Online Service Price Increase Wave: Netflix, Google One, Meta Users 'Hat Their Wallets' Hurt!

In the last days of June, many Netflix users in Vietnam unexpectedly received an email notification: the price of service packages will increase slightly from July 1. The adjustment fluctuates around 5%, equivalent to 4,000 to 13,000 VND per package, which seems insignificant but suggests many bigger stories.

Not only Netflix, a series of online services from global technology giants such as Meta and Google are also preparing to announce the application of a new VAT rate of 10%, double the old rate - according to the provisions of the Law on Value Added Tax 2024, effective from July 1. Behind this small adjustment is the problem of tax management for cross-border platforms, a problem that Vietnam is determined to solve in order to ensure a fair playing field for domestic enterprises, as well as increase budget revenue from the booming digital economy. So what exactly is the new price? Who will be most affected? And more importantly, what does this say about the digital content and online advertising market in Vietnam in the coming period? Let's find out the details in the article below.

1. Netflix's New Prices

Specifically, according to the new price list, Netflix's lowest package - the Mobile package with 480p resolution has now increased to 74,000 VND/month, 4,000 VND higher than the previous 70,000 VND/month. The basic package, which allows viewing in 720p resolution, has also been adjusted from 108,000 VND/month to 114,000 VND/month.

Notably, the two packages most chosen by many families: the standard package (Full HD) and the premium package (4K) also recorded increases from VND 220,000 to VND 231,000, and from VND 260,000 to VND 273,000, respectively. If converted by ratio, the increase fluctuates around 5% - a seemingly insignificant number, but for those who subscribe for a long time or share accounts, this difference adds up to not small.

This is also a rare price adjustment by Netflix in Vietnam recently. Unlike previous price increases that were often associated with the addition of features or upgrades in content quality, this adjustment is entirely due to the requirement to comply with new tax laws.

Law on Value Added Tax 2024:

According to research, the main reason for the price adjustment is that the Law on Value Added Tax 2024 will officially take effect from July 1, 2024. An important new point of this Law is the clear regulation: services provided by foreign suppliers without a permanent establishment in Vietnam to domestic organizations and individuals via e-commerce and digital platforms will be subject to 10% VAT, instead of the preferential rate of 5% as before.

The new regulation aims to ensure fairness between domestic enterprises and cross-border platforms. Previously, many opinions said that large foreign technology companies, with huge revenue from the Vietnamese market, but without permanent units or legal entities registered in Vietnam, would have difficulty controlling tax obligations. Applying the new VAT rate helps the State increase budget revenue, while creating a more equal playing field for domestic enterprises.

2. Not only Netflix, international platforms also make adjustments simultaneously

Netflix is ​​not the only name to adjust prices this July. Meta and Google – two giants with huge advertising revenue in Vietnam – have also sent notices to many partners and users about adjusting service prices according to the new tax policy.

For businesses and individuals running ads on Facebook or Google Ads, the 5% increase in costs due to VAT has been predicted since the beginning of the year. However, when converted into actual figures, especially for advertisers with large budgets, this increase is not small. A marketing manager shared: “Most advertisers have prepared for this. The higher amount of money spent than before forces us to optimize efficiency better. We cannot waste money like before.”

Indirect impact on individual consumers

Notably, for individual consumers, some other Google services such as Google One and YouTube Premium have not yet announced changes. However, this does not mean that there will not be adjustments in the near future. In the official announcement, Google pointed out that the current service prices largely do not include tax. Applying the new tax rate may only be a matter of time.

For users with large cloud storage needs, or watching ad-free YouTube content, price adjustments in the near future are almost inevitable.

The fact that platforms like Netflix, Google, and Meta are applying new tax rates also reflects the fact that the digital services market in Vietnam is still growing strongly. The latest report from Statista shows that Vietnam is currently among the top 10 countries with the highest streaming service growth rate in Southeast Asia. The percentage of users willing to pay for copyrighted content, especially movies and music, is increasing.

This leads to the fact that despite the slight price increase, the demand for services remains high. Most users accept the adjustment because they understand that this is an inevitable trend. Moreover, compared to the general level, the cost of using Netflix in Vietnam is still much cheaper than in major markets such as the US, Korea or Japan.

3. What should advertisers do when costs increase?

From a business perspective, those who directly spend their advertising budgets will be most affected. With the VAT rate increasing by 5%, many companies have come up with plans to cut ineffective budgets, focusing on measuring and optimizing campaigns to ensure that the ROI (return on investment) index still meets expectations.

A digital marketing expert commented: “In the past, many advertisers did not really focus on optimization, partly because the cost of digital advertising in Vietnam was still quite low. But now, every penny spent must be carefully calculated, because prices have increased, competition is high, not to mention the risks of platform policies.”

In addition, the trend of shifting advertising budgets to new channels such as TikTok, Zalo or domestic e-commerce platforms is also increasing. This is considered a way to diversify channels, avoiding complete dependence on Google or Meta.

4. Will individual users leave Netflix?

For those on individual or family plans, the question is whether the price increase will make them abandon Netflix. The reality is that this is unlikely in the short term. The reason is that Netflix still maintains its position as a platform with a rich content library, the ability to customize viewing quality, support multiple devices, and high stability.

Many groups of young people and Vietnamese families often share accounts, so the cost is still reasonable compared to the cost of watching pirated movies, which has potential risks to information security. Moreover, the habit of paying for quality services, no ads, and standard subtitles is also becoming more and more popular.

A student in Hanoi shared: “The 13,000 VND increase for the highest package is actually not significant if divided equally among 4-5 people. It is still cheaper than going to a coffee shop or buying movie tickets multiple times a month.”

The Netflix story shows that the bigger problem is that cross-border platforms must adapt and comply with Vietnamese laws. The VAT increase is just one step in the journey to perfecting the legal framework for the digital economy. In the future, it is not impossible that there will be additional regulations on data sharing, content management, and obligations to contribute to the local market.

This brings challenges but also opens up opportunities. Domestic businesses can take advantage of policies to develop their own digital content platforms, competing with foreign giants. Meanwhile, users benefit from diversified choices and increasingly improved service quality.

In short, Netflix’s increase in service package prices from July 1 due to changes in VAT rates is a reasonable adjustment, in compliance with Vietnam’s new tax law. Although the increase is only about 5%, it partly reflects the trend of tightening tax management for cross-border digital services, a policy that has been applied by many countries to ensure fairness for domestic businesses and balance the state budget.

Individual users may not feel the impact immediately, but in the long term, the habit of paying, requesting more transparent and secure services will become inevitable trends. For businesses, the increased advertising costs will motivate them to optimize, innovate and be more flexible in choosing marketing channels.

The simultaneous price adjustments by Netflix, Google, Meta... also remind international technology platforms that: to develop sustainably in Vietnam, complying with the law and fully paying tax obligations is unavoidable.