Netflix Shifts 4K Video to Premium Tier
To get Ultra HD video from Netflix, not only do you need a more expensive TV set, you also need a pricier service plan.
The online streaming giant has shifted all of its 4K content from its HD package to a premium tier priced at $11.99 per month. According to a report by Variety, the change only applies to subscribers who are new to 4K TV. Those who started streaming UHD video before August 12 can continue to access all higher-resolution content at a grandfathered rate. Customers who signed up for Netflix before May 9 pay a monthly fee for HD content of only $7.99, while those who signed up after that date pay $8.99 per month. The regular HD tier allows subscribers to stream content to two devices simultaneously, while the premium tier increases that cap to four devices.
Netflix Inc. (Nasdaq: NFLX) started early 4K video trials 11 months ago and has a limited library of UHD content available. There is a handful of 4K movies in the Netflix line-up along with TV shows that include House of Cards, Breaking Bad and The Blacklist. The content is currently available on select smart TV models from LG, Samsung, Sony and Vizio. (See Netflix Launches 4K Video Trials.)
According to Variety, Netflix said it upped its rate for 4K streaming because production and acquisition costs for Ultra HD content are higher than traditional high-definition television. That's certainly true, but video delivery costs are also a likely factor in the decision to charge more for 4K content. UHD video streams require roughly twice the bandwidth of regular HD video, and Netflix has to negotiate content delivery network contracts and direct peering deals that accommodate those higher bandwidth requirements. Currently, Netflix has paid interconnection deals with AT&T Inc. (NYSE: T), Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC) and Verizon Communications Inc. (NYSE: VZ). (See Netflix, TWC Sign Pay-to-Peer Deal.)
Meanwhile, Netflix isn't the only service provider dreaming of ways to make money from UHD video. Amazon launched its first 4K titles on Amazon Instant this month. And Comcast said in January that it's working on a 4K app for smart TVs and will also start trialing new 4K-compatible set-tops later this year. The cable company hasn't shared many details on its 4K roadmap, but it wouldn't be a bad guess to think that the trial markets for new 4K TV service might coincide with regions where Comcast is also transitioning to MPEG4 video delivery. Comcast confirmed in August that it is beginning to move HD channels to the MPEG4 format in Augusta, Ga., starting this month. (See Gentlemen, Start Your 4K Engines.)
— Mari Silbey, special to Light Reading