Netflix bucks the trend and lowers prices for millions

Streaming giants like Disney+ and HBO Max have started raising subscription prices in order to become or stay profitable. However, Netflix has now dropped prices in more than a hundred countries. Why?

It’s a move that might be understood as an attempt to convince users, unhappy with the ongoing crackdown on password sharing, not to cancel their memberships and move onto other streaming services.

Ampere Analysis, a research and analytics company, reports that the subscription cost has been decreased in more than a hundred territories, and the discounts for the basic tier range between 20% and 60%.

The price dropped in countries like Egypt, Malaysia, Thailand, the Philippines, Croatia, Slovenia, and Bulgaria, among others. It’s estimated that the change affects around 10 million people – more than 4% of Netflix’s subscriber base, which exceeds 230 million.

“Effective immediately, Netflix is to drop monthly subscription pricing in more than a hundred territories globally,” Ampere Analysis research manager Toby Holleran wrote.

“These territories, which span Central and South America, Sub-Saharan Africa, the Middle East and North Africa, Central and Eastern Europe and the Asia Pacific regions will see discounts for the basic tier range from 20% to nearly 60%, with the price drop kicking in instantly for new and existing subscribers.”

Rich countries will still pay in full

The price does not change in North America and Western Europe, Netflix’s largest and most affluent markets, where average revenue per user is higher. Besides, subscribers in the US, Canada, and, say, Sweden can simply afford more expensive memberships.

Netflix announced all this locally – there was no big general announcement. For instance, the company tweeted for its subscribers in Malaysia that the Basic Plan in that country now costs 28 Malaysian Ringgit (about $6.30) – it’s down from 35 Ringgit ($7.90).

Good news, right? It’s puzzling, nonetheless, as the industry trend is to raise prices, not lower them. Apple TV+, Disney+, Paramount+, Hulu and HBO Max are the most recent rival streamers to increase their prices.

Obviously it helps that Netflix has been profitable – its income reached $4.49 billion in 2022, despite the fact that it lost subscribers in the first two quarters of the year.

Besides, as Ampere Analysis notes, the move is designed to help soften the blow of Netflix’s password-sharing crackdown. Many users have been unhappy with the new rules, and threats to leave the service have trended on social media. Netflix is the only streamer to charge a fee for sharing passwords.

“With Netflix reportedly planning to charge consumers extra to have additional ‘out of home’ users access their account, these price drops potentially cancel out the extra cost to subscribers currently sharing accounts. While this move will have a negative average revenue per user impact on Netflix in these emerging markets, it could drive subscriber additions amongst consumers yet to take the service,” Amper Analysis research manager Holleran said.

Indeed, virtually all markets where prices have been lowered are emerging markets, so Netflix is probably hoping to drive new subscriber growth there. If, for instance, it drops the price by 20% but sees 30% more subscribers, this will be a net positive from a revenue perspective.

Finally, it’s easy to see that in many of the markets where price has dropped Netflix pricing is presented in US dollars – and the dollar has recently been strong, leaving customers paying more in local currency terms.