Obviously as Ozbargainers many of us will have tried VPN hacks etc to get cheaper Netflix or Spotify or YouTube premium.
As the companies start to crack down on this it makes me ask the question, are we in fact subsidising these low cost countries?
Is this really fair?
Am I better to move to the Phillipines and become a hotel lobby boy?
Wouldn't "…a former Queensland-based Nationals MP…" be better placed to answer that?
Yeah he was the Netflix CEO, right? And Optus … and Ferrari …
Better than that what about this.
A CEO doesn't use the Maccas index, they do some research into what they expect to sell at a given price, they then multiply that out to get their gross profit. Then the factor in the expenses and decide if the profit is worthwhile to them. If it gives them more than the profit they think its worthwhile, they then decide to up the price based on their estimate of elasticity of demand. That is the amount they can charge to get the maximum profit they can.
Of course they know this is just estimates, and can be wrong, but they give it their best shot.
They dont look at total worldwide profit and say, oh we can change Aussies/Yanks/Euro's etc more and then charge less so the under developed countries can get a free ride.
They wouldnt open up a country unless the expected it to be profitable. Like others here say, the cost of doing business in Oz with all the employee perks is more than that of the other countries. (No I am not judging either - its reality).
Isnt this basic concept taught in schools? Supply and demand etc
He will say "It's not my job" and add another Miniter title on him.
things that I should have used Google instead of posting on forums.
Then move to the Philippines… and get paid $14.50….. per day
Also not quite as cheap as Turkey or Argentina
Would say for the middle class the average lifestyle in Philippines is much better than the avg in Australia
What the rate of middle class vs. Australia. You'd find they have a much larger % of lower class; than here in Aus.
All well and good if you can hit that middle class, but it's similar to Australians reaching the upper class
Being a lobby boy has other benefits.
Your theory doesn’t hold up in a work from home era.
Maybe gdp per Capita matter in pricing? India is $2k, Australia is $50k.
It's not very consistent. The average wage in Indonesia, for example, is about $15K PA. Netflix's top tier is about $18pm. Seems a bit steep to me
I don't speak for the whole country but most of the people i know in Indonesia don't really use netflix, there's a fair amount of streaming services already in the asian market (VIU, iQIYI, Viki, Hotstar, AsianCrush etc) along with satellite tv apps for on demand stuff from HBO etc
Spotify is pretty universal and is also $8.50AUD/mo for a 5 member family account so perhaps its all just supply/demand.
Are 'High Fee Countries' for Netflix etc Subsidising Low Cost Ones?
I'd say no. Capital sales don't really work that way I don't think? Instead they see whats the highest appetite to charge and thats what they charge. As long as its worth charging for.
eg if they could charge country account X $300 a month, they would. But they likely did studies to understand that the biggest payout would be by charging X country Y amount and so thats what they do.
They're just maximising available profits. The price they charge is based on what will gain them the maximum amount of revenue in that specific market, if they charge western prices in developing nations they'll get nothing so you tailor your price to fit. It makes sense when you look at the country as a giant money pie made up of all the discretionary funds of it's people, you're trying to balance your price to take away the biggest slice of that pie.
If you don't like how much Netflix costs then don't pay it. That is the best way to bring the price down, if people voted with their wallet.
There are no subsidies in products like this, Netflix maximises revenue by setting it at different levels in different countries. It's cheaper in Turkey because they can make more money via having it a lower price. In return, they target more content at western countries because that's where the bulk of their revenue comes from. If they upped the price in Turkey they'd need to deliver more content targeted at them and it's apparently not worth it.
It's also probably cheaper to pay for Turkish rights than Australian ones.
I showed Netflix. I went from the 4K plan to HD plan. I bet they’re worried now.
I hope OP is getting a lesson in supply and demand
GDP of aus 1.3 trillion
GDP indonesia 1 trillion
Population of Australia: 26 million
Population of Indonesia: 275 million
Would you mind explaining what that's got to do with supply and demand?
We found the genius I believe…
Another question, is all netflix users subsidising piratebay?
If only
Its about the target market you are in.
Charging A$17 / month in third world slums will net them zero clientele.
Licencing would also be cheaper in these other countries, so it should be cheaper.
Is Disney licensing their own stuff to themselves? Union rules charge percentages for things like residuals.
Australian licensing just costs more?
FTA still hasnt even got Game of Thornes, and HBO just sold it off to Discovery to merge with WB.
It's not really a subsidy.
It's more that Netflix, Spotify etc are ripping off Westerners & making super large profits from them, while making much lower profits from 3rd world countries.
They're obviously still making some profits from Turkey, Argentina, India etc. Otherwise, if they were running a loss then they wouldn't offer any subscriptions at all in those countries.
"Ripping off" isn't the word.
They are charging what the market is willing to pay. The vast majority of businesses would do the same thing.
