Netflix raises prices - a lot

Rico · July 12, 2011, 04:14:03 PM

Ok, I love Netflix and have used them a very long time. But they have just raised their prices by a lot if you get both DVD's and do streaming too. I'm not too happy about this and probably will go to only streaming, which might be their goal by doing all this. Anyway, story below:

Netflix on Tuesday announced significant changes to its pricing plans that include a 60% price bump on combination DVD and streaming plans. The new changes go into effect September 1 for existing members.

Netflix customers, if you couldn't already guess, are not pleased with the changes. More than 4100 comments, most of them glaringly negative, have been left on Netflix's official blog that announced the changes.

"You've decided to raise customer rates during a period of economic downturn, when people are struggling to pay for basic necessities and when cable TV is just too damned expensive," Darrin Wright of Zimmer Radio Group wrote on Netflix's blog. "You're forcing me to pay more for products and services I've paid for loyally for quite a while now. You're really, REALLY making me reconsider this business relationship."

Some comments were less cordial.

"This is a horrible deal for current customers," Todd Hayward of Old Dominion wrote. "You're going to be losing a lot of business with this decision."

The new plans separate DVD-only subscriptions and streaming-only subscriptions, with each basic plan costing $7.99 a month. Before, the company offered customers a combo plan that made it cheaper to get both DVDs in the mail and streaming content.

The basic plan for one DVD at a time and unlimited steaming used to cost $9.99 and now will cost $15.98 a month. To further illustrate pricing, one DVD out at a time now costs $7.99 while 2 DVDs at a time costs $11.99 and so on. To add streaming content, it's another $7.99 on top of that.

It's understandable that the price of Netflix's services would increase over time due to new licensing agreements and the expansion of movie and TV content. But as a current Netflix member with a combination DVD and streaming plan, I'm also upset about this abrupt price change. I understand slow, gradual price inceases to match inflation and to deliver a stronger catalog of movies, but a 60% bump is simply too much.

What do you think about the price bump?

http://venturebeat.com/2011/07/12/netflix-raises-plan-prices-by-60-with-4100-negative-comments-and-counting/

KingIsaacLinksr · July 12, 2011, 04:19:00 PM

I saw this coming a mile away. The Content providers HATE what Netflix did to them and wanted payback, THIS is what happens when people get greedy, WE get screwed. You want to rage at someone? Rage at the content providers and their endless greed.

King

KingIsaacLinksr · July 12, 2011, 04:23:37 PM

Now that my venom is out of the way...I will continue to stick with Netflix for the time being because the streaming service they provide is quite nice. I saw this price charge coming because the cable/TV/hollywood hated what Netflix "screwed" them out of, which is why I switched to Streaming-only content, to hopefully encourage more streaming content and the same price. At least for us who went this route we aren't too badly off, I pity those who have both plans...

Its a sad day for all us Netflix users. I really hope this is the last price raise for a while, otherwise I will leave Netflix. Which saddens me...

King

Bryancd · July 12, 2011, 04:26:02 PM

They had to do it, they were charging too little for the DVD and streaming. It's a smart move, they want to transition business to streaming. The problem is the content is still behind but that will change over time. For now I'm just going to do both.

KingIsaacLinksr · July 12, 2011, 04:28:05 PM

Quote from: Bryancd on July 12, 2011, 04:26:02 PM
They had to do it, they were charging too little for the DVD and streaming. It's a smart move, they want to transition business to streaming. The problem is the content is still behind but that will change over time. For now I'm just going to do both.

Unless I'm mistaken, its been expanding at a great rate here lately. Heck, Star Trek the entire series was nice, that right there is worth $7.99 a month. So unless I've missed something, it will definitely continue to improve. But your right, DVDs have fallen in demand, but not as much as Netflix had hoped so they had to change it.

King

Bryancd · July 12, 2011, 04:31:13 PM

The problem is you can't get new releases streaming.

KingIsaacLinksr · July 12, 2011, 04:32:33 PM

Quote from: Bryancd on July 12, 2011, 04:31:13 PM
The problem is you can't get new releases streaming.

And Hollywood will never ever let that happen. It would destroy their DVD/Blu-ray sales. Or at least, that is their justification.

King

turtlesrock · July 12, 2011, 04:33:29 PM

i was thinking of joining netflix because of the star trek streaming. now i am not so sure.

X · July 12, 2011, 04:34:58 PM

Doesn't affect me at all. I only stream and when I want to see something sooner, I grab it from Zune Marketplace on Xbox or from Redbox.

