Netflix Is Lowering Prices in 100 Territories, But There’s a Catch

Netflix is planning to lower prices in 100 territories – but, as always, there’s a catch. It seems as though Netflix seems to be adjusting the subscription prices by region, with poorer regions of the world getting more significant discounts than the US. 

A study that was done concludes that Netflix will be dropping monthly subscription prices in more than 30 countries/100 territories overall. The “Basic” tier ad-free plan will get the most significant price cut; Central and South America, Sub-Saharan Africa, the Middle East and North Africa, Central and Eastern Europe, and the Asia Pacific regions all being among those reportedly seeing significant price drops. 

Analysts are saying that Netflix’s price decrease may seem to fly in the face of current trends in streaming services (Disney+, HBO Max, and others have all set price increases), but reflects the truth of Netflix’s current business dilemma. In short, it seems that Netflix has maxed out its subscriber potential in North America and Canada, and is looking for ways to increase subscriber numbers in overseas markets.

 Netflix launched an ad-supported tier of its service in an effort to provide a lower-cost option to a wider demographic of potential subscribers; however, that ad-supported version of Netflix is currently only available in a limited market of countries, including Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, the United Kingdom, and America. That leaves little room for finding price-cutting strategies to incentivize potential subscribers outside the ad-supported countries – but a flex-pricing system based on region seems like one effective (if complicated) way to do it. Netflix will reportedly also cut prices for its mobile-only tier of service, by upwards of 25-33% in certain markets – through heavily populated regions will not get that particular price cut.

“We’re always exploring ways to improve our members’ experience,” a Netflix spokesperson said in a statement to IndieWire. “We can confirm that we are updating the pricing of our plans in certain countries.”

Netflix seems to be betting its chips that the incentive to get new subscribers in will outpace the losses in monthly subscriber revenue in the regions where Netflix sees the most potential growth:

“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,” wrote Ampere, the source of the study. “While this move will have a negative average revenue per user (ARPU) impact on Netflix in these emerging markets, it could drive subscriber additions amongst consumers yet to take the service.”

Netflix has always been infamous for spending big upfront in the bet of bigger long-term gains. Why change now?