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Tiers of joy: how Netflix can boost ARPU

Tiers of joy: how Netflix can boost ARPU

Tiers of joy: how Netflix can boost ARPU

Following Netflix’s recent quarterly report (which confirmed vigorous growth in its subscriber base), Futuresource Consulting has indicated some potential drivers of future growth for the internet TV giant.

Netflix has already been seeking to increase ARPU through price tiering and marginal price increases, and Futuresource’s recent consumer survey, Living With Digital, suggests there is plenty of room for it to achieve its stated ambition of moving customers up the tiers.

“Over one third of subscribers in many of the leading countries are still on the basic, one stream Netflix plan, according to our Living With Digital consumer survey, in some countries this is over 40%” says David Sidebottom, Principal Analyst for Entertainment Content at Futuresource Consulting. “In particular, there is significant potential to move subscribers to the most expensive 4-stream family plan, with the added benefit of 4K streaming, with typically less than 20% taking this option. However, in developed Netflix markets like the USA, UK and Canada, over 10% of consumers don’t know what plan they are on, making an upsell more difficult”.

Sidebottom goes on to point out that Netflix has the option to also tier prices based on content availability, similar to pay-TV operators, which to date it has been reluctant to do. “However, as its content purchasing power increases, it may decide to tier further, particularly if it makes a foray into more specialist content or even Sports.”

The growth of Netflix and OTT in general in the US is a topic expected to dominate discussion at this year’s TV Xperience (October 6th-7th 2015, Hilton Times Square, New York), and something IP&TV News recently spoke to Ipsos analyst (and TV Xperience speaker) Gavin Bridge in depth.

“The fact you can now get TV without having to have the cable subscription is a big deal in the US,” Bridge told us, discussing the growth of OTT in the US. “It’s slightly different to the UK. No one in the US has every single channel, many don’t even have a DVR. It’s why people here are so petrified about cord cutting.”

Be sure to check out the full, fascinating interview with Gavin Bridge about the future of US cable and OTT here. For booking and more info about TV Xperience, click here. 

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