Netflix to raise price of Streaming-DVD option

[macalu]

Well, this sucks. Looks like i'm going to downgrade to their streaming option only. I don't want to pay $6 more dollars for a service I hardly use although it was nice to have.

http://www.netflix.com
http://online.wsj.com/article/SB1000...619018422.html
By NICK WINGFIELD

Netflix Inc. boosted by 60% the price of its cheapest movie-rental plan that includes streaming and DVD rentals, triggering an outcry among customers who still use the disc format despite the growing popularity of online movies.

The Los Gatos, Calif., company said it will no longer offer a $9.99 a month plan that allows members to stream an unlimited number of movies over the Internet and to rent one DVD at a time. In its place, Netflix subscribers will have to pay $15.98 a month for a plan that combines an existing $7.99-a-month streaming-only movie service with a new $7.99-a-month DVD-only rental plan that lets them check out one disc at a time.

A Netflix company blog announcing the change quickly filled with hundreds of complaints from customers over the price change's magnitude, which is far larger than the price increases Netflix has announced in the past. The move seemed to impose a stiff financial penalty on the many Netflix customers who have switched to watching most of their Netflix videos over the Internet while still occasionally getting DVDs in the mail from the company's much-larger selection of titles on the disc format.

Dan Rayburn, an analyst at research firm Frost & Sullivan who follows digital media, said the move "makes no sense," predicting it will push people like him who pay $9.99 a month for Netflix streaming and DVD services—often leaving a red DVD envelope from the company unopened for months—to switch to the company's $7.99 streaming-only plan. Mr. Rayburn said customers that make such a switch can rent DVDs from kiosks run by Coinstar Inc.'s Redbox and others for $1 a night when they can't find a title on Netflix's streaming service.

"They were getting an extra $2 a month from me," he said. "It's free money for them."

Netflix spokesman Steve Swasey acknowledged some members will be upset over the price increase. He declined to say whether Netflix expects most customers to switch to the streaming-only plan. "We still believe it's a terrific value," he said of the new $15.98 plan.

In its blog post, Netflix said the price change was prompted by the continuing popularity of the DVD format among consumers. "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," the company said in the post.

Netflix Chief Executive Reed Hastings has made it clear he sees Netflix's streaming service as the future of the company. Netflix isn't even bothering to launch DVD rental services as it expands its streaming service into new territories outside the U.S., such as Canada and Latin America.

Mr. Hastings has said that Netflix favors the shift to online delivery of movies because the company's costs to stream movies are much less than the postal costs for transporting a DVD to customers in the mail. However, the company is also spending an increasing amount to license online rights to stream movies and television shows.

While Netflix's streaming service has become a huge hit with customers, helping the company surpass the 23 million-member mark during the first quarter, its online library of titles is still much more limited than its DVD catalog, though Netflix won't say how much less. Netflix's online selection of new releases is considered weak, since rights to many studios' films are tied up by long-term deals between the entertainment companies and traditional distributors like Time Warner Inc.'s HBO.

Write to Nick Wingfield at nick.wingfield@wsj.com

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

[rhino17]

I feel the same, how stupid

[Harrisment]

Physical media is dead and has to be far more expensive to maintain for Netflix. I think this is a smart move on their part.

[ima_drummer2k]

Just got the email.

Not sure which one I'll stick with and which one I'll cancel. The DVD option has an endless selection but who wants to wait 2 days to get your movie? And the streaming option is awesome, but the selection SUCKS ON ICE.

[DudeWah]

Sucks, because instant queue generally blows.

[SamFisher]

F-that, I just got the email, the streaming selection blows.

[moestavern19]

The streaming selection is nice if you like TV shows, but awful for movies. They rarely have anything above B movie quality, and if it is, it is usually something you'd be seeing on a movie package like Starz.

I wonder why they don't just charge something like 17.99 per month for ultimate access to everything they have via streaming.

I know I'd probably pay something close 17-20 bucks a month for unlimited streaming capabilities for their entire catalog.

[DreamShook]

We knew this was going to happen; Netflix is too good a service to just stay at such a low price. Lets hope they just try to expand the streaming movie Library in the future.

[DreamShook]

Originally Posted by DreamShook We knew this was going to happen; Netflix is too good a service to just stay at such a low price. Lets hope they just try to expand the streaming movie Library in the future.

Might have to check out Hulu plus if I'm only going to be streaming.

[Lady_Di]

got the email too...

i changed to DVDs only. apparently, they have not caught the wind of subtitles for streaming tv/videos.

[droopy421]

Yeah just saw the e-mail netflix sent. I really liked having them both for $10 because then I could always watch a decent movie that I couldn't find online and the streaming had a lot of the TV shows I normally watch. The instant queue selection isn't awful but its not good either, especially when it comes to movies. Guess I'll just drop the service once September rolls around.

[JayZ750]

Originally Posted by moestavern19 I wonder why they don't just charge something like 17.99 per month for ultimate access to everything they have via streaming. I know I'd probably pay something close 17-20 bucks a month for unlimited streaming capabilities for their entire catalog.

because they can't. they are in contracts that don't allow them to do so. and from what i've read, they are going to take a serious blow to their P&L when those contracts come up.

According to Michael Pachter, an analyst at Wedbush Securities, Netflix's content costs could rise from $180 million in 2010 to $1.98 billion in 2012.

I'm guessing this is a move to get in front of the uncertainty surrounding their upcoming contract negotiations. They have clearl seperated streaming and DVD options.

I'm not sure what we'll do. Like everyone, we really like the streaming... ABSENT the complete lack of quality current movie content.

[Yonkers]

I just switched to the streaming only option since I still have the very first DVD they sent me sitting in a drawer. I've just never used it.
Seems like most people are doing either or instead of opting for the 60% increase in price.

[LonghornFan]

This does not concern me in the least. I make it rain at Subway. I wipe my dogs ass with $20's. I might even make another account just to get rid of some of my extra money.

[JunkyardDwg]

Aww crap. Might be worth it to go to streaming only and use the redbox.

[DreamRoxCoogFan]

I'm dropping the service.

[what]

Unfortunately for me, I'm pretty much hooked on their 1 movie out service. Yeah, it sucks, but netflix provides an awesome alternative to cable which I've ditched. Screw you, netflix.

Sincerely,

what

[DaDakota]

I just joined this week, lol....and got it installed on all the Game systems, IPads, Iphones, DVD players in the house...and now.....this....awesome !

DD

[DieHard Rocket]

This does not look good for their ability to offer newer content on the streaming service. They should be planning as if streaming will be their primary service, but they're still thinking in terms of DVD postage costs.

There are more and more people everyday that only care about the streaming. They were happily paying 9.99 for it. Now, Netflix just screwed themselves out of $2 on each of those customers, because the vast majority of those streaming customers are going to cut off the DVD service. And the DVD customers will only dwindle over time. Not a futuristic move at all.

[what]

I heard that one of the reasons hbo pulled their content from netflix was because hbo thought they were too cheap. I dunno but if I had to guess this might have something to do with the price hike.