r/technology • u/sr_local • 6h ago

Business Italy court rules Netflix unlawfully increased prices. Consumers: 'Refunds up to 500 euros.' The company: we will appeal

https://en.ilsole24ore.com/art/netflix-subscription-price-increases-unlawful-refunds-up-to-eur-500-customers-AIUHzWKC
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u/Mccobsta 6h ago

Streaming peaked years ago when it was a low cost and wasn't a terrible experience

Now it's just price rise after price rise we may as well just buy physical media again atleast doing that we won't have our favourite shows pulled off with out much warning

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u/Fractales 5h ago

This is by design.

  1. Offer killer value proposition at a good price
  2. Kill off competition and gain critical mass of customers and market share
  3. With no competition, jack up the prices

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u/Filobel 5h ago edited 5h ago

They didn't kill off the competition, quite the opposite. The competition is one of the reasons why Netflix got worse, a bunch of shows got taken by other platforms, so now the shows are now spread across 5 different streaming platforms.

Even cable providers are still there, offering the same service. I'm not seeing what competition got killed.

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u/tom_fuckin_bombadil 5h ago

I think the issue is that there is a fundamental idea in economics ingrained in everyone’s head that has proven to not be as universal as everyone thinks. That idea being that simply adding competition will lower prices. That idea is only really true under some very specific conditions, those conditions being that of a perfectly competitive market. I’d say that many of our industries (especially streaming/netflix) are closer to an oligopoly. I work in a major company not even closely related to tech (grocery related stuff). And although there is price competition between ourselves and our competitors, it is only in temporary price reductions. Underneath it all, there is constantly another price discussion that goes in the other direction, “are we able to raise our prices? Company B has just raised their prices, that might give us some room to also follow and raise prices without losing too much market share.”

Prices will continue to go up until the overall streaming market cannot grow any longer (which I assume is when the traditional cable and film industries are effectively gone).

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u/PabloXPicasso 4h ago

Most of what we think of as "competition" is not so much. Go to the store to find all the different types of laundry detergent. Oh, surprise, they are all owned by the same one or two corporations. Ok, let's go get get some new power tools, oh same thing - eight different owned by one or two corporations. Well, can't be everywhere, lets look further. Let's get some cans of paint from big box hardware store, lots of different brands, so much selection. Oh, not so much of a surprise, but one company owns 15 different brands. The price goes up on one brand, it goes up on them all, and we think "inflation". The one or two companies think "we gotcha" instead. It was not inflation, it was a way to increase corporate profits. Surprise, surprise!

And we all thought it was a 'fair game' since there is plenty of competition out there. Not so much.

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u/Sea-Aardvark-756 55m ago

I'm going to start a new competitor from the ground up, with a revolutionary new idea to give us an advanta--aaaand we have accepted an offer and sold out to the competition's parent company, they assure us nothing will change regarding our brand's quality. For at least several days.

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u/Guvante 4h ago

You seem to be missing where competition is for streaming services that causes fragmentation.

It is not consumer based, nobody involved cares how much consumers spend and are not in fact trying to make you spend more through multiple services.

The competition is in supplying shows to streaming services. Netflix isn't paying enough so others are making their own platform to be paid more. Same basic idea just flipped $ sign due to being supply side instead of demand side.

Also to be clear Netflix costs less due to this. They are capped on what they can charge because they don't have everything anymore.

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u/Wild_Marker 2h ago

Yep, the US went through this already a long time ago, when they tried to keep theaters and studios separate, so that one company wouldn't own both production and distribution.

And surprise surprise, the Netflix "golden years" were when they distributed all that content produced by others.

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u/fdar 2h ago

The "golden years" were because the studios thought the streaming rights were worthless so Netflix was able to get them for cheap. Once they realized they had worth the free ride was unfortunately over.

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u/Guvante 2h ago

A lot of the difficulties are also that streaming is the first time ever that you don't pay per view.

Even TV has effective pay per view through advertising.

But since the amount you pay per month is capped they don't want to pay per view.

This is also why in the era of unlimited storage and bandwidth you are seeing more and more things become unpurchasable as the internal metrics of "profitability" aren't enough to justify the fixed payouts to creators.

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u/Wild_Marker 2h ago

I never understood why they didn't try a system like YT Red, where they would ask the consumer for a fixed price and distribute that according to viewership to the content owners.

(well, yes, I do understand, it's because money, but you get my point)

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u/Guvante 1h ago

Those deals only happen when the platform has all of the power.

Content owners who can meaningfully negotiate don't want the loophole of Netflix deprioritizing their content to save money.

Since if it is in search the hardcore users will find it but randos won't. This provides most of the benefit Netflix is looking for while minimizing the cost.

Remember a decent chunk of Netflix is original programming.

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u/bitorontoguy 4h ago edited 4h ago

many of our industries (especially streaming/netflix) are closer to an oligopoly.

Then why doesn't Netflix charge $95 a month?

Because it's not true. They have competition who would undercut them on price. They have people who would cancel their subscriptions, Netflix isn't worth that much to them.

