The streaming wars we’ve all been waiting for might finally be at the cusp of erupting now that Hulu has dropped the price of its lowest tier to $6 a month.
Of course, that’s only for new subscribers who don’t mind watching commercials. Otherwise, you’re paying $12 a month for a service its closest competitor Netflix offers for $10. That could be enough to attract new long-term subscribers looking to supplement or maybe even replace some of the other streaming services.
That news come on the heels of ever-growing speculation that one of Hulu’s partners, the Walt Disney Co., might look to buy Netflix outright. Those reports were enough to shoot Netflix stock up over $100 per share, but Drexel Hamilton analyst Tony Wible tells Bloomberg that all the excitement could lead straight to a dead end.
“You’ve seen some takeover chatter popping up, but Netflix hasn’t shown it wants to be acquired.”
Netflix shares slipped a little after Nasdaq trading closed Monday, but share prices remained over $100. That puts Netflix’s stock value alone north of $44 billion, meaning if Disney was serious, it would have to write a pretty big check. But then again, Disney can afford it. That media mega-empire shares are valued at just under $150 billion.
The latest trend right now, however, isn’t streaming services dropping prices in order to compete. Instead, it’s local governments hoping to cash in. City officials in Pasadena, California, want to impose a tax on people who use streaming services like Netflix.
Pasadena hardly is the first to consider a tax. Other California municipalities have imposed taxes between 1 percent and 10 percent, joining governments in other states like Pennsylvania and Illinois. Netflix spokeswoman Anne Marie Squeo told The Los Angeles Times the taxation trend is something that really shouldn’t gain steam.
“It’s a dangerous precedent to start taxing Internet apps and websites using laws intended for utilities like water and electricity. It is especially concerning when these taxes are applied to consumers without consent, and in a manner that likely violates federal and state law.”
Pasadena, like other municipalities, are experiencing budget shortfalls. Revenue from taxes on popular services like streaming video could help fill those holes. That’s all fine and good, but Robert Callahan – executive director of the advocacy group Internet Association – wonders where emboldened governments will look to tax next.
“That is a slippery slope we think is dangerous. Today, it’s because I’m paying for Netflix, and the next day, it’s for the music I download online, and the next day it’s for social media I use. If you’re treating Internet websites and apps as utilities, there’s no limit as to how far they can take it.”
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