Netflix Sets Its Prices According To Local Piracy Rates

Netflix Sets Its Prices According to Local Piracy Rates

If you live in a country with a lot of piracy, you probably enjoy lower monthly Netflix subscription fees. That's according to Netflix CFO David Wells, who says that a country's piracy rate is the primary factor determining the service's local price.

Netflix, with over 60 million subscribers globally, is a giant in the world of online video entertainment. Its biggest competitor is, in fact, piracy. But as TorrentFreak reports, Netflix treats online piracy like any other source of competition, using statistics on illegal downloads to determine not only what types of content it should offer, but also, local rates.

"Piracy is a governor in terms of our price in high piracy markets outside the US," Wells explained. "We wouldn't want to come out with a high price because there's a lot of piracy, so we have to compete with that."

It's an interesting strategy that may speak to why the on-demand streaming service has seen so much success in recent years. Piracy isn't going away, and if you can't stamp out your competition, better to make it as unattractive as possible. [TorrentFreak]

WATCH MORE: Tech News


Comments

    Wow, common sense does exist

    now.............foxtel....erm........

    Last edited 19/04/15 10:54 am

      Yep, Netflix knows it competes with piracy. This is just smart, sensible business tactics.

      Last edited 19/04/15 11:36 pm

        So we can all wait for the day when Netflix believes that piracy in oz is low enough for them to jack up the prices. Then piracy will slowly increase again, Netflix will react with a price drop (if you're lucky and they still care about battling piracy), and so the circle of life will continue.

        I'm betting people will smarten up and either use the American Netflix or use vpn services to continue doing what they want to access what they want (ie torrents), and eventually the stats that Netflix uses to monitor and react to piracy will become meaningless and they'll permanently jack up the price, and regularly continue to do so.

        Last edited 20/04/15 9:57 am

          I use both Australian Netflix and VPN Netflix after I discovered that Australia has some Netflix content that America doesn't which surprised me

          Last edited 19/04/15 10:22 pm

          I think you are being too cynical on this.

          I don't think Netflix would jack up their prices if piracy eventually dropped to an all time low, at the end of the day they lowered their prices to get all those customers they wanted, it would be like undoing all the hardwork they put in if they jacked their prices up which would then cause them to lose the customers they had gained.

          By the sounds of it Netflix are quite good when it comes to business tactics, I don't think they would be stupid enough to do what you are saying.

          Now if you were talking about Foxtel... You'd definitely be right!

      Use your brain!!! Netflix has a global market of billions of potential customers. Netflix can afford to lose money here in the short term to build their business, using the 300million strong US market to prop them up until they are profitable here. Foxtel has a potential market of a few million households, they can't afford the same level of flexibility. In any event, they have Presto which is the same price so there is no level on which your comment isn't completely stupid.

        Boo hoo for Foxtel.. it's a global market these days.. if you can't compete.. GTFO.

        Oh wow, I can get Presto on my smart TV or console? Oh, nope, I have to get it on a tablet or PC and then cast because Foxtel want me to have FOXTEL on my TV? Oh, I can get Foxtel Play? Nope, SD only and expensive. How about Go? Oh, tablet and PC only again, but with no casting, and you need an active foxtel subscription. Tell me again why I should feel sorry for this greedy company who want me to spend $100 a month to watch anything on my TV while pumping it full of adverts that yell at me and repeats? pass.

          thanks dk Agree with all said in reply
          ( As an aside, I've seen Some Idiot in a few outbursts and always as a Guest
          just wondering why )

    How is piracy Netflix's main competitor when Netflix only shows less than 10 percent of all the main movies in the year. I looked up their catalogue and I was shocked how dismal it was. If pop corn time was a paid service and legal, it would be the best site for streaming because it has EVERYTHING. But I'm quite okay that it's free.

      Yeah it has everything because it is illegal and doesn't need to pay for rights

        I'd be happy to pay 20 dollars a month to a streaming service if it could replicate exactly what pop corn time has to offer.

          But if it was $21, you'd happily use that as an excuse to keep stealing content.

            If I am forced to join three different streaming sites and I still can't get the content that I want, then logically the system is broken.

          It cant have all the content because other places own it.. thats why streaming beats netflix. The difference is for 9.99 a month im not scared of anyone tracing my illegal activity, they add new content monthly, and now they are in AUS they will start buying more rights to things as they are released for new content :)

      the australian netflix has less to offer, try the american one, much more content.

