In a recent interview with Reuters, Netflix CEO Reed Hastings said that the streaming giant is planning to offer a lower-priced tier in some markets to boost its subscriber base, a closely-watched metric as the company seeks to greater penetrate international markets.
Hastings suggested that the tier could help Netflix stay competitive as it fends off competitive threats worldwide. "Now it is true that YouTube is free, and Amazon is basically free, and cable is extremely inexpensive because it's ad-supported. To some degree that creates a consumer expectation," he said in the interview with Reuters. Seeming to contradict a comment by Netflix's product chief Greg Peters on the company's October earnings call, however, Hastings said that Netflix isn't planning to offer the cheaper tier in India -- a booming market where Netflix competes with local streaming players as well as the likes of Amazon (AMZN) - Get Report .
Subsequent reports suggest that the market in question may in fact be Malaysia. On Wednesday, Malaysian news site The Star spotted a new listing offering a mobile-only version of the service for the equivalent of about $4 per month in U.S. dollars - around half the cost of the standard tier, which costs about $7.80.
A Netflix spokesperson said in an email late Wednesday to TheStreet, "We are always looking for ways to make Netflix more enjoyable and more accessible to people all over the world. In this case, we are testing to understand consumer interest in a mobile-only plan in some countries. Generally, we try out lots of new ideas at any given time, and they can vary in how long they last and who sees them. We may not ever roll out the features or elements included in a test."
As Netflix strives for global dominance, pricing tweaks are likely to draw a good deal of investor scrutiny.
Analysts often speculate about how much headroom Netflix has to raise prices on its service -- on Monday for instance, Piper Jaffray's Michael Olson wrote that Netflix could be in a position to raise prices if users believe that its offerings are improving: "We believe, as long as the vast majority of subscribers perceive that the service is improving, Netflix will be positioned to periodically increase price."
One of Netflix's main challenges is balancing its imperative to grow new subscribers -- a hard-to-predict and closely-watched metric that can vary greatly by season -- with the prospect of raising prices to offset losses. It has also tinkered with more expensive tiers as well, including an "Ultra" plan in a handful of European markets that allows HD streaming to four devices simultaneously, for the equivalent of about $19.80 a month.
"They lose money at $11, so would lose more at $7," said Wedbush's Michael Pachter of Netlix's prospective lower-priced tiers. "I think they're addicted to growing share no matter what, and investors have rewarded them for doing so. If they cut price below cost, cash burn will increase."