Netflix price set according to amount of piracy in local markets

Company also uses what people are downloading to decide what should be added to the service

Netflix Chief Streaming and Partnerships Officer Greg Peters and Sony Electronics President and COO Mike Fasulo at a press event at the Las Vegas Convention Center for the 2015 International CES, where the company announced new plans for getting Netflix o (Getty Images)

Netflix is cheaper in countries that pirate more, so that the company can compete better in places where lots of people tend to download films and TV shows.

The company — which sees the increasing popularity and complexity of piracy technology as one of its main threats — uses the amount of piracy as “a governor in terms of price”, the company’s chief financial officer, David Wells, said in an interview after its earnings announcement last week.

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

Netflix is cheaper in Australia, where the rates of piracy are high, for instance.

It says that the policy is reducing piracy in countries that it is active in. Giving people content through Netflix is meaning that they are moving away from downloading media through other routes, the company said.

Netflix has also said in the past that it uses data from torrenting sites to decide what sorts of content it should be hosting.

The company sees VPNs, which allow users to get round restrictions on local content, as less of a threat than privacy. It is working to reduce their use, but Netflix is ultimately looking to make VPNs pointless, by offering all of its films and TV shows across the world, according to TorrentFreak.

“The best way to make the VPN issue a complete non issue is through global licensing that we’re continuing to pursue with our partners,” the company’s head of content, Ted Sarandos, said.