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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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RE: Morons
By Mitch101 on 7/12/2011 9:13:13 PM , Rating: 5
Im ok with this. Im a streamer and could care less about getting a physical disc. I though I did at first but really the discs that arrive in the mail I find useless and return them without even watching them most of the time. So Netflix is just risking the disc in the mail for only $2.00 more.

Im also all for Netflix making a profit too they never once screwed around like Blockbuster did with me.

Besides $2.00 less is two redbox rentals at my local gas station if needed.

RE: Morons
By jeepga on 7/12/2011 10:39:30 PM , Rating: 2
Netflix had an 88% increase in profit last reporting cycle. They're making good profits. This is their second price increase in a year.

I couldn't care less if there is a reason behind it. It's unacceptable and I will be cancelling my subscription before the increase goes into effect.

RE: Morons
By Mitch101 on 7/12/2011 11:08:16 PM , Rating: 5
Its a $2.00 price cut for me.

Not long ago the only option was DVD rental no streaming and it cost more than $8.00.

I would also bet that increase was due to Blockbusters Chapter 11 not all of them went to redbox.

I even look at Hulu+ at $7.99 and that has commercials and think Netflix is a better offer where the two compete with one another where Netflix is the $8.00 commercial free version.

I still think its a good bargain if not there is always redbox.

RE: Morons
By FITCamaro on 7/13/2011 9:42:29 AM , Rating: 1
Yeah I might take this money from cutting DVDs off and go get Hulu Plus. I'll keep streaming for now.

Netflix is risking shooting themselves in the foot here. I didn't mind the last price increase. But this one is a bit ridiculous. Charging roughly double the prior cost?

Sorry but if they were going to do this, they needed to provide reasons such as massive increases in licensing fees for movies. Put the blame on the movie industry. Not give a BS reason that amounts to "We want more money".

Now if they take this (potentially, depending how many people cancel) higher revenue and drastically improve their streaming options, this could turn into a win for them.

RE: Morons
By Klober on 7/13/2011 5:25:27 PM , Rating: 2
Yep, they will be losing $7 per month from me alone. I have the 2 DVDs at a time plan and am paying $14.99 + tax/fees (comes out to $16.38), and now they want to split it up and increase the rate to $7.99 + $11.99 per month and jack me for another $5? Kiss my you-know-what. The only reason I'm going to keep the streaming for now is because my girlfriend's kids love watching TV shows on it. Unless they improve dramatically I'm jumping ship completely when a better alternative comes along.

As an aside, they say you're paying an extra $2 per month for the DVD, yet for 2 DVDs at a time they charge an extra $5. I call shenanigans. To me that says you were paying $5+ for the DVDs and the rest for the streaming on the $9.99 plan. The reason for the + is because usually you get a discount for higher quantity, so the first DVD was likely more akin to $6-$7 per month. I hate BS marketing that just tries to excuse stupid decisions.

RE: Morons
By someguy123 on 7/13/2011 5:42:47 AM , Rating: 1
You don't care if there actually was a reason?

What kind of sense does that make? If they were forced to do it financially they should just become nonprofit and offer you movies at cost?

RE: Morons
By tastyratz on 7/13/2011 8:39:39 AM , Rating: 2
No he is saying he doesn't care because they explicitly are making very high profits and got greedy. The majority of people who buy netflix for streaming are not going to be using the dvd plan. The pr is crap, the reasoning is crap, and the viewpoint is crap. This is not selling dvd for $2 more, this is selling an additional infrequently utilized service to an existing customer base and increasing revenue/attach rates.

The price of 7.95 for streaming only is not what netflix will likely incur wit their costs (given their profit margins now) but what a panel determines their customer base is willing to pay- I bet they could make a profit selling it for 2.95... Instead of looking at it as dvd for only $2 more one could argue it's dvd for $7 more and the streaming is reduced to 2.95 in that package.

