4. Price elasticity is an important concept in pricing. With new competitors continuing to enter the market, what strategies might Netflix undertake to make its offering more inelastic to retain market share?

Netflix was founded in 1997, at which point its main business model was renting DVDs by mail. It began streaming video content in 2007 in the United States, entered the international market in 2010 by expanding into Canada, and now streams in more than 190 countries. Netflix is also known for its original content, developing its own movies and shows, a number of which have won nominations and awards at the Emmys and Oscars. It has 5.3 million Australian subscribers, accounting for over 40 per cent of Australian SVOD revenue. With more than 700 original series, 200 original movies, a library with more than 5500 titles and a budget of $12 billion for original content, Netflix is the dominant streaming platform in Australia and overseas.
Netflix has adopted a ‘customer-oriented pricing approach’, offering tiers based on different market segment needs and the perceived value of additional services on offer. A basic service is $9.99 per month for one screen; high definition and the ability to watch on two devices is $13.99 per month; while Ultra-HD streaming and four devices is $19.99 per month. All tiers offer the ability to watch unlimited shows and movies; the value pitch is for the quality and number of screens. This was complemented with a one-month free trial period for new subscribers.