[News Terms] "Netflix Subscription Feels Burdensome"… 'Streamflation'

As domestic and international online video service (OTT) providers such as YouTube and Netflix continue to raise their prices, the so-called 'streamflation' phenomenon is accelerating, increasing the burden on consumers accordingly.

Streamflation is a combination of the words 'streaming' and 'inflation.' OTT providers that deliver content over the internet initially offered cheaper subscription plans to attract subscribers. However, as competition intensified, user growth stagnated, and content production costs rose, they implemented successive subscription fee hikes to cover accumulated deficits.

Since last month, YouTube has increased its Premium membership price by 43%, from 10,450 KRW to 14,900 KRW per month. This is the first increase in over three years since the price rose from 8,690 KRW to 10,450 KRW in September 2020. When YouTube Premium was first introduced in 2018, the price was 8,690 KRW.

Earlier, Netflix began enforcing a policy in South Korea from early November last year requiring users who do not live in the same household and share accounts to pay an additional 5,000 KRW per month. From mid-December, Netflix also discontinued sales of the cheapest ad-free plan, the 'Basic Membership.' As a result, the minimum cost to watch video content without ads increased by 4,000 KRW, from 9,500 KRW to 13,500 KRW per month.

Disney Plus also changed its pricing from a single 9,900 KRW monthly plan to two plans: Standard (9,900 KRW) and Premium (13,900 KRW), effectively raising the subscription fee by 4,000 KRW.

Among domestic OTTs, TVING announced the introduction of an ad-supported plan and raised its existing subscription fees by about 20% starting December. Based on web payments, the Basic plan increased from 7,900 KRW to 9,500 KRW per month, the Standard plan from 10,900 KRW to 13,500 KRW, and the Premium plan from 13,900 KRW to 17,000 KRW.

Coupang Play, Wavve, and Watcha have not yet joined the price hike trend, but industry insiders say they are likely to follow suit soon.

As consumer dissatisfaction grows over the simultaneous price hikes by OTT providers, the government has taken action. With 72% of the population watching OTT services and subscribing to an average of 2.7 platforms, there are concerns that subscription fee increases will lead to greater household financial burdens.

The Korea Communications Commission (KCC) has announced plans to inspect the price increases of major OTT services. Article 50 (Prohibited Acts) of the Telecommunications Business Act and Article 42 of its Enforcement Decree prohibit telecommunications service providers from offering services in ways that significantly harm users' interests or failing to explain or notify users of important matters such as service fees, contract terms, or discounts. The KCC will review each provider's price increase details and terms of service to determine if any legal violations have occurred. If violations are confirmed, the KCC may order the cessation of prohibited acts and impose fines of up to 3% of the related revenue.