The whole point of a business is to make money. If Netflix thought people would pay $50 a month for the same thing, they'd charge $50 a month. If they thought people wouldn't pay any more than $5 a month then they'd charge $5 a month (assuming they can still make a profit)
"Poor countries are ripping us off! So unfair! Whine whine whine"
/returns to watching streaming services on inexpensive electronic devices that are so cheap because they're made by people earning $20k a year
The content varies from country to country.
The cost of the digital rights for the programs they show in each country would vary depending on the wealth of the country and the market conditions/competition.
Australia has a wealthy but relatively small population.
Yes
Same with international aid
Provision of vaccines
UN help
lazy people subsidise pirates.
pirating is easier than ever, but most people would stick with netflix or another legitimate streaming service, because it's slightly easier than pirating. so pirates are a minority that studios can tolerate, as they remain a minority.
I think you need to check the definition of subsidise. What you’re really saying is that lazy people make up for the theoretical loss that Netflix would be taking due to piracy. But the body that’s being subsidised isn’t “pirates”, it’s Netflix.
You are richer so you should pay more.
So many dimwitted socialists here. Keep this up and the smart/richer ones will just pirate the crap.
It's pure capitalism mate.
If less people wanted netflix I imagine netflix would offer better deals.
If they are like most corporations, they look at overall profit, and then adapt to local conditions to ensure it. You can call it subsidisation or risk management.
Each market will pay an amount in their local currency for the value they perceive. The provider will charge an amount to maximise return in that market
Kind of, but only because these companies are not profitable yet.
It's the same as the old record industry, and Nike and Apple and to an extent all purchases. Aussies are not great bargainers on the whole.
They charge what people are willing to pay not what they think the product is worth. If Netflix thinks people will pay $50 then that is what they will charge.
We need some kind of consumer union so we can start messing with them with things like a demand freeze.
Companies charge people for what they believe people would be willing to pay for them. Which is why iPhones cost $2.5k and no one bats an eye to buy one every year. But ask that same person to pay $6 for an app they use daily and they'll revolt!
Physical products generally aren't charged different prices depending on location because someone will find a way to buy them cheap and make profit selling elsewhere. But subscription services can't be resold like that.
Not necessarily. Eg in India netflix will have a very high nuber of subscribers compared to aus subscribers. Economy of scale also plays a part.
You realise economy of scales doesn’t apply to digital product, right? I can sell 20k subscriptions or 200k, but I need to make the movie and platform only once. It doesn’t matter if I sell it in India or Aus as there are basically zero distribution costs.
So if you spent 500k on platform and content and you gave only 20k subscribers each will have to shell out more as opposed to 200k customers.
Whilst that might apply to the actual content, that’s not strictly true with respect to business operations. The more subscribers, theoretically you need more backhaul technology (servers) as well as customer service and other back office personnel
Australian market is small in comparison to other countries, our tax laws mean big companies can get away with murder, we have lots of land but don't have decent telco infrastructure to spread out to, and retarded copyright laws which mean channel BT is more difficult to get.
Netflix will charge the maximum in a country it thinks it can charge before people cancel their subscriptions or refuse to sign up. There's no subsidy. For poorer countries that's less. For richer countries that's more.
This is market segmentation. They break the world up into discrete chunks then charge the maximum the market will sustain in each segment. This adds up to more than trying to optimimse one flat price across the globe.
Pretty standard really, just more visible with SaaS products than tangible goods where at least shipping acts as an additional barrier around the market segment and adds another ost to justify matters.
This is the correct answer. (Source: I work in a corporate)
Can people stop this shit with the poor are getting a better deal ??? people below you are not the enemy… the ultra-rich and the corporation that lobby to change laws to pay shit in taxes are. They have companies in tax havens and declare losses here to get the profits in other countries.
The immigrants are taking your jobs…
You are paying too much taxes because of the "people on the dole"…
The brits are coming to Australia for medical care so you pay more…
Rich countries pay more for Netflix because they subsidize poorer countries….
None of them is the actual problem…
This topic is especially ********. They are not subsidizing shit… they are charging the maximum the people would pay to maximize their profits. You are not paying more so somebody else would pay less, Netflix as a company does not think like that, corporations have no morals, they just want profits.
Right now so many people on the economic ladder kiss up and kick down.
Netflix's major costs don't come from giving individuals access to their product.
I imagine their major costs are in licencing, media production, software/infrastructure development.
For the cheap countries, they're probably charging enough to cover the actual additional cost of the user plus whatever they think they can get to help pay for the above.
The cost of a user may be even cheaper in rich countries because of scale and existing infrastructure. However, we can afford to pay more to cover their real expenses (and make profit).
The same idea is why they offer tiered pricing (1 screen SD, 2 screen HD, 4 screen 4k). It doesn't really cost Netflix more to give you their higher tiers. They're just there to allow you to pay more/less.
And in those richer countries where they make a higher profit … do they actually make an accounting profit and pay tax on that!
They would earn less from those regions, but not nothing.
If they were making 0 profit, they wouldn't be operating there.
I would be happy to pay Australia prices but I don't think Netflix make enough Australian content for the price we pay when you consider that a lot of that content can be marketed towards many other countries.
let me ask scomo