Netflix Dominates... Will Subscription Fees Increase in Korea?

[Asia Economy Reporter Koo Chae-eun] Netflix has raised its standard subscription fee for U.S. subscribers from about $13 (approximately 14,700 KRW) to $14 (approximately 15,900 KRW) per month, sparking concerns about potential price increases in South Korea. However, there is no confirmed plan to raise fees for Korean subscribers, leaving the situation uncertain. A Netflix spokesperson stated, "Price changes in the U.S. do not affect pricing changes in other countries globally."

According to industry sources on the 1st, Netflix increased its standard and premium subscription fees effective on the 29th (local time). This marks the first price hike in 1 year and 10 months since Netflix raised fees for U.S. subscribers in January last year. Since it is a monthly subscription model, U.S. consumers will be automatically billed at the increased rate going forward. The basic entry-level subscription fee remains unchanged at $8 per month.

Greg Peters, Netflix Chief Operating Officer (COO), explained, "Netflix will expand investment in original content to deliver more value to users," adding, "To do this, we may ask Netflix subscribers to pay a bit more." Bloomberg News predicted that "this price increase will boost Netflix's revenue by over $800 million (approximately 905.2 billion KRW) and increase cash liquidity."

It is not yet confirmed whether the U.S. Netflix subscription fee hike will lead to a price increase in South Korea. Netflix has historically adjusted pricing policies differently by country. In fact, Netflix sets different fees for each country. Last year, Netflix raised subscription fees in over 40 countries including the U.S., but excluded some Asian countries such as South Korea and India. Recently, Netflix raised subscription fees in certain tiers in Canada.

Netflix has been operating in the South Korean market since 2016, maintaining fees between 9,500 KRW and 14,500 KRW. Especially due to the COVID-19 pandemic, as people started spending more time at home, Netflix has seen the greatest benefit. Netflix's stock price has risen about 51% this year alone. As of the second quarter, Netflix has approximately 200 million paid subscribers worldwide, with about 73 million subscribers in the North American region.

The growth trend in the South Korean market is also steep. According to WiseApp/WiseRetail, a sample survey of payments made by South Korean individuals aged 20 and over using credit or debit cards on Netflix as of September showed a record high payment amount of 46.2 billion KRW and an estimated 3.36 million payers. Both payment amount and number of payers nearly doubled compared to the same period last year, making Netflix dominant among online streaming service providers (OTT).