Netflix Hikes Subscription Fee in Korea

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Netflix has hiked its subscription fee in Korea by 17.2 percent, apparently confident that it will remain the No. 1 streaming service here.

Netflix insisted it has not raised the fee since it launched in Korea in January 2016 and the increase was “unavoidable.”

The company said Thursday the standard fee will rise 12.5 percent to W13,500 a month and the premium fee 17.2 percent to W17,000 (US$1=W1,183). The standard fee is the most popular service that can be played on any two devices at a time, while a premium account can be used on four devices in high-res. The basic fee covers only one device at W9,500 a month. New Netflix users will have to pay the new fees starting Thursday and existing users next month.

The streaming giant claims it needs to raise fees in order to continue offering differentiated content. Apple TV+ and Disney+ began offering streaming services in Korea this month, intensifying competition, and Netflix does not run ads and the only source of income is subscription fees.

A Netflix staffer said, “We earned W415.5 billion in Korea last year but pledged to invest W550 billion. Fees in the U.S. were raised by 12.5 percent in October last year, and they were also raised in Canada and Japan.”

But Netflix has been accused of avoiding responsibility, despite reaping huge profits. It made an estimated W1 trillion profit from the worldwide success of the dystopian Korean thriller series “Squid Game” and third-quarter earnings more than doubled to US$1.45 billion. That is almost two times the earnings at Korea’s three telecoms combined.

According to Bloomberg, Netflix spent $2.4 million to make each episode of “Squid Game” or a total of $21.4 million for the series, but its value is estimated at $890 million. In other words, Netflix’s profits increased 41.7 times. But citing contract terms, the streaming giant apparently neither shared profits nor paid any bonus to the Korean production company.

Netflix is also clashing with Korean telecoms over network usage fees. Domestic service providers say that they have to shoulder huge costs to increase bandwidth at peak times and are calling on the streaming giant to contribute to network maintenance costs. They point out that domestic clients such as Naver and Kakao do pay them. But Netflix refuses even to negotiate and has contested a court ruling to pay network usage fees to SK Broadband.

Korean telecoms complain that Netflix is using its market dominance to get its way. One industry insider said, “Local telecoms have to shoulder the cost of bolstering networks, while Netflix is taking home all of the profits. This is a rip-off.”

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