        It still wouldn't have 25 percent of what I can get from pop corn time. No competition.

          By your logic no point going to bunnings to buy anything because the house being built beside you already has all the tools and supplies you need. Bunnings could never beat that price.

          Better off with just robbing people after they use ATM's because no job can ever pay the same as cleaning someones bank account out.

          Poor outlook on your side.

            Weird analogy. If someone sets up a streaming site where I can get everything in one place I'd happily join up. Music streaming sites can do that so why can't movie streaming sites do the same. They can't because the system is broken and I'm not going to buy into that. You might accept it but I don't and if more people don't then that might force them to change the way they do business. Apathy is why we get what we get. You are part of the problem, not me.

              Not a bad analogy you just said if its not all there ill use the illegal version that does have it all.

              And i'm not part of the problem. You are not magically going to get every distributor/producer etc together by watching popcorn-time. What you do is support change when it looks like it is working towards a goal that you would like to have.

              Netflix is becoming ever larger and moving to more and more countries and as time goes on it is buying up the rights to more and ore things. Its initial launch will of course lack some content because other networks own it. but as netflix establishes itself in each country it will more and more buy up titles and new releases until it becomes large enough that all companies just go straight through netflix as they do Itunes.

              Netflix has shown us that they want to go the right way about this
              - Accounts that can move geographically.
              - Asking ISP's to remove data caps and feeling bad about making streaming deals with some ISP's
              - Competing at a price that is affordable instead of ripping us all off with Australia taxes
              - Giving us a fast, well built, high quality, high def option to watch our stuff as we all want.
              - Combining it with helpful technologies such as Chromecast to make the solution easy to watch

              REALLY?!? me! part of the problem?
              No. I pay my way for things that try to achieve a goal that i would like to see come to pass.

              Netflix has demonstrated that they are working towards what we all want. An end to piracy with moderately prices high quality viewing at a time we want how we want and what we want.

              The system is not broken. You think perfection happens instantly and should cater 100% to what you want. Welcome to the real world. Progress takes time and support. Now jump on the bandwagon or admit you are the problem and you and hindering the solution

                If everyone said they won't stream or buy any more films or TV shows until they fix the whole system then believe me, they'll change it the next day. Problem is most people don't/won't stand up for what is right hence the bullshit system we have to put up with. Change comes from pressure. The music industry understood this and has now changed for the better. Why did they change ? Because they were losing too much money because people were pirating.

        What's the point of paying to do something unethical rather than doing it for free?

          No, I'm suggesting that streaming sites should be like pop corn time. Everything you want in one place. Much like when you steam music. You're not forced to join 3 different music streaming sites just to listen to the music you want to hear.

            ultimately the problem isn't streaming sites. I'm sure netflix would love to have every single movie ever. The problem is licencing agreements. Popcorn time does what it does because it doesn't have to worry about contracts, payments and legal licencing.

            I agree that there should be one service for everything but until the whole industry changes, it's simply not feasible.

    But you hear all the time that Australia is one of the biggest when it comes to pirating. So should't Netflix pricing be lower than it is? So all the reports we here with us being bigger pirates than the rest of the world is just media hype then?

      they still have to make a profit.

      honestly are you telling me $8.99 a month is asking too much?

        I don't think what they charge us is too much. I pay for the $11.99 plan my self. I'll just like to know at what point would they say they can't afford to go to that point as piracy is to much a competitor to them

          I think you can be pretty sure that at $8.99 they are losing money here, at least until they can get their subscriber numbers up. It took Foxtel 10 years to become profitable, which is actually an exceptional result for a cable TV service by global standards, I think it will be a while before Netflix is making money here at $8.99, which is only around US$6.50.

      Comparatively i think it is. Consider that usually they gauge us with a pretty significant markup netflix is very reasonably priced when taking that into consideration.

      Largest problem for netflix is bandwidth caps. Proportionally netflix costs you a lot just from the use of data - and it depends quite heavily on how you view your content (HD is up to 7GB/hour where as SD is as little as 300meg/hour). Of course this point is moot if u have optus\iinet but nearly 50% (or is it more) of the market is taken by telstra and they will never offer netflix data null against your cap.

      The day they start offering drm free mp4's as purchasable options is the day they actually start competing with piracy IMO. Until then pirates just have it better every way.

