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Netflix is making two big changes to its plans and prices that will either prove to be successful, or rub subscribers the wrong way

On-demand video streaming and video rental-by-mail company Netflix has enjoyed bundles of success recently, reporting 23.6 million subscribers worldwide this year. But now, Netflix is making two big changes to its plans and prices that will either prove to be successful, or rub subscribers the wrong way.

The first new change is the introduction of DVD-only plans. Customers have the option of paying $7.99 for one DVD out at a time, or $11.99 for two DVD's out at a time, but the plan does not allow video streaming to be included.

The second new change is the separation of video streaming and DVD plans. While current plans bundle the two together for $9.99 per month, the new plans will be either DVD only or video streaming only. A DVD-only plan with one out at a time costs $7.99 per month, and a video streaming-only plan costs $7.99 per month. No longer can they be bundled together.

If a subscriber wants both plans, the monthly cost is $15.98 per month.

According to Netflix, the reason for these changes is to meet demand for DVD by mail, and the current $9.99 plan (which is $7.99 for streaming and an extra $2 for DVDs by mail) does not make sense financially. Netflix believes DVDs should not just be a $2 add-on cost, but a broader, individual plan of its own. Also, Netflix wants to ensure the long life of DVD by mail options.

These changes are effective immediately for new members, but for existing members, these changes are effective September 1, 2011.

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Contract Fees
By Salisme on 7/12/2011 7:44:40 PM , Rating: 3
I wonder how much is behind the scenes contract negotiations with the movie industry/producers being passed on to the consumer. I can easily see Time Warner/Sony wanting their own distribution service and try to squeeze Netflix out of the market.

RE: Contract Fees
By ClownPuncher on 7/12/2011 7:58:42 PM , Rating: 2
Most of the added costs are from the added licensing fees they are paying the big studios with their new contracts. Unfortunate, because it will lose them customers, Netflix fault or not.

RE: Contract Fees
By hackztor on 7/12/2011 8:28:41 PM , Rating: 3
Actually they did not say anything about extra costs for licensing. They mentioned that they thought 2 dollar add on for DVD was not enough. In addition, if Netflix would try and stop getting exclusive content to them and not the cable companies, they could spend that on extra content. Some sources say 200 million for exclusive content. I am fine with Netflix pushing streaming only, but come on you have to have the content available before a consumer would want to do that.

RE: Contract Fees
By Modeverything on 7/13/2011 8:53:44 AM , Rating: 2
It's true they didn't say it, but it does appear to be the main driving force behind this.
Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

I still don't agree with their decision though. Considering their huge profits, there should be some other solution. Also, I think existing subscribers should be grandfathered in and current subscriptions not be raised.

RE: Contract Fees
By Dr of crap on 7/13/2011 9:50:25 AM , Rating: 2
I agree. They NEED more NEW movies to stream. The old stuff can go. IT's mostly crap. We want more a more current selection, and bigger as well.

RE: Contract Fees
By mcnabney on 7/12/2011 9:43:26 PM , Rating: 2
Actually, it is the other way around.

When Netflix agreed to delay DVD/Streaming availability after initial release to encourage DVD SALES they were given HUGE subsidies from distributors.

RE: Contract Fees
By MisterHC on 7/13/2011 12:02:52 AM , Rating: 2
Also the NBC Comcast merger has had a big effect on some of these competitors. They now control much of the internet backbone and tried to take legal action against Netflix peering partners before. They now have control over a vast amount of content and its licensing.

Netflix, HULU etc caught a lot of the conventional media providers by surprise and they seem most unhappy about the newfound competition.

"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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