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Will original programming reap Polish rewards for Netflix, or is pricing more important?

22 Sep 2016
Will original programming reap Polish rewards for Netflix, or is pricing more important?

Simple maths suggest that at €9.99 Netflix Poland is significantly less affordable than earlier ‘successful' Netflix markets.

The Polish content market has grown significantly in strength over the last five years. With FTV growing their local content offer, and even International Pay TV players like HBO producing original programming in Poland with some good results (in 2015 local HBO Polish production Wataha outperformed Game of Thrones in the market). Netflix say they are going to create a local service, but it remains to be seen how localised and whether they initially mean just more content that is dubbed/subtitled in the market. Adding more content generally that is versioned in Polish may increase appeal a little (although they seem to be ignoring local Lectoring practices) but creating local content in the market would no doubt impact adoption levels more.

More importantly pricing is key, and despite a recent re-pricing the current level seems to be at a premium price-point for the market - limiting its appeal as a mass market product. Netflix have re-priced in Poland in local currency (Zloty - PLN), but the Standard plan in Poland is PLN 43, equivalent to €9.99, which is the same as the rest of Europe and more than the UK at €8.69 and the US at €8.93.

It is challenging to do like-for-like comparisons of Pay TV packs as services differ greatly in the number and types of channels provided by different services. But by every metric the Polish market indicators point to the need for pricing to be lower comparable to the UK, US and other markets. TV industry revenues are lower in every way. Poland’s Pay TV market is well penetrated and growing, but pricing at the lowest levels challenge Netflix’s Standard Plan, with basic cable offerings at a similar level, ranging PLN 35-40. Even price points for premium services like HBO are less (HBO is PLN 25-30 with different operators). Back in 2015 OFCOM reported Pay TV ARPU in Poland was £125, versus £386 in the UK, £272 in Spain, £270 in Germany and £300 in Italy. Whilst penetration levels are very high for Pay TV (>80%) pricing levels are very low and the likely comparisons that will be made to Netflix’s pricing will be poor.

The Big Mac Index (produced by The Economist as an informal affordability comparison) points to products in Poland being 33% cheaper than the US, with the OECD indicating a greater difference at 50% less. So by these and may other economic indexes the simple maths suggests that at €9.99 Netflix Poland is significantly less affordable than earlier ‘successful' Netflix markets.

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