Netflix to set prices according to local piracy levels
Fri 17 Apr 2015
Media streaming giant Netflix has this week outlined plans to better structure its pricing dependent on the prevalence of piracy in a country. In an earnings call to investors, chief financial officer David Wells announced that the company would reduce subscription prices in countries with higher piracy rates in order to remain competitive.
“Piracy is a governor in terms of our price in high piracy markets outside the US,” said Wells. “We wouldn’t want to come out with a high price because [if] there’s a lot of piracy […] we have to compete with that,” he continued.
While the public admission makes sense in economic terms, it does seem that the new amended rates will only serve to encourage piracy. Knowing that pirating online media will reduce Netflix subscription rates, consumers will surely turn to sites such as Popcorn Time to stream more pirated content.
During the same interview, the Netflix panel also referred to the controversial use of virtual private networks (VPNs) by international customers to access the American catalogue from countries outside of U.S. borders.
CEO Reed Hastings said that the company did not encourage the use of VPN but that it was “certainly less bad than piracy.” He added that as the company expands globally, building its current 60mn worldwide subscriber base, he expects VPN use to gradually “disappear” as Netflix becomes more able to meet demand “directly” in each country.
However, chief content officer Ted Sarandos also admitted that attempting to control the use of VPNs to access Netflix was “kind of a whack-a-mole.”
“It’s become kind of a lifestyle thing for a very small segment of the population […] The real great news is, in the piracy capitals of the world, Netflix is winning. We’re pushing down piracy in those markets…” he said.
U.S. customers currently pay $7.99 (approx. £5) a month for a basic subscription, Brits pay £5.99, while other Europeans such as French and Germans pay a similar €7.99 and the Swiss fork out CHF11.90 (£8).