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Pricing at Netflix: The Sequel

Ofek, Elie; Klopfenstein, Amy

Product #:523015
Supplier:Harvard Business School
Discipline:Marketing
Setting:Central America;North America;United States, 2022
Details:Supplemental Case (PDF) • 7 pages • 2022-08-05 (Rev: 2023-03-01)

Subjects:

Business communicationCompetitive strategyCorporate strategyCustomer profitabilityCustomer satisfactionInformation systemsInternetMarketingMarketing strategyPricing strategyProfitabilityStrategyManaging yourselfCustomer experienceTechnology and analyticsWeb-based technologiesSales and marketingCorporate financeSales and marketingMarketing

Industries:

Media, entertainment, and professional sports

Geography:

North AmericaUnited States
Your Price:$7.50

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This case continues the themes discussed in "Pricing at Netflix" (Case 521-004). Following the conclusion of the original case, Netflix developed new, high-profile original content, added millions of subscribers, and introduced another price increase in January 2022. Yet Netflix struggled to grow as streaming rivals such as Disney+, Hulu, and HBO Max captured market share and the global pandemic was winding down. The case describes actions that Netflix considered to remain competitive, such as developing video games, charging users for sharing passwords, and, particularly, rolling out an ad-supported tier at a cheaper price than the other plans it currently offered. The case describes other streaming platforms' ad-supported tiers and asks readers to consider whether and how Netflix should design its own ad-supported plan; as well as whether raising subscription prices yet again on its existing plans was advisable.

Learning Objectives

To explore the decisions related to an ad-supported revenue model, as part of a multi-tier subscription service, including cost per mille (CPM), ad load, ad length, and the optimal pricing strategy.
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Supplemental Case Study: Pricing at Netflix: The Sequel (English version) | Ivey Publishing