Netflix customers in Australia could soon be facing steeper monthly charges.
The popular streaming service on Monday confirmed that it recently tested higher
subscription prices for new customers in Australia. The company—which has nearly 100
million global subscribers and expanded to Australia in 2015—has reportedly tested raising
prices for new subscribers by as much as three Australian dollars (AU).
Netflix’s test resulted in some Australian customers seeing price increases for the streaming
service’s Basic plan (going from AU$8.99 to AU$9.99 per month), while Netflix’s Standard
plan increased AU$2 to AU$13.99 and the Premium plan increased AU$3 to AU$17.99 per
month, according to The Australian.
Netflix confirmed the tests, but emphasized that it has not yet formally announced any
permanent price increases. “We continuously test new things at Netflix and these tests
typically vary in length of time,” the company said in a statement. “In this case, we are
testing slightly different price points to better understand how consumers value Netflix. Not
everyone will see this test and we may not ever offer it generally.”
Addendum from the lecturer: They increased the prices to $9.99, $13.99 and $17.99
respectively from 1st July 2017. And in 2019 they increased the premium plan to $19.99,
while leaving the other two prices constant.
Discuss why you think Netflix conducted this test and what you think they found from that
test based on their later decisions.
Refer in particular to concepts from the Week 3 lecture topic, such as what price elasticity of
demand is and how it is calculated and used, its relationship with revenue, and relevant determinants of price elasticity of demand