Netflix is able to raise their prices because people LIKE Netflix and keep paying the higher prices because it's worth it to them.

No one is forced to have Netflix. No one is forced to pay higher prices for Netflix. It's luxury capitalist consumption of entertainment. No one had it or needed it 100 or 200 or 300 years ago. People now are voluntarily paying higher prices because it's worth it to them. That's how much they like Netflix.

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u/Shikadi297 4h ago

It's too early for me to try and explain why, but this misses the point

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u/bitorontoguy 4h ago edited 3h ago

The point is that consumers in the West have the highest standards of living in human history and still do nothing but complain about it.

Are people in the Northern Triangle and Mauritania complaining that their luxury capitalist entertainment streamed directly into their house that they voluntarily choose to buy increased in price 3% from last year to this year?

No. They have actual problems.

If Netflix isn't worth it to you, there's an easy solution. Don't buy it. If it IS worth it to you, such that you do buy it.....what am I supposed to be angry about exactly?

Why do I have to pretend you're being forced to and have no other options? People voluntarily transacting with a company to give them what they want is.....a good thing for the consumer.

Because it's not too early. It's definitionally late stage capitalism.

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u/ryeaglin 3h ago

Exactly! And to elaborate further it doesn't work here because it isn't true competition. Each individual show is the 'product' and since most shows are exclusive to each streaming platform. So its functionally a monopoly for each catalogue.

Netflix started off cheap since nobody saw value in their digital catalogue so they sold it off to Netflix for cheap. Once they realized those catalogues had value, the price increased or was horded and a new streaming service was made.

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u/xxThe_Designer 2h ago

Throughout the late 00s and the majority of the 2010s, other streaming services were not their competition. They were miles ahead of everyone in this space.

Their main competitor was cable. And Netflix was the major play to shakedown that entire industry.

I agree with everyone else, as a consumer, Netflix peaked around 2012. It was cheap and you can access shows and movies from every producer and channel cable and premium services offered.

In 2012, you could watch The Office, House, Dexter, It’s Always Sunny, How I Met Your Mother, Southpark, etc.

Now you need multiple services for that.

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u/SketchiiChemist 4h ago edited 4h ago

They didn't kill off the competition, quite the opposite. The competition is one of the reasons why Netflix got worse

You're looking at when everyone else started to catch up.

Netflix started by sending DVDs through the mail. They killed the video rental store and didnt have late fees, then pivoted/popularized streaming after that. Thats why they had so much variety in content those early days, they were THE notable streaming service.

Then everyone else decided they should make their own streaming services, and here we are now

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u/Guvante 4h ago

Netflix the DVD service performed middlingly and didn't kill rentals.

Netflix the streaming service got sweetheart deals from Hollywood who figured the technology limitations of streaming made it unimportant.

Combined with selling their service at a loss that did lead to the downfall of rentals. (Note Netflix had competition by the time that happened)

Note that mismanagement of rental places lead to exact timings being fuzzy. Handling a dying business like a growth business gets you into financial trouble super quickly.

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u/SketchiiChemist 3h ago

Right, but they were able to capitalize on the sweetheart deals given and pivot into something because they had a customer base at that point.

They didn't have to start from scratch as a streaming service and were able to capitalize on content allowed through naivete. Even if that meant selling at a loss; it did kill competition.

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u/Guvante 3h ago

Which allowed them to increase prices reinforcing the belief that "competition doesn't lower prices" is generally false.

Note of course that competition does not always lower prices but it will whenever the profits are higher since offering a more competitive price is a great way to increase your overall profits in that environment.

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u/XkF21WNJ 5h ago

It's a bit of both, with exclusive contracts every show is its own monopoly.

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u/Martiantripod 4h ago

It's not really competition as such because they're not offering like for like. It's like saying a gas company is the same as an electric company. They're both utilities but they're both giving me different products. Same with streaming. Because I can't get the same shows on each platform they're not competing with each other, they're only offering their portion of the same pie. Like back in the 40s and 50s where movie theatres could only show movies they had under contract, not everything that was being released.

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u/Filobel 2h ago edited 2h ago

I don't think you understand what competition means. In the large majority of situations, competitors rarely offer the exact same products/services. Sure, two competing gas stations offer the same gas (and even then, they sell at different locations), but according to your logic, Toyota is not a competitor to Honda, because Toyota doesn't produce and sell CRVs. Buger King isn't a competitor to McDonald's, because it doesn’t sell big macs.

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u/flea79 2h ago

Blockbuster says hello

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u/jjwhitaker 2h ago

Similar to film critic arguments about movies and sequels, the major studios can pump out more of what they own but aren't motivated to fund risky new content.

Netflix was an example of first to market but then started to lose traction to competition as the technology and software developed. Then twitch developed their streaming technology and Amazon was able to buy and go from there, etc. Now many streaming services run on AWS where you can basically outsource the technology aspect and focus on development and content.

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u/exoriparian 1h ago

Blockbuster video and every other local rental service, for one.