Slashdot Mirror

← Back to Stories (view on slashdot.org)

Netflix Plans To Raise Prices By "$1 or $2 a Month"

Posted by timothy on from the testing-testing dept.

New submitter Burphytez (3625571) writes with this excerpt of a Reuters story, as carried by the Chicago Tribune: "Video streaming service Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company buy more movies and TV shows and improve service for its 48 million global subscribers. Investors welcomed the announcement by Netflix, which had suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011. The company's shares jumped 6.7 percent in after-hours trading to $371.97, after the company released plans for a price hike and posted a rise in first-quarter profit that beat Wall Street expectations."

32 of 202 comments (clear)

  1. Milk that cow! by B33rNinj4 · · Score: 5, Insightful

    I guess they found a way to cover the costs of their deal with Comcast.

    1. Re:Milk that cow! by Mashiki · · Score: 5, Insightful

      Doesn't really matter anyway, even at raising the rates for new customers by $1-2, it's still got more value than cable or sattelite TV by leaps and bounds. That's pretty scary isn't it? Especially with all of the crap programming and reality TV garbage that they have on these days. I sadly remember when things like History, NatGO, Discovery and TLC had something worthwhile on them. The last time I watched them when I was in the US(last year) it was wall-to-wall reality TV programming. Good riddance to them.

      --
      Om, nomnomnom...
    2. Re:Milk that cow! by alen · · Score: 5, Informative

      more like the content costs

      if you look at their financials 3/4 of revenues goes to pay for content. networking costs are maybe 1/10 of revenues

    3. Re:Milk that cow! by SJHillman · · Score: 5, Insightful

      The really curious part is the fact that Netflix is so much cheaper than cable *in spite of not having commercials*. The fact that you pay for cable TV only to be bombarded with commercials is a slap in the face that most people are too willing to accept.

    4. Re:Milk that cow! by jeffmflanagan · · Score: 5, Interesting

      The media reports on the deal with Comcast turned out to be complete bullshit.
      A friend did some research on this:


      There are three companies involved:
      Netflix (Content provider)
      Cogent (Transit provider)
      Comcast (Internet service provider)


      It was Cogent, not Comcast that was the bottle neck.

      Here’s how the industry works. These companies negotiate with each other to use each other’s services.

      So, Netflix agrees to pay A for Cogent to provide B amount of bandwidth. Cogent agrees to pay C to Comcast for D amount of bandwidth.

      What happened is that Cogent ran out of bandwidth. Under normal industry standards, Cogent is expected to pay E for F additional bandwidth. In what appears to be some pretty underhanded and sneaky business practices, Cogent demanded that Comcast provide the additional bandwidth for free and tried to make it look like it was Comcast’s fault.

      Basically, Cogent was getting money from Netflix to provide a service that it couldn’t provide.

      The Comcast-Netflix deal is basically, that Netflix decided to replace Cogent and hire a new vendor. Comcast is a large company and offers multiple services. Netflix could have gone with any vendor they wanted. They choose to go with Comcast apparently because Comcast was offering them a better deal than anyone else. I don’t know if that means they are charging less than Cogent or perhaps there’s some technical advantage (such as better performance or more reliability) with hiring the same vendor for two different services.

      So, the reason why Netflix is paying Comcast is because Comcast is now providing a new service (transit provider).

      Also, this money is not a brand new fee that Netflix has to pay someone. This is the money (A) that they were going to give to Cogent.

      Again, Netflix could have used any transit provider they wanted. They choose Comcast because apparently, they offered the best deal.

    5. Re:Milk that cow! by jeffmflanagan · · Score: 2

      Correct. I was paying about $100/mo for DirecTV many years ago. NetFlix could raise their rate to $40/mo, and it would still be worthwhile to me. I use the service almost every day, so it'll still be a bargain at $10.

    6. Re:Milk that cow! by sycodon · · Score: 2

      I really look forward to more Grade B movies that they always describe as "Not to be confused with the Blockbuster..."

      Maybe the new arrivals list will turn over more than once every six months now too!

      --
      When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
    7. Re:Milk that cow! by SJHillman · · Score: 2

      That only explains why cable costs more. It doesn't explain why cable costs more and yet still has as much ads as content.

      Also, for most people, the ISP bill is a sunk cost. They would still pay it even if Netflix didn't exist, and therefore it should not be included in the total cost of Netflix (again, for most people, there will be exceptions).

    8. Re:Milk that cow! by Dcnjoe60 · · Score: 2

      That only explains why cable costs more. It doesn't explain why cable costs more and yet still has as much ads as content.

      Also, for most people, the ISP bill is a sunk cost. They would still pay it even if Netflix didn't exist, and therefore it should not be included in the total cost of Netflix (again, for most people, there will be exceptions).

      It doesn't matter if the ISP is a sunk cost or not, it is still a cost of receiving netflix. As for the commercials, isn't the cable company just transmitting what the channel is sending? As such, the fault should be for the networks, not the cable company. OTOH, they might as well broadcast 60 minutes an hour of commercials if all they offer are those crappy reality shows.

