Netflix, a dominant player in the online video streaming service (OTT) industry, is persisting in its non-response to government pressure to lower subscription fees, raising concerns about increasing burdens on domestic OTT companies. Experts argue that to improve equity between domestic and international companies, the government should enhance support for domestic OTTs, including tax reductions.
Ted Sarandos, co-CEO of Netflix, during a press meeting on Feb. 16 at Centropolis in Jongno District, Seoul, stated that there are no plans to announce changes in pricing plans in response to inquiries about lowering subscription fees.
An official from the Presidential Office commented that it’s not feasible or appropriate to artificially dictate prices to OTT platforms and mentioned that the focus is on diversifying products to enhance user experience. For instance, while YouTube offers a discount plan for up to six family members abroad, such an option is not available in Korea, leading some users to bypass IP restrictions to gain access.
The industry considers Advertising-based Video On Demand (AVOD) as one of the alternatives. This model offers the same services as existing plans but at a lower price, incorporating ads before, during, or after content. Tving is set to be the first domestic OTT to launch an ad-based subscription model next month, priced 4,000 won cheaper than its current lowest subscription option.
The government’s scrutiny into OTT pricing began as the continuous increase in user numbers was accompanied by companies exploiting their monopolistic positions to excessively hike prices. YouTube increased its premium subscription fee last December, and Netflix has also effectively raised its prices by implementing a paid account sharing policy and discontinuing new subscriptions to its basic plan.
A Presidential Office official emphasized that the government must responsibly address excessive price hikes due to monopolistic positions.