Online Streaming to Become More Expensive in the US

[Len]

Online streaming is about to get more expensive across several states from the U.S, as they are preparing a levy for those who pay monthly fees to watch online content.

Bye Bye Netflix?

The implications of a levy for online streaming means that some users might decide to give up their monthly subscriptions to sites such as Netflix, Hulu or Amazon Prime. The tax is not going to be implemented in all states and it could start with only 1 $ per month.

States which agreed to charge the fee

Chicago, Pennsylvania and Florida are three states which have already started to implement the online streaming fee. It is also believed that the states of California, Alabama, Louisiana and West Virginia are already taking steps to implement the fee.

The reason behind the initiative

Municipal governments explain that the idea started because, nowadays, online streaming is the equivalent of the video rental stores of the past, such as Blockbuster Video. If physical stores were paying tax, then online one also should.

Larry Downes, project director of the Georgetown University Centre for Business and Public Policy explained for USA Today that stores such as Blockbuster video used to be charged for the services they were offering. Since streaming is now more popular than the traditional TV, governments are seeking to benefit from this transition and recover their losses.

Even if the 1$ charge seems insignificant, since the number of subscribers is so high, profits could easily be of more than 50 $ a year per consumer. This is a significant amount the government could benefit from.

Consumers fight back

Consumer rights groups have claimed that the tax is somehow illegal according to the Internet Tax Freedom Act of 1998. Netflix has not openly criticized the decision, but it has expressed some concern about losing clients.