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Changes could be made to the Netflix (NFLX) prices.
In a recent interview, Netflix CEO Reed Hastings said the streaming giant was planning to offer a lower price in some markets to increase the number of subscribers, an indicator closely monitored for the purpose. to saturate international markets.
Hastings suggested that this level would help Netflix remain competitive, as it would repel competitive threats around the world. "Now, it's true that Youtube is free, and Amazon is basically free, and cable is extremely cheap, because it's funded by advertising, which creates, to a certain extent, a consumer's expectation," he said. he said in an interview with Reuters. Seemingly contradicting a comment by Netflix product manager Greg Peters about the company's October earnings call, Hastings said Netflix was not planning to offer the cheapest level in India – a market in full swing. boom where Netflix is competing with Amazon's local and other streaming players (AMZN).
Subsequent reports suggest that the market in question could in fact be Malaysia. On Wednesday, the Malaysian news site The Star spotted a new list offering a version of the only mobile service for about US $ 4 per month in US dollars, about half of the cost of the standard level, which costs about $ 7.80.
A spokesman for Netflix said Wednesday in an email to TheStreet: "We are always looking for ways to make Netflix more enjoyable and more accessible to people around the world, so we're trying to understand consumer interest for a mobile only In many countries, we test a large number of new ideas at any given moment, and their validity and the number of people who see them are variable and we will never be able to deploy the features or elements of a test. "
While Netflix aspires to global dominance, price adjustments are likely to attract investors' attention.
Analysts often speculate on the leeway available to Netflix to cover the price of its service. Michael Olson of Piper Jaffray, for example, wrote Monday that Netflix may be able to increase its prices if users believe that its offers are improving: as the vast majority of subscribers believe that the service is improving Netflix will be able to periodically raise its rates. "
One of Netflix's biggest challenges is balancing its imperative to recruit new subscribers – a hard-to-predict measure that can vary significantly from season to season – with the ability to raise prices to compensate for losses. It is also tinkering with more expensive levels, including an "Ultra" plan in a few European markets, which allows streaming HD on four devices simultaneously, for an amount equivalent to about $ 19.80 per month.
"They lose money at $ 11, so they would lose more at $ 7," said Michael Pachter of Netbix at Wedbush. "I think they're hooked to a growing share, whatever that may be, and investors have rewarded them for that – if prices are reduced below cost, cash consumption will increase." "
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