Netflix Price Increase

[Corey]

http://blog.netflix.com/2011/07/netflix-introduces-new-plans-and.html

 

 

 

Jessie Becker, here to share two significant changes at Netflix with you.

 

First, we are launching new DVD only plans. These plans offer our lowest prices ever for unlimited DVDs – only $7.99 a month for our 1 DVD out at-a-time plan and $11.99 a month for our 2 DVDs out at-a-time plan. By offering our lowest prices ever, we hope to provide great value to our current and future DVDs by mail members. New members can sign up for these plans by going to DVD.netflix.com.

 

Second, we are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both. With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail.

 

So for instance, our current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

 

Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month

Plan 2: 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). For new members, these changes are effective immediately; for existing members, the new pricing will start for charges on or after September 1, 2011.

 

Why the changes?

 

Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan. At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. 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. Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering. Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix.

 

Now we offer a choice: Unlimited Streaming for $7.99 a month, Unlimited DVDs for $7.99 a month, or both for $15.98 a month ($7.99 + $7.99). We think $7.99 is a terrific value for our unlimited streaming plan and $7.99 a terrific value for our unlimited DVD plan. We hope one, or both, of these plans makes sense for our members and their entertainment needs.

 

As always, our members can easily choose to change or cancel their unlimited streaming plan, unlimited DVD plan, or both by visiting Your Account.

 

 

 

 

 

gayyyyyyyyyyyyyyyy

[vke]

Oh well, an extra 4 bucks month won't break the bank.

[Krayzie]

It's an extra six. Going from 10 to 16. Plus taxes. It'll be over 20 dollars now. Cancel the stupid dvd's now and just use Redbox when I want a dvd.

[RoosterCogburn]

Im going to cancel my dvd and blu-ray subscription, most of the time they sit around for weeks before i realize i need to send them back. Streaming suits my needs just fine.

[NoGooD]

Sweet...looks like I'm going to be canceling my netflix acct. Unless they start getting DVD's in at the same time the box stores do theres not much else going on unless your a film history fan.

 

Now what to do with that extra $10/mo. Hmmmm...

[Krayzie]

Also now that they are raising their price's they should be adding more to the streaming library, in my opinion at least. ESPECIALLY new movies.

[Corey]

Now what to do with that extra $10/mo. Hmmmm...

 

porn subscription ;D hehe

 

This is the second time this year they have raised the price if i remember correctly. It was just 2-3 dollars last time i think. but expanding their instant watch library would be nice. I am not into tv series so my picks for decent movies to watch streaming have almost been depleted. I don't use it as much as i used to so I may end up canceling that to save $8

[Timberwolf]

lol netfix .... never used it ... blockbuster is gone out of bussiness ..... And i freestream movies ...I remember the early 80's and pay per view with a descrambler box ...Music i can record anything playing on my speakers on my computer and run my free program to mix remix and mash up songs or sounds and change formats . mp3 mp4 wav etc etc

 

for every bull poop idea some big chair dummies think of over charging someone there's someone else there to make it better

[Pegasus™]

I have unlimited streaming, but alot of times when I do search..they're not even available..only on DVDs.."ugh"

[TulsaGeoff]

I tried the DVD subscription, but meh. Streaming is all I need.

[Thoracic]

After a quick view of Netflix recent 10k I can see why they split the plans and increased prices.

I think they have a classic case of supplier concentration risk in the streaming segment (supplier power is one of Porter's 5 forces which is a classic strategic management theory).

 

The streaming segment has cost concentration from Amazon Web Services and broadband cost pressure from the cable companies who indirectly compete with Netflix. (no incentive for Cable companies to lower costs for Netflix). The US Postal service is a supplier risk for the DVD's, and their least expensive way to send DVD’s.

 

By splitting the services they reduce the risk in each given segment. Given their net margin is approx 8%, increases in postal costs, broadband or Amazon Web Services puts them in a precarious position. In reality they should have never bundled them but from a strategic standpoint it worked to bring in the subscribers and their stock has done VERY well. (I don't own any shares).

 

Personally I don't mind as I'll just switch to the DVD plan, I can see customers bailing though but other competitors will have the same supplier (costs) risks and will eventually raise prices to an appropriate level.

[bell reavue]

Also now that they are raising their price's they should be adding more to the streaming library, in my opinion at least. ESPECIALLY new movies.

 

Agreed, I love the streaming for TV shows but they need to put new movies on there. I'm paying for the DVDs but I only watch, what, 2 a month? Most of the movies that stream are crap.

[Penisland]

two words

 

Pirate BaY

[daredevil]

Never had the subs for Netflix.. all time old movies.