On Dec. 14, 2016, Amazon announced that Prime Video streaming services were officially available in more than 200 countries across the globe, according to an article in Bloomberg Technology. Netflix also announced its expansion to over 190 countries and territories worldwide on January 4, 2017. At first glance this might look like a simple game of keep-up-with-your-competitor, but there is another key player here: price.
For many of us, Netflix’s lowest price tier of $7.99 per month can be looked at simply as replacing a few Starbucks drinks. But that price seems much higher to someone with less spending power in a less developed country.
Amazon Prime Video pricing starts at a mere $2.99 for the first six months of service, and increases to a competitive and sustainable $5.99 afterwards. In some countries, such as the U.S., Canada, France and Germany, the subscription video on demand (SVOD) service is included in the costs of Amazon Prime, which is either $10.99 per month or $99 per year.
SVOD has continued to be a key industry for premium video content by each company creating and distributing original content. Netflix seems to be ahead of the game in this respect, which may be the reason for charging a higher price, but in July 2016 the company saw a 15% drop in share prices that was linked to their issues overseas.
The Bloomberg article suggests that in each country’s unique competitive environment, the key to success will be the user experience and selection. However, I believe price will have more of an effect than the article alludes to.
Based on what happened to Netflix last July, we know that appropriate pricing is important overseas. Since Amazon is offering their service at such a low introductory price, it is likely that they will acquire a large portion of the market purely based on affordability.
Integrated marketing communication is largely about consistency of message and of brand image. If this consistency can’t cross geographic and cultural lines, you have a problem. It seems that Amazon’s pricing strategy overseas keeps affordability in the frontlines, but Netflix’s missed the mark originally and the price hit too high. Maybe Netflix’s image as the creator of awesome content is more important than being affordable, but $1 to someone in the U.S. means something very different than it does to someone in Cambodia.
So, will the pricing strategy help Amazon reach more users globally or will Netflix’s status as king of original content win out despite price? Only time will tell, but my gut is telling me that price in other cultures may be more important than a plethora of content.