Most people who sign up for streaming are choosing the dvd service as a safeguard in case their favorite show/movie is not available streaming. This acts like insurance to lure new customers and keep short term members. They don't exactly offer a unique service here.

Maybe they should allow a "voucher" towards 1 dvd rental of 7 days per month or similar to appease streamers?

Netflix has tempted me in the past, and I do not currently have an account - but I can say for sure now I would NOT sign up. I would primarily use streaming and occasionally use rental but now find the bundle pricing of the 2 to not be a good value.

RE: Morons
By tigz1218 on 7/13/2011 8:41:58 AM , Rating: 3
How is it "unacceptable"? Was renting movies a fundamental right that I am unaware of? It's called capitalism, and when companies make mistakes, it opens the door for a competitor. Maybe that could be you. Learn from things like these how to capitalize, not get angry, and you will be a very successful person.

RE: Morons
By Hiawa23 on 7/13/2011 1:59:44 PM , Rating: 2
I agree, it is called capitalism, same with Apple, same with MS, same with Sony, same with Goodyear, & I seriously don't know how any of you would know how much money or profit this company has made, last quarter or other. Personally, I don't have an issue with it as I love the Bluray new releases, & if I had to do without one it would be the streamin feature cause the streamin movies, even though I have over 150 in my Q these are basically tv shows & old movies, of which if I wanted I could get the physical copy. If Netflix opens up the new releases without the restriction, I would love that as there would be no day wait for the physical copy. I would be willing to pay alittle more for this pay option as I love the new released Bluray, many of these not available for streamin, so there is noway I would pay for streamin only. My HDTV also has the Netflix ap on it which is cool as my TV uses less power, & heat than my PS3 or Xbox360, & i have been using it for my stremin movies lately.

RE: Morons
By rubbahbandman on 7/13/2011 12:18:20 PM , Rating: 2
I assume the reasoning behind this is reducing SG&A (Selling, General & Admin expenses) and improving cash flows.

If you take a look at their quarterly report SG&A has increased substantially, no doubt a large portion is attributed to the physical media side of their business.

It seems a bit odd that they don't offer any sort of discount for bundled packages though...

RE: Morons
By Denigrate on 7/13/2011 9:54:38 AM , Rating: 4
I went to the streaming only option when they offered it, so this has zero effect on me. I hate physical media at this point as it's simply something else to keep track of around the house.

I'd guess Netflix wants to move to streaming only, and this will help get them there.

RE: Morons
By Stuka on 7/13/2011 1:07:45 PM , Rating: 2
I don't know how you do it. 9 times out of 10 the movie I want to watch is not available instantly. Last week I wanted to watch Transformers 2, not available. But thank god just about every B-movie, campy horror or 1940s western is available instantly. I don't get it.

RE: Morons
By theslug on 7/13/2011 1:12:24 PM , Rating: 2
It's good that their streaming service actually has a lot more than what you just described.

RE: Morons
By Reclaimer77 on 7/13/2011 1:27:26 PM , Rating: 3
Last week I wanted to watch Transformers 2

Uhhh, why?

RE: Morons
By JediJeb on 7/13/2011 2:55:02 PM , Rating: 2
I don't get it.

The movie studios are to blame for this, not Netflix. The studios want you to stream all the old westerns and B movies that is how they make money off them because no one would actually spend $15 to buy one, and they make more money streaming those than selling them in the bargain bin for $3. Something like Transformers 2 they can still sell at Wal Mart for $10 or more, why would they want you to be able to stream it and make only a few cents per copy?

Just thank goodness that the MPAA doesn't get their way or you would be paying $7 every time you stream a movie because that is what they would have made at the box office and you got to support those starving actors you know.

RE: Morons
By icanhascpu on 7/19/2011 3:33:02 PM , Rating: 2
What will help them get there is having content that matches the physical DVD service. Not upping the cost and adding little.

"I modded down, down, down, and the flames went higher." -- Sven Olsen

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