      What netflix and hula plus and some others are doing is providing an on-demand content service. That's something that people have been trying to get cable companies to do for decades. The technology has been there for years, they just kept the old business model and now others have stepped up to fill the void. If I were a network, I'd take it to the next level and go direct to subscribers via the internet. There's probably no more than 10 channels I regularly watch, even though my cable overs ten times that many. I'd gladly pay a a few dollars a month to each of them (even with commercials) for the privileged of watching their content.

    9. Re:Milk that cow! by cpotoso · · Score: 3, Insightful

      What are you smoking?? WE pay for the internet service (monthly bill, anyone?). So why should Netflix have to pay on top of that?? The infrastructure? Yes, coming from your monthly bill. Duh!

    10. Re:Milk that cow! by Dcnjoe60 · · Score: 2

      As for the commercials, isn't the cable company just transmitting what the channel is sending?

      Yes, but the commercials you see are a combination of the national commercials and commercials that are overlaid by your cable provider.

      Yes and no. The cable provider isn't gapping the show to add commercials. The slots are already there. If there aren't local commercials, primarily for local businesses to advertise on national shows, then another national commercial will be displayed. Basically, network determines there are X minutes of commercials in a show and they are allocated between national and local markets.

    11. Re:Milk that cow! by Archangel+Michael · · Score: 2

      You're correct, except for one point. Cable TV expects life to revolve around the 7-10PM slot, when I happen to be busy with "life". And, I often don't have time to watch for several weeks in a row. And DVRs are stupid with On Demand Viewing like Netflix available. All said and done, unless you HAVE to be that annoying person who "spoiler alerts" every freaking conversation, then please spare me the "second run content". That is so 20th Century.

      --
      Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
    12. Re:Milk that cow! by Darinbob · · Score: 2

      Most Netflix streaming customers are still paying someone else for internet and thus paying for the infrastructure. Many of those internet customers get internet directly from the cable companies. (maybe that's a good reason for municipal internet, if only cable companies stopped lobbying to make that illegal).

    13. Re:Milk that cow! by Darinbob · · Score: 2

      It's not just on-demand, it's an alternative to lousy cable companies. I'm moving that way soon, but it's not because I want anything on-demand (I was happy with time shifting with dvr). It's just that streaming is the only alternative, I'd prefer to have a DVR like system using the internet (and be legal). But the costs keep creeping up and even though my satellite is still much cheaper than cable alternatives there's just so little on at times that it seems like a waste of money, plus my equipment is getting old and will soon need replacing.

      Cable could recover if it lowered prices, offered ala-carte choices (ie, pick 6 channels for one price), increased their on-demand selections, had some actual competition (though satellite/uverse is competition it's not always available or practical), and treated customers like human beings. Except that cable has been in bed with Hollywood for a long time so it's unlikely it will change soon.

    14. Re:Milk that cow! by Jason+Levine · · Score: 2

      You can't count the full cost of your Internet service unless you ONLY use your Internet service for Netflix. A normal Netflix household will use their Internet connection for a few things including Netflix. So the true cost of Netflix is $7.99 a month plus some fraction of your monthly Internet service fees (the latter of which will vary from house to house).

      Still a better deal than cable TV.

      --
      My sci-fi novel, Ghost Thief, is now available from Amazon.com.
    15. Re:Milk that cow! by Kalriath · · Score: 2

      The problem is that if they did, 3 episodes would be more than the cost of a subscription.

      --
      For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
  2. Not Necessarily A Bad Thing by sortius_nod · · Score: 2, Interesting

    While as a consumer I'll bemoan paying more, the reality is, to deliver quality content they need to find the price sweet spot. It's still way below the cost of cable TV, so I don't think it will hurt them in the long run.

    Yes, it seems like it will mainly benefit shareholders, but with the lack of ads and low price, even after the increase, who can really complain?

    1. Re:Not Necessarily A Bad Thing by The+Grim+Reefer · · Score: 3, Informative

      While as a consumer I'll bemoan paying more, the reality is, to deliver quality content they need to find the price sweet spot. It's still way below the cost of cable TV, so I don't think it will hurt them in the long run.

      Yes, it seems like it will mainly benefit shareholders, but with the lack of ads and low price, even after the increase, who can really complain?

      From TFS, "Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month..."

      Unless my reading comprehension is on the blink, as a current customer, you shouldn't see a rate increase. Yet.

    2. Re:Not Necessarily A Bad Thing by Talderas · · Score: 4, Interesting

      Yep. Their goal is to encourage long term subscriptions and not binge subscribing. They have a "problem" where people will subscribe for one to two month, binge watch content, and then unsubscribe for about six to eight months.

      --
      "Lack of speed can be overcome. In the worst case by patience." --Znork
    3. Re:Not Necessarily A Bad Thing by Guybrush_T · · Score: 2

      I'm amused to see that in the US, having an internet access is still optional :-). Are the US considered an under-developed country ?