While netflix might have killed the video chains, Redbox and blockbuster express is turning the tide. 1 buck for dvds, one fifty for bluray, and 2 bucks for games. They really can't compete with that and lose money when they try. Every movie sent and sent back costs netflix almost a buck in postage .

X · July 12, 2011, 04:36:39 PM

Quote from: Bryancd on July 12, 2011, 04:31:13 PM
The problem is you can't get new releases streaming.

Yeah you can, but it cost rental prices. I can stream movies from Zune for like 5 bucks for HD. The Source Code is showing now and hasn't even hit DVD yet.

Quote from: turtlesrock on July 12, 2011, 04:33:29 PM
i was thinking of joining netflix because of the star trek streaming. now i am not so sure.

This doesn't affect streaming

Rico · July 12, 2011, 04:40:42 PM

Still a lot of content that isn't up for streaming on Netflix. And as far as other services, no one has Netflix beat in terms of selection.

Bryancd · July 12, 2011, 04:43:46 PM

Yeah Redbox and Blockbuster are so far behind Netflix both domestically and International expansion. That's why I own the stock for clients.

X · July 12, 2011, 04:47:56 PM

Quote from: Bryancd on July 12, 2011, 04:43:46 PM
Yeah Redbox and Blockbuster are so far behind Netflix both domestically and International expansion. That's why I own the stock for clients.

Wait. I'm not clear on this. Which stocks do you own? Netflix or the other two? If it's the other two is it because of the low in cost of buy now?

X · July 12, 2011, 04:56:34 PM

Why Netflix changed its pricing plans
By Ryan Lawler Jul. 12, 2011, 11:47am PT

Netflix updated its pricing Tuesday, removing the ability to combine DVD-by-mail and streaming plans and effectively forcing subscribers to choose one or the other. For those that wish to continue using both services, the change effectively raises the price of a combined plan by 60 percent, which has already caused some subscriber unrest on the blog post announcing the change and around the Internet. But why did Netflix make the change?

Ultimately it comes down to money, as Netflix VP of Marketing Jessie Becker acknowledged in the company's blog post. "Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs," she wrote.

The cost of its DVD-by-mail operations isn't supported by the $2 per month in additional revenues that Netflix gets from the previous add-on plan. While much of the infrastructure investment is a sunk cost and has been amortized over the years, supporting ongoing DVD operations isn't a winning strategy for a company that is betting big on streaming. The cost of postage alone argues against such a heavy discount for a continued DVD-by-mail plus streaming offering.

But there's another reason why Netflix is making this change: By forcing subscribers to choose, it's likely betting that most will go streaming-only, thereby lowering the infrastructure costs of supporting them. As we wrote last year, the real cost of its streaming service isn't defined by video storage, delivery or other infrastructure, but in the acquisition costs that come with it. That gives Netflix the ability to better manage its costs as it decides which content to invest in.

From an investor standpoint, splitting up Netflix's operations more clearly into streaming and DVD-by-mail services could also give further transparency into its business. Doing so would enable it to break out operational costs from its DVD and streaming units, something that it has been unable (or at least unwilling) to do so thus far. With a management and organizational structure that clearly defines operations into separate units — streaming, DVD and international — financial analysts and investors will get a better idea of what's driving revenues and costs. This could happen as soon as the fourth quarter of this year, once subscribers have been moved into one plan or another.

And finally, while Netflix weens subscribers off the combined plan and onto either a DVD- or streaming-only plan, there's a side benefit to breaking up its plans and effectively raising rates for those who subscribe to both: In the short term, at least, we're likely to see those who subscribe to both plans effectively subsidizing content acquisition costs for its streaming-only plan — except they'll be doing so at a higher rate ($7.99 versus $2 a month) and with more transparency.

If Netflix does break out financial operations in the coming quarters, as we suspect it will, we could see whatever profits might come from a combined plan or DVD-only being shuffled to support content acquisition, as Netflix invests ahead to support more aggressive subscriber growth, both in the U.S. and internationally.

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JeffM · July 12, 2011, 04:56:51 PM

Netflix is still the best deal out there. I'll dump the one-at-a-time dvd thing, but the streaming is so satisfying.

The library is still steadily improving.

I am just really satisfied with Netflix. That with Hulu+ pretty much takes care of my needs, I dumped DirecTV a few months ago and I don't miss it at all.