Netflix Announces Streaming Only Plans and Higher Prices for DVDs

micsaund writes "While Netflix has continued to drop fees and still maintain a good services, today, they take three steps in the other direction by doubling the cost of the plan you probably already have: 'So for instance, our current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans ... Unlimited Streaming (no DVDs) for $7.99 a month ... Unlimited DVDs, 1 out at-a-time (no streaming), for $7.99 a month. ... The price for getting both of these plans will be $15.98 a month ($7.99 + $7.99).' Now, if they could get everything available on streaming, this would be fine, but how many times have you needed to get a physical disc for that oddball movie, or had a movie in your instant queue that magically disappears due to some behind-the-scenes contract expiration or whatever?"

Comments

Hmmm

[thebra]

Well I'm not to sure how I feel about this. I currently have the streaming + 1 dvd. I only watch a dvd every few months but the option was still nice to have. There is no way I would pay 8 bucks a month for the few dvds I would watch. But on the other hand the streaming selection is pretty poor so paying 8 bucks a month for just streaming doesn't seem like that great of a deal. I think they've shot themselves in the foot but without a great alternative they will probably get away with it.

Re:Hmmm

[Xacid]

I don't know if it's a great alternative but Blockbuster is still alive and kicking: http://www.blockbuster.com/download Anyone have any experience with them?

My knee-jerk reaction is to just cancel my account and be pissed. Afterall - it's a pretty large increase percentage-wise. However, when I really think about it - they've just been too cheap for a while. As long as they don't start pulling a move like the cable companies did and slap advertising on top of a paid service I think I'm okay with this. Compared to the volume of movies I watch now vs. the cost of getting them from a brick and mortar rental place I'm saving hundreds a month.

Can't get premium TV without basic TV

[tepples]

For $9 a month I can get HBO/Showtime from my cable company

My cable company won't even let me subscribe to HBO or Showtime until I already subscribe to a $80/mo bundle of other channels that I don't watch.

Blame the content makers

[jcdick1]

The estimate is that in 2012, Netflix's license fees will go from $180 million in 2010 to $1.98 billion in 2012, according to this.

Its going to be very hard for anyone to become the legal clearinghouse for media at a price point most consumers see as reasonable because the studios won't allow it.

Re:Blame the content makers

[rsmith-mac]

Bingo. We all knew this was coming, it was inevitable the moment Netflix made it big and people started unsubscribing from cable/satellite.

The studios originally licensed content to Netflix believing they were an end of the line service - a place for content to go once every other method of squeezing out profit had been exhausted. Instead people stopped buying DVDs, stopped buying $3 episodes off of iTunes, stopped buying Video On Demand, etc. So instead of extracting the last few pennies out of their content, the existence of Netflix has been severely undermining more profitable viewing methods. The studios aren't charities of course and want what they believe they should be making (or to put it more appropriately: they strongly believe in price discrimination), which means if viewers are going to use Netflix as they currently are then Netflix will have to pay more for the right to deliver their content. There's no such thing as a free lunch.

Finally, the next step will be for the studios to license their content to a Netflix competitor for cheap for a short period of time, similar to what the RIAA did with Apple & Amazon. The purpose will be to try to diminish the influence of Netflix, as a large independent content delivery company is going to squeeze the studios on profits. The end result will be that none of the content delivery companies will have enough leverage to use against the studios, leaving the studios in complete control of pricing.

Redbox...

[nam37]

Basically, this will drive people to use Redbox for disc-based movies and NetFlix for screaming.

Re:Redbox...

[bdleonard]

Basically, this will drive people to use Redbox for disc-based movies and NetFlix for screaming.

I use Wilhelm for all of my screaming ...

So they do this after killing Blockbuster?

[bennomatic]

The only Blockbuster left in a 10 mile radius of my house is an unmanned kiosk which is broken half the time. If I can't get everything via streaming, then Netflix has become far less useful to me. I was under the impression this was a semi-sustainable business; if I had known that they were just doing it long enough to kill the competition then jack up prices, I probably would have stuck with old faithful.

Dear Content Providers

[Tailhook]

I'm not going back. You'll have to live with some fraction of the cut you got for cable/satellite service, whether via Netflix or some other distributor. Streaming is the a la carte that should have been available 20 years ago. I will not pay for a package full of dreck. Pull whatever you want. I'll live with whatever is left over. You're not getting back to $70/month. Deal with it.

You need to adopt this attitude as well. These people need to take a few pay cuts.

Re:My solution

[ktappe]

$8/month streaming only - great for hopping around when I don't know what to watch.

$1/DVD rental at the video store at the end of my block for DVDs.

You did exactly what they wanted you to: stuck with them. Now you are paying the same amount as before but they're providing you less.

Re:Doubling the value!

[redemtionboy]

Umm, I have netflix on every TV in my house, my laptop, my desktop, my phone, my iPad, and soon my 3DS. My wife and I simultaneously watch content in different rooms all the time. Also, sure, you get 100s of shows, but you only get 1 show per channel at a time, and unless you record it, it's gone. With Netflix I can watch thousands of titles at any moment I want. Sure you do get slightly faster access with TV, but a lot of shows update on Netflix the next day. Also Netflix has tons of great features like party watching on Xbox 360. I watch movies with my best friend who lives 1,000 miles away all the time. I don't see cable having significant benefits over netflix unless there is a particular show you watch that they don't host or you HAVE to watch it the moment it airs. Personally, I've got the patience to wait.

Re:Going to reduce their revenue

[bberens]

Check out redbox for your individual/specific movie rental needs. Yeah, it's not quite as convenient as having stuff magically show you up at your door, but you get immediate gratification of picking out the movie you feel like seeing on that particular day and it's only $1. IMHO Netflix has the streaming right and Redbox has the physical media right.

Yet, net result = Netflix costs me (the user) more

[zooblethorpe]

You're not paying more because netflix just decided to charge more. You're paying more because studios have increased their price and because of a weakening dollar. Netflix is just trying to stay in business.

Whatever the reason, I see an increase in cost for a decrease in service provided. And more to the meat of your post, if the move were solely the fault of the studios, Netflix could certainly have done more to point this out in their blog post announcing the change. As it is, I see a lot of blather about in-house pricing decisions, but nothing about studio licensing costs -- which makes the whole affair look more like it's all about Netflix's bottom line.

(NB: I'm not saying that a company can afford to be purely charitable -- but raising prices without noticeably increasing or improving your offering, while at the same time claiming that they are "offering our lowest prices ever", sounds precious close to corporate babble and bald-faced lying. There're happy lies ["you look mahvelous in those trousers!"] and unhappy lies ["lower prices!" when they're really higher], and this one is unhappy.)

Cheers,

Thanks Netflix!

[sqrt(2)]

Congratulations! I will be canceling my account at the end of this month and switching entirely to Bittorrent. Thanks for making it even harder to do things the "legitimate" way. You killed the golden goose. You had a service that was actually easier and more convenient to me than downloading DVD rips from bittorrent; the price was right, the selection was adequate (but only just), and it was worth it to me to pay for it. Not anymore, I'll just take what I want for free from the superior service known as P2P filesharing. I suggest everyone else do the same.