Netflix tax: current prices 'unfair', but is Netflix really cheaper?

12 May 2015

The federal government is planning to levy a goods and services tax on “intangible products” purchased online such as music, eBooks and streaming services like Netflix. The reasoning behind this is simple: Netflix and other overseas companies have an advantage over home-grown services like Presto and Stan, which are already subject to GST and must subsequently charge more. Under the new taxation scheme Netflix subscriptions will have an additional 10% slapped on top.

This is hard logic to argue with. Why should Australian streaming services have to pay a tax to which Netflix is exempt? They obviously shouldn't, but give the Aussie products credit where it's due. Current Netflix prices aren't as comparatively appealing as you might believe.

Need a bigger plan?

Video streaming services can significantly increase your internet usage. Just how much depends on your own viewing habits. You might be able to get by with your current plan, or it could be time to start shopping around for something bigger.

For more info, check out our Netflix broadband usage guide, or take a look at the kinds of plans you might need based on your viewing habits.

Alternatively, you could just take a look at the plans currently on offer from Aussie providers.

Is Netflix cheaper?

Netflix is often touted as less-expensive than its competition thanks to its entry-level $8.99 plan. This is admittedly far-better than Presto, but compared to Stan it’s actually not that great.

Netflix basic package

The un-taxed $8.99 entry pack from Netflix is more to catch your eye than offer a great product for cheap. Netflix hopes that this plan will get you on to the site, after which you'll pay for the more-expensive $11.99 plan.

Like the competition, this basic package offers unlimited hours of viewing, but you can only run one stream at a time. If you want to watch something, but someone else in your house is already using the account, then you’re out of luck.

This plan is also restricted to standard definition (SD) viewing, which may be fine for some folk but if you’ve got a 40 inch TV or bigger you’re definitely going to notice the lack of quality. Those that want HD will have to pay more. That's where the $11.99 plan comes in; a classic bait & switch.

Stan’s only package

Stan charges a flat fee of $10. For this you get three simultaneous streams and HD content.

For Netflix to compete with this offering you’d have to look at its $11.99 plan which still only supports two streams with HD content. That’s one less stream than Stan for $1.99 per month more.

Presto movies & TV bundle

Presto charges $10 for movies-only or $10 for tv-only. If you want to bundle the two it’s $15 per month. At this inflated price you’re still limited to SD viewing. Despite being run by media-giant Foxtel (which is 50% owned by Telstra), it appears Presto needs all the help it can get.

Netflix now vs Netflix + tax prices

Currently, Netflix offers three subscription tiers in Australia; each one has its own pricing and features. These prices are set to go up if GST is applied. It's not much, but it could make all the difference when you're comparing monthly subscription prices.

Tier 1:

Now $8.99

With Tax $9.89

This plan limits you to one single standard definition (SD) stream. You cannot run two streams simultaneously, nor will you have access to HD viewing.

Tier 2:

Now $11.99

With Tax $13.19

Two simultaneous HD streams. This is more in line with what Stan offers as its basic packages.

The new price of $13.19 will place Netflix noticeably above Stan’s $10 asking price for three HD streams.

Tier 3:

Now $14.99

With Tax $16.49

Four simultaneous Ultra HD streams. Ultra HD content (often called 4K) is limited in availability and requires a very fast broadband connection; generally either cable or NBN tier 2 and up. It is unlikely most users will be utilising the Ultra HD component of this plan; it is more-useful for families and households that require more than two simultaneous streams.

In short, you'll realistically be paying $16.49 per month for four HD streams, which is only one stream more than Stan offers for $6.49 less.

The post-tax price of $16.49 is also more expensive even than Presto’s movie + TV bundle, except Netflix will continue to offer HD and Ultra HD content, where Presto is limited to standard definition.

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