Netflix will hike its prices if UK increases levy
What's the story
Netflix has announced plans to raise its subscription prices in the United Kingdom if a proposed 5% streaming levy comes into force.
The Culture, Media & Sport Committee (CMSC) of the UK Parliament recently recommended this tax on streaming services' UK subscriber revenue.
The committee has urged the government to make this statutory within a year if the industry doesn't take action.
As per Deadline, if levies are imposed, customers will have to bear the extra cost.
Company statement
'Levies diminish competitiveness and penalize audiences'
Reacting to the proposed levy, a Netflix spokesperson said, "The UK is Netflix's biggest production hub outside of North America—and we want it to stay that way."
However, they added that "in an increasingly competitive global market, it's key to create a business environment that incentivizes rather than penalizes investment, risk-taking, and success."
"Levies diminish competitiveness and penalize audiences who ultimately bear the increased costs."
Levy details
'Kosminsky Levy' proposed to boost domestic TV production
The 5% streaming levy intends to create a cultural fund, administered by the British Film Institute (BFI), to support domestic high-end TV production.
Informally dubbed the "Kosminsky Levy" after its main supporter, director Peter Kosminsky, it will "supplement the budgets of high-end drama of specific interest to UK audiences but which doesn't necessarily have cross-border appeal," the CMSC report stated.
Official response
Government's stance on the proposed levy
While the UK government has recognized the difficulties it faces with its film and TV industry, it has not indicated plans to introduce the proposed levy.
Chris Bryant, the creative industries minister, had earlier told lawmakers that "we haven't got any plans" for such a move.
The government may be cautious about imposing additional costs on American firms due to past considerations about tariffs and maintaining positive relations with the US.
Industry reaction
Concerns raised by other streaming services and broadcasters
Other streaming services and broadcasters have also raised concerns over the proposed levy.
The Association for Commercial Broadcasters and On-Demand Services (COBA), which represents big US players in the UK, argued that a levy could hurt public service broadcaster dramas by reducing co-production budgets at streamers.
They emphasized that "the levels of investment from streamers in UK content are the envy of many countries."