April 20

Netflix: Turning Piracy Into Profit

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By Rikeia Perteet

How is a company like Netflix able to go toe-to-toe with the Entertainment industry’s biggest enemy — Piracy? Simple: They treat them like competition instead of opposition.

Netflix’s largest competition, like most big corporations in the realm of movies and TV, is piracy. However, instead of raising prices to compensate from the losses pirates and torrenters cause and limiting their access, Netflix takes a stand by making itself more affordable to its users.

According to Netflix’s Chief Financial Officer, David Wells, a country’s piracy rate is a main factory in determining the service’s local price.

“We wouldn’t want to come out with high price because there’s a lot of piracy, so we have to compete with that.” Wells said in the 2015 Quarterly Earnings interview with Netflix.

Another way Netflix uses piracy to its advantage is by using it to find out what they should be offering next. What is being pirated has a large impact on what ends up in your “Recently Added” list in Netflix.

“With the purchase of series, we look at what does well on piracy sites,” said Kelly Merryman, the Vice President of Content Acquisition, in an interview in 2013 with Netherlands website, Tweakers.

This method of trying to take piracy down by outpacing them instead of compensating for them has worked greatly in their favor, giving us subscribers the best content that Netflix can offer and slowly extinguishing the desire for illegal downloads.


Netflix Sets Its Prices According to Local Piracy Rates [Gizmodo]

Netflix Uses Pirate Sites to Determine What Shows to Buy [TorrentFreak]

Tweakers Interview with Netflix Netherlands (Untranslated) [Tweakers]

Netflix Q1 2015 Earnings Interview [YouTube]

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Posted April 20, 2015 by Rikeia in category How Does It Work?

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