      It's based on percentage per capita - because Australia has a sub 30 million population but say we have 10 million people pirating - that's a huge percentage of our population being just over 30%

      America has 318 million people lets say only 15% of Americans pirate = 47.7 million people so they have more people than Australia even has pirating but their percentage of population doing it is half.

      So it's both bullshit and media hype - but also incredibly accurate from a mathematical point of view.

      Netflix is lying. They don't vary their prices across the world much at all. What varies much more is the library, as everyone already knows, America has by far the best library, yet piracy rates are higher elsewhere, so why are Americans getting the best deal?

      Because the actual rules governing price and library have nothing to do with piracy. What governs price: Netflix's strategy of keeping prices low everywhere to undercut the local competition and drive them out of business. What governs library breadth: how many competitors there are in a market bidding on the same in-demand Hollywood studio content. Everyone wants the same stuff. The more competitors there are bidding on content, the higher the price and the more the content gets scattered around and inaccessible with just one subscription.

      According to this, were not even in the top ten.
      http://www.go-gulf.com/blog/online-piracy/

      I think what they mean when they say they base their pricing on piracy is not "How much" pirating is done specifically. But
      "How much can we offer the service where people who pirate will pay to have it all in 1 place legally"

      So if you were in china where EVERYTHING is copied and downloaded then their pricing would be appropriate to where chinese people would go.. "hmm 10rmb.. i dont mind that instead of looking all around the net for a good copy"

    There you have it, right from the horse's mouth – piracy is good for consumers, case closed, court dismissed.

    I've got the $15 plan. My internet is barely fast enough for HD content, let alone UHD.. And I only use about 2 streams. But it's still pretty cheap and I feel this is the least I can do to earn back some karma after all the torrenting I've done in the past.

    Everyone is just buying Netflix's statement on face value without actually examining it. It's baloney. Here's just one example: Australia has higher per capita piracy than America, yet the price for Netflix is no cheaper and the library is much worse, making Australian Netflix a much worse value for the money. This "proves" that Netflix charges higher rates in territories where piracy is worse, in direct contradiction to Netflix's statement.

    In reality, Netflix's price doesn't vary much by region. It's part of their pricing strategy to keep prices low, undercut the local competition and drive them out of business. Same thing that they did with Blockbuster and all other video stores. Remember video stores? They simply don't have much room to maneuver pricing-wise, so they can't vary price by piracy rates.

    Much bigger factors: the strong dollar and the amount of competition Netflix faces in bidding wars for high-demand Hollywood content. Australia has a lot of distribution competitors, Stan and Presto and that bunch. The more competitors, the worse the library will be. Netflix is in a much better position in America, with about 1/3 of households subscribing. More money to win bidding wars. If Australia wants a better library, work up to the point where 1/3 of Australians are paying customers. The way to get a better deal from Netflix isn't piracy, it's by giving them more money and their competitors no money.

    So why would Netflix say this? They want to take credit for fighting piracy. They're in a bit of a bind. They wink at VPN "piracy" because it represents future customers to them (current customers really, future legit customers when they move into that market). Having the market seeded for them like that is very valuable. But the Hollywood studios hate it, because they licensed the content to someone else. It's breaking their business deals. The studios are also business partners of Netflix, which can't afford to honk them off. So they pretend that they are fighting piracy pro-actively, by being noble and lowering their prices. In reality, Netflix fights piracy simply by existing, but they're not lowering prices to do so.

      I wouldn't say 'everyone is buying it' on face value, I think people are just (for the most part) happy with the price point.

      Video stores were killed by the internet in general, but those (like Netflix...) that changed their model to deliver DVDs rather than having a shop front still seem to be a thing. I for one stopped going to my local Video Ezy when they no longer had any VHS tapes for hire...

      Even with the competition a lot of movies are not available on any of them. I would say Netflix etc are great for TV series, movies have a way to go. However by subscribing to this model it will eventually force the studios hand into selling the movie rights online, and sooner.

      I think most peoples attitude will now be, I pay for content via Netflix etc, if it ain't there it's going to be torrented.

      $11.95 a month is still better than nothing, that is the alternative really.

      This model is a step in the right direction, but it ain't perfect.

    @nerdrage "Australia has higher per capita piracy than America, yet the price for Netflix is no cheaper".
    Check the exchange rates. The AUD $8.99 is around USD $7, so it is a significant discount when compared to US customers.

      But the US service has over 50 percent more content than the Australian version.

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