Global expansion round two seems to involve price review
In the first phase of its international expansion drive, Netflix (NFLX) focused on making its video streaming service available in every corner of the world. Now Netflix is available in more than 190 countries, and the company exited 2018 with close to 140 million paying subscribers worldwide. If phase one of Netflix’s international push was about having a footprint in as many countries as possible, phase two may involve raising prices.
According to a recent report from Bloomberg, Netflix has been experimenting with a higher pricing scheme for some of its customers in Italy. The experiment is fueling speculation that Netflix may be considering charging more than the current rates for its service in Italy. Netflix has raised prices in some of its markets in recent years. In January, for instance, the company hiked prices for its customers in the United States, with the price of its most popular plan jumping to $13 a month from $11 previously.
Fundraising for content investments
In an interesting turn, Hulu slashed its prices shortly after Netflix hiked its own. Hulu and Netflix are bitter rivals in the video streaming market. Hulu is backed by media heavyweights Walt Disney (DIS), Comcast (CMCSA), 21st Century Fox (FOX), and AT&T (T), all of which have been losing subscribers since Netflix became famous and inspired the rise of more online video services. These Hulu backers have launched their own video service to try to compete with Netflix, or are planning to do so in the coming months.
Netflix’s attempts to raise its prices are viewed as designed to help it raise more funds to invest in content. The company’s content spending has been soaring, hitting $12 billion in 2018 and is poised to reach $15 billion this year, according to expert estimates cited by Variety.