So I haven’t found anything explaining this. I saw an unethical life tip on reddit saying changing your location to India significantly decreases the cost of streaming services monthly subscription fees. I did some research and what do you know it’s true. India seems to be the one market were it is consistently significantly cheaper monthly subscription fees. Russia is also in a similar boat. Why are these streaming services offering the subscription for a significantly lower cost in these countries? Spotify, Netflix, Hulu are just some of the services that are a fraction of the cost in India than they are in the US specifically but in most other countries as well.
In: Economics
The amount that it costs *them* to stream a video is basically zero. But they charge you whatever they think you can pay, because that makes the most money.
This is known as *price discrimination*, which happens when companies. charge several different prices for the same product. In order to sell to as many consumers as possible and maximize profits, international businesses such as streaming services will charge cheaper prices to capture larger portions of the global market.
The type of price discrimination you’re talking about is known as *group pricing* (in economics terms, third-degree price discrimination), as Netflix and Hulu have divided up the general demand for their services to make the most money possible in each region they cover. Since Russians and Indians are not as wealthy as Americans, they have a lower willingness to pay for monthly subscriptions. Charging US prices would result in only a small amount of services demanded abroad, and both Russia and India have hundreds of millions of potential customers that neither company wants to miss out on. So, Netflix and Hulu split the market to make the most money possible from each demographic.
Because capitalism. You will always pay the highest price their market analysis says the market will bear; i.e, if they determine that Americans are willing to pay $15 a month for a service but sales drop off at $16/month, then the price for the service is set at $15. Conversely, if a different market with a different economy shows that it will only bear a lower price, then the service is cheaper there. If India’s market says the people will only buy Netflix for $8 and not $9, they charge the $8.
It’s a similar to how goods are different prices in different areas. A carton of eggs in the US is usually $4-5, whereas in China, it’s only about $0.12usd. (This is why chinese wages appear so low to westerners – the conversion rate is bad, yes, but the amount they need to live is so much lower that in reality, their wages have roughly *triple* the buying power of US wages. I’m not a fan of a lot of what China does, but that whole ‘they only pay them a dollar a day’ shit is pure propaganda.)
Because the average wage in those countries is much lower. These companies are calculating how to get the most subscribers and price drives that. If your price is for example 10% of average monthly income you get fewer subscribers than you would at 5%. Average monthly income is higher then they will charge more in dollar terms but a similar amount as a percentage. I say average monthly income but the may use more than one metric such as average disposable income.
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