Abstract

The case “Netflix’s Pricing Strategies to Arrest Falling Subscriber Numbers” talks about the various new pricing strategies that leading global streaming giant Netflix, Inc. was contemplating introducing to arrest the rising number of service cancellations among its subscribers. The case explores how Netflix had always been abreast of the ever-changing customer preferences in the home entertainment space and had changed its business model accordingly to serve customers, thereby emerging a winner each time. In the late 2010s, Netflix was faced with a new set of challenges. It was experiencing a fall in subscriber numbers and, consequently revenues, due to a gamut of reasons. Besides, its investment costs were also high due to the focus on content creation that it had undertaken to retain customers. Netflix was considering introducing a host of new pricing strategies – to earn revenues, retain customers, and compete effectively – thereby bringing in a change in its business model again. So, will Netflix again successfully change its business model to emerge a winner?

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the key components of a business model.
• Analyze the circumstances that lead to the reinvention of business models.
• Examine the various pricing strategies and their business effectiveness.
• Identify the impact of new pricing strategies on business prospects.

Keywords

Pricing Strategy; Price Wars; Market Penetration Pricing; Business Model Reinvention; Ad Pricing Model; Content Creation; Business Environment; Business Model Framework; Competition Analysis; Falling Demand; Market Saturation; Subscription Pricing Model; Promotional Strategies; Business Model Innovation; Online Streaming Market