In case you haven't heard, Netflix just changed its pricing paradigm -- and many in the movie-streaming world are outraged. Netflix is separating its streaming service from DVD shipping service and essentially charging 60 percent more to get what consumers got on Monday.
Specifically, Netflix on Tuesday announced it is launching new unlimited DVD-only plans in the U.S. at $7.99 a month for the one DVD out-at-a-time plan and $11.99 a month for the two DVDs out-at-a-time plan. The unlimited streaming plan will remain at $7.99 a month. The price for getting both unlimited streaming and unlimited DVDs will be $15.98 a month. The changes go into effect on Sept. 1 for existing members.
"Netflix members love watching instantly, but we've come to recognize there is still a very large continuing demand for DVDs by mail," reasoned Andy Rendich, Netflix Chief Service and Operations Officer. "By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members."
An Ugly Choice
Many Netflix consumers aren't buying into Rendich's reasoning. Upping a price by 10 percent may cause consumers to grumble, but they will typically pay the price, according to Rob Enderle, principal analyst at The Enderle Group. He said the 60 percent increase could cause viewers to look elsewhere,
"The reality is that a good chunk of Netflix's customer base doesn't want an either/or solution," he said. "There is not enough content on the streaming side yet to live off streaming only, which means most folks will have to subscribe to a blended service if they want to see a certain type of content."
As Enderle sees it, if the streaming and DVD services were nearly identical in terms of the content, then Netflix customers might be open to the change because they could choose one or the other without giving up any content or paying more money. But many old TV shows that stream aren't available on DVD. And many movies on DVD may not be available for streaming this year.
"People see the change as a huge price increase or an ugly choice. Maybe Hulu is looking better, or they will just go back to cable," Enderle said. "Until this move, Netflix was trending as one of the big beneficiaries of folks becoming unplugged and moving away from their cable television service. By making this pricing action, they have undoubtedly caused a lot of folks to rethink that move."
NBC Content Renewal
Meanwhile, Netflix is still forging ahead with content deals. Netflix and NBC Universal have renewed a multi-year film and TV content agreement. Programming under the deal includes prior-season series across multiple NBC networks, including The Office, 30 Rock and Parenthood.
All future seasons of these shows will be available on Netflix on a one-season-delay basis. Under the deal, Netflix members will also be able to enjoy prior-season episodes of Law and Order: SVU and The Event. Also available to watch via instant streaming from Netflix will be shows from NBC Universal's cable networks.
Posted: 2011-07-14 @ 7:09pm PT
I am outraged by the extreme price increase.Intend to look into Hulu.
Posted: 2011-07-13 @ 8:05pm PT
I got the email from Netflix on Tuesday and cancelled on Wednesday. To raise the price of this service by 60% was a no brainer for me. I'll go to Hulu or Joost for my movie/TV shows now.
Posted: 2011-07-13 @ 2:01pm PT
streaming content is poor now - they will lose multitudes of customers and probably reverse the price hike by september
soon to be ex-netflix
Posted: 2011-07-13 @ 1:43pm PT
I instantly changed to 'viewing only' to give me 30 days to investigate my options and WILL be completely ending my membership then.This may be a good time to buy NFLX stock with the upcoming share price drop and management change in response to this debacle.