there should even have been a halving of the monthly subscription prices as the service has confirmed to the Wall Street Journal.
Behind this is certainly not only the intention to attract new subscribers. On top of that, Netflix doesn’t want to be that one service that customers are now eliminating from their repertoire of active streaming memberships. Furthermore, it can be seen from the price cuts that they are based on the popularity of the service in the respective country. The lower Netflix’s market share is in a country, the lower the streaming service apparently dropped the subscription price. Accordingly, the company is primarily targeting customers in Africa, Asia, and the Middle East. However, there are also said to have been price reductions in some places in Europe. Eastern European countries such as Bulgaria, Croatia and Slovenia are said to be affected.
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No price cut in sight in Germany
It is quite exciting to see how Netflix acts in direct comparison to the competition. For example, the company seems to have made extremely high profits during the Corona pandemic and currently still have enough resources on the high side. Otherwise, it is hard to explain why the streaming service has left its subscription prices unchanged for many months. The competition has a different mindset here. But Netflix’s concept is also different. With its different subscription models, the company can charge its customers up to 17.99 euros per month. Disney+, on the other hand, only offers one subscription, which costs just 8.99 euros. Meanwhile, Netflix fans in this country are also eagerly awaiting a price reduction. However, that might just be wishful thinking. After all, a lower subscription price in Germany is rather unlikely.
It is noticeable that the price reduction particularly affects countries that do not offer their customers an ad-financed subscription. The latter scores with a low price, but also demands a lot of compromises from its users. Not only do you have to “endure” the ads, but you also only get a limited selection of the Netflix library. However, it is uncertain how long the “advertising subscription” will last. After all, advertisers recently expressed disappointment with the low payouts. Incidentally, it doesn’t take a genius to understand Netflix’s strategy. In countries where the streaming service enjoys high demand, subscription prices are not only maintained. A price increase is likely to follow sooner or later. Countries, on the other hand, where Netflix is only enjoying success in places will benefit from price cuts. This strategy should ensure that revenues remain in line.