Netflix’s international pricing under the spotlight

Monday, February 15th, 2016 
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According to Digital TV Research, many were surprised when Netflix announced its global pricing strategy at CES. Very broadly, Netflix charges $8/month for one screen, $10/month for two screens and $12/month for four screens and HD content in its 130 new territories.

These rates are reasonable in developed countries, but are high in developing ones. Reed Hastings, the CEO of Netflix, explained that the company was trying – at least initially – to target the elite in developing markets.

Therefore prices are likely to be tweaked in the mid-term, but the rates will appear high in the short term.

Netflix charges as a percentage of average pay TV ARPU
Source: Digital TV Research
Calculations are based on cheapest Netflix subscription as a percentage of the average pay TV ARPU.

So, Netflix is asking Indians to pay two and a half times as much as they would for the average pay TV subscription. At the other end of the scale, Australians would be forgiven for thinking that Netflix is cheap as its fees represent only 9% of the pay TV ARPU.

Note that proportions in the established markets of Brazil and Mexico are low – Netflix has been long-established in the region, and does not charge as much as in the new countries.