Hello everyone. We begin with Neil’s thoughts on Netflix cutting prices in more than 100 territories. It is quite the surprising development. The discussion then turns to YouTube and where the streaming service sits in the broader video streaming industry. Will YouTube’s market positioning shift with the company moving deeper into paid video? Will YouTube run into user resistance as it looks to evolve beyond being a source of free, ad-supported content?

Let’s jump right in.

Netflix Slashes Pricing in Dozens of Countries

A long-term trend in paid video streaming has been higher pricing. We can go so far as to say price increases were the big trend in 2022 as companies prioritized revenue and profitability.

As a sign of how the streaming industry is far from settled, Netflix is trying something new in 2023. Here’s the WSJ:

“Netflix Inc. has reduced the cost of its service in more than three dozen countries in recent weeks, as it tries to appeal to customers around the world who have an ever-growing list of streaming options.

The streaming company’s recent price cuts span Middle Eastern countries including Yemen, Jordan, Libya and Iran; sub-Saharan African markets including Kenya; and European countries such as Croatia, Slovenia and Bulgaria.

In Latin America, nations including Nicaragua, Ecuador, and Venezuela have seen reductions in subscription costs, as have parts of Asia including Malaysia, Indonesia, Thailand and the Philippines.

The cuts apply to certain tiers of Netflix in those markets—in some cases halving the cost of a subscription.”

This is a surprising development. It is the opposite of what Netflix management talked about on its most recent earnings call. While management teams are not obliged to follow product strategy discussed on earnings calls, the breadth and magnitude of these price cuts strongly support the view of a strategy shift being in play.

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