Netflix raises subscription fees as net neutrality issue continues

Netflix Vice President of Public Policy Dean Garfield speaks to journalists during a press conference in at JW Marriot Hotel in Seoul, on Nov. 4. Yonhap

By Kim Jae-heun

Streaming giant Netflix will raise its subscription fees for the first time in Korea, while the extraordinarily successful, Korea-made Netflix original series, “Squid Game,” has been drawing keen attention to the company's payment of content creators.

On its official website, Thursday afternoon, Netflix said it will increase the Standard and Premium monthly membership fees by 12.5 percent and 17.2 percent, to receive 13,500 won ($11.4) and 17,000 won ($14.35), respectively. However, it will maintain its Basic subscription fee of 9,500 won ($8.02) per month.

What's of greater concern is that Netflix is facing calls to provide compensation for the large volumes of traffic the streaming service generates on the domestic internet network. Its executive was recently in Seoul to reiterate its defiance against compliance with the Korean government's repeated requests for “network service fees.”

Regarding the details of its new service pricing plan, the new prices will apply to new customers first, while existing subscribers will be sent an email notification 30 days prior to their subscription fee increase.

Netflix raised its subscription fee in October in the United States, Canada, Japan and England, but not in Korea. Netflix said that its pricing strategy update is the result of its thorough consideration of various economic indexes, such as a country's cost of living and income levels.

Some views were that Netflix's fee decision was a reaction to lawmakers and politicians asking it to pay network service fees. However, Netflix said that the network service fees request did not affect its decision on the new price policy.

“We have increased the subscription fees to improve the quality and quantity of TV series and continue to produce original Korean content like 'Squid Game' and 'Hellbound,'” a Netflix official in Korea said, Friday. “Netflix will continue to work hard to provide the best entertainment experience and subscription value to our subscribers.”

Some customers are complaining about the streamer's decision to raise its prices and analysts are not ruling out the possibility of Netflix experiencing a drop in the number of users.

But Netflix's position in Korea is very solid. Data provided by industry tracker WiseApp said that Netflix subscriptions based in Korea reached 5.14 million in 2021 compared with 3.16 million in 2020, year-on-year.

Furthermore, Disney Plus' recent product launch here won't make any visible and huge impact on the country's paid streaming content market as Koreans already have a huge preference in terms of paying for Netflix subscriptions as the services provides a lot of in-house content featuring top-level local celebrities.

Netflix executive Dean Garfield said that Netflix is viewed as a force for good in Korea and that it is taking on the role as a contributor in terms of supporting Korea's soft power export policy. It spent $700 million on local content between 2015 and 2020 and Garfield reiterated its earlier commitment to spend another $500 million by the end of this year.

“We are a company that is 100-percent committed to tax certainty and committed to paying the taxes that we owe in countries in which we operate. There are companies that are primarily focused on tax optimization. That's not where we are,” Garfield told reporters during his earlier brief stay in the country at the beginning of November.