Want more evidence that Netflix is refocusing its business on streaming media? Look no further than Tuesday's announcement that it would separate streaming media and DVD plans. This change results in a 60 percent rate increase for many.
Whereas subscribers could formerly stream an unlimited amount of content and have one DVD out at a time for $9.99 per month, the cost would now be $15.98 per month. Each option would be charged at a rate of $7.99 individually.
If subscribers wish to have a second DVD out simultaneously, the rate increases to $11.99 per month, or $19.98 when combined with streaming. Current members would see the increase beginning on September 1 unless they take action, while new members would pay the increased price immediately.
Why the Change?
The change is due to the costs of running its business, Netflix claims, while responding to subscriber requests for more flexible plans. "By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members," says Operations Chief Andy Rendich.
Netflix's streaming option first debuted in 2007. At that time the service only had about six million members. The feature has proven to be popular among subscribers, and could be why subscriptions have increased nearly four-fold to 23 million today--obviously also increasing operating costs.
The company had been treating DVDs as a $2 add on to the unlimited streaming plans since its last price hike in November. However, it soon realized that DVDs remain a popular feature, and that strategy didn't make "great financial sense" for the company.
I do consider this change to be somewhat unfortunate given the state of Netflix's streaming offerings. At least for me--in most cases--I often find the selection woefully inadequate for what I'm looking to watch. So putting it on even pricing with DVDs doesn't make sense to me.
You'd think if it costs the same, it should offer the same right? Well it doesn't. But then again, as far as DVDs-by-mail go, Netflix is pretty much the only game in town now that Blockbuster is all but gone. Oh well, there's always Redbox.