Netflix Cuts Prices Around the Globe, With Some Reduced by Half

The streaming giant has reduced its prices in more than 100 countries so far this year

Wednesday. Jenna Ortega as Wednesday Addams in Wednesday. Cr. Matthias Clamer/Netflix © 2022

Amid a threatened crackdown on sharing accounts and expected price hikes in the US, Netflix is cutting prices in dozens of countries by as much as half.

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

The streamer in recent months cut prices in a host of countries in the Middle East, Latin America, sub-Saharan Africa, Eastern Europe and parts of Asia. The cuts apply to certain tiers of Netflix in those markets, and in some cases reduce the cost of a subscription by half, The Wall Street Journal first reported.

The moves were not unexpected as streaming competition ramps up around the globe.

The total number of countries that see price reductions could top 100, Ampere analyst Toby Holleran wrote earlier this month.

The basic tier subscription is the one that would see the largest percentage drop, Holleran said, with cuts ranging from 13% in the Philippines to almost 50% elsewhere.

The premium tier would see price drops between 17% and 43% in many countries, though not in The Philippines, Vietnam or Malaysia, where no discount on the premium tier is offered.

Mobile tier prices are also seeing cuts between 25% and 33% in most markets, the analyst wrote. “However, in more populous markets, such as India, Indonesia, Thailand, Malaysia, Philippines, Vietnam, Pakistan and Nigeria, the tier will not be discounted.”

Holleran noted that Netflix is offered in local currency in just 10 markets with a combined total of more than 10 million subscribers. “Localized pricing serves as a key way to increase accessibility for customers, ensuring subscribers are not exposed to currency volatility, such as the particularly strong US dollar in 2022,” the note said. “This suggests that more than 5% of Netflix’s 200 million+ subscribers will see a reduction in the monthly price they pay for the service.”

The analyst also pointed out that the price drops could offset any revenue that comes from charging customers who share accounts “out of home.”

“These price drops potentially cancel out the extra cost to subscribers currently sharing accounts,” Holleran wrote. “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.”

The international price drops contrast with efforts to increase revenue in the U.S. and follow last year’s introduction of Netflix’s ad-supported tier, which goes for $6.99 in the U.S. and 11 other countries.

Netflix said last month that it ended 2022 with 230.75 million subscribers worldwide.

It reported sharp disparities in average revenue per user, a key metric in the streaming business, between subscribers in different countries, with the U.S. and Canada leading at $16.23. In the Europe, Middle East and Africa region, ARPU dropped to $10.43 while in Latin America it was $8.30 and just $7.69 in the Asia-Pacific region.

In a letter to shareholders accompanying its fourth-quarter results, the company said it has “a clear path to reaccelerate our revenue growth,” and suggested that if price changes were coming, they would be increases.

“We’re going to look at the metrics that our members are giving us and telling us and look for opportunities,” COO Greg Peters said during the fourth-quarter conference call. “And then we’ll go back and opportunistically ask for them to pay a little bit more, so that keep this virtuous cycle going and really invest that back into incredible content and stories.”

The Palo Alto, California-based company reported fourth-quarter revenue of $7.85 billion, up just 2% from the 2021 quarter. It forecast $8.17 billion in revenue for the current quarter, reflecting a goal of a 4% increase.

Netflix shares slipped $18.58, or 5.5% to $316.30 in midday trading as the broader market turned to the red. The stock has changed hands between $162.71 and $397.75 in the past 52 weeks.

Lucas Manfredi contributed to this report.