      That said, I'm sure your comment only makes sense to a very small portion of the population ; which will make cable companies useless in the short term.

  3. Fine logic by LookIntoTheFuture · · Score: 3, Insightful

    Investors welcomed the announcement by Netflix, which had suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011.

    Well, the first price increase cost us customers so the stock plunged. What will make the stock soar? A price increase!

    --
    Brave Sir Robin ran away. ("No!") Bravely ran away away. ("I didn't!")
  4. More content! by NotDrWho · · Score: 2

    I don't mind paying and extra buck or two, if you can improve the content. I'm getting a little tired of movies dropping out of my queue, not to mention multiples seasons of TV shows (some of my TV shows have went from having every season available to just a few in the last year). I'm glad you got House and Cards and all, but what you really need to focus on is your meat-and-potatoes movie and TV show content.

    --
    SJW's don't eliminate discrimination. They just expropriate it for themselves.
  5. Vote With Your Wallet by semilemon · · Score: 2

    I don't understand why everyone gets so upset when Netflix talks about raising its prices by a couple of dollars per month. I've been a subscriber for several years, and even with the limited selection available in Canada, the lack of advertising and unlimited on demand nature makes it worth way more than the equivalent cost of a few days of cable/satellite.

    Sometimes you have to vote with your wallet, even if that means overpaying a little bit for a product/service that you see the potential in and want to succeed. The content producers will follow the money (eventually). If you're not willing to pay an additional $24 per year, then how badly do you really want to see more content on Netflix?

    --
    Why do today what you can put off until tomorrow?
  6. Verizon FiOS by DoofusOfDeath · · Score: 2

    I'm a Verizon customer, and Netflix streaming has become less useful to me since the whole monopoly shakedown business happend.

    I'm willing to pay a few dollars more per month to Netflix, if it returns streaming to its previous glory on Verizon.

    Bonus points if they use the money to buy a law that makes being a Verizon executive a capital offense.

  7. Re:Repeat July 2011 by tsqr · · Score: 2

    I'll be in the first wave myself.

    If you're going to quit, you must be an existing customer, which means you won't see a rate increase. Are you going to quit as a statement of principle?

  8. FIFY by 140Mandak262Jamuna · · Score: 5, Informative

    "Video streaming service Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company pay ransom to the ISP monopolies with stranglehold on the last mile of cable built by the rate payers over theyear on public rights of way, protected by the public utilities commissions, who wantonly flout truth-in-labeling laws by selling X Mbps service and balk at providing it.

    FIFY

    --
    sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
    1. Re:FIFY by geminidomino · · Score: 2

      . A very simple change to their service: Allowing users to cache movies locally to be watched later (i.e. I want to watch my movie tonight so I set it up before I go to work...) would have eliminated this problem years ago and the ISPs would have dropped it

      [citation needed]

      Everything I've read says the opposite: Netflix has ISP-level caches available, which would be even better for the ISPs' bandwidth numbers for every video where #views > 1 (local caching at the user end means it still gets downloaded per-user, just at offpeak times) and were shown the door when they offered it.

      I posit that the actual problem is that there doesn't seem to be any legal concept of "conflict of interest" in the US anymore.

  9. Re:Repeat July 2011 by SJHillman · · Score: 2

    I just got a Prime trial subscription, mostly for streaming movies. I find the interface to be more confusing than Netflix, and the closed captioning isn't as easy to read. I've also had issues in which Full Screen will switch it to my primary monitor, so I have to use the Pop-Out viewer. Also, the price of Prime just went up recently as well which may be one of the reasons Netflix is more comfortable with raising their rates too.

  10. Re:....profit by wonkey_monkey · · Score: 4, Insightful

    2. Announce forthcoming price rise applicable to new customers as of a future date
    3. Watch those people who were previously on the fence about it sign up to avoid the price hike
    4. ???? ...and so on.

    --
    systemd is Roko's Basilisk.
  11. Re:New Customers by SJHillman · · Score: 4, Funny

    I wonder how many current customers will quit over this, then realize two months later it was only for new customers. And then have to sign back up at the higher rate.

  12. Re:Repeat July 2011 by Talderas · · Score: 2

    Why would there be an exodus, current subscribers are not having their prices changed, only new subscribers. This is a move to counter binge subscribers in order to smooth out their revenue. In fact, if Netflix wanted to be brilliant about it, the would offer their Xth month free with a $1-2 reduction in your subscription cost. Basically, you're "paying forward" the extra $1-2 towards a month subscription that you only get if you stay subscribed long enough. That would essentially provide the exact same lower costs for long term subscribers.

    --
    "Lack of speed can be overcome. In the worst case by patience." --Znork
  13. Re:Repeat July 2011 by jeffmflanagan · · Score: 2

    Some lunatics will. People lose their minds over trivial changes, and make bad decisions all the time.