Netfux

[CountDeMoney]

So I'm sure many of you Netflix customers got the same email I did the other day:

Dear Sucker,

We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.
Your 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
Your price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). You don't need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.
These prices will start for charges on or after September 1, 2011.
You can easily change or cancel your unlimited streaming plan, unlimited DVD plan, or both, by going to the Plan Change page in Your Account.
We realize you have many choices for home entertainment, and we thank you for your business. As always, if you have questions, please feel free to call us at 1-888-357-1516.
–The Netflix Team

Netflix raises DVD, streaming plan price by 60 percent
Lisa Richwine
Reuters

LOS ANGELES (Reuters) - Netflix Inc hiked monthly prices for customers who use both its mail and online services, a move that could steer users toward its growing Internet streaming service.
The company said it was raising by 60 percent the monthly price of a plan that lets subscribers watch unlimited movies and video online and get DVDs by mail.
Customers in the United States who want both services will pay $7.99 per month to rent one DVD at a time plus $7.99 for unlimited streaming, or a total of $15.98 per month, the company said on Tuesday. The previous cost of this plan was $9.99 a month.
The changes take effect immediately for new subscribers, and in September for current customers.
Netflix, the top movie rental service with 23 million subscribers, recently has focused on its streaming service for televisions and mobile devices and downplayed its business of mailing DVDs in red envelopes.
The company faces growing costs for mail shipping and building its streaming library plus competition from online players such as Amazon.com Inc and Hulu.
The company separated the pricing for mail and streaming services "to better reflect the costs of each and to give our members a choice," Netflix Vice President of Marketing Jessie Becker wrote on a company blog post.
The company also said it saw continued demand for DVDs.
"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," Becker wrote.
Merriman Capital analyst Eric Wold said he thought the company was aiming to "steer people away from DVDs" by raising the cost for the combined service.
The $6-per-month price hike could lead some customers to downsize to a streaming-only plan and perhaps visit a Coinstar Inc Redbox kiosk for an occasional DVD, said Wold, who has a "neutral" rating on Netflix shares.
Netflix said its $7.99 option for one DVD at a time was its lowest price ever for DVD-only service. The company also said it was creating a separate management team to focus solely on DVDs by mail.
Its Canadian service is streaming only, and the new Latin American service also will be streaming only.
Netflix shares gained 0.2 percent to close at $291.27 on Nasdaq.

Netflix price rise draws user ire, investor glee

LOS ANGELES (Reuters) - Netflix Inc's hefty price increase provoked an unprecedented outpouring of outrage on the Internet, but Wall Street cautiously welcomed the move, sending its shares up nearly 3 percent on Wednesday.
Thousands of subscribers complained on Netflix's official blog with many threatening to cancel subscriptions after the fast-growing video service raised prices by up to 60 percent for users of both its streaming andDVD-mail service.
Many said they would consider options such asHulu, the Internet video service owned by Comcast Corp NBC Universal, News Corp, Walt Disney Co and Providence Equity Partners, or even Redbox, whose once booming kiosk-rental service had been eclipsed by online, instant Web offerings.
"Who's genius idea is this crap?" said one comment on the Netflix blog, which promised to cancel service. "Your streaming selection sucks and the Red Box is looking better and better these days!"
The higher prices clearly stirred passions among the company's subscribers, but Netflix brushed off the criticism as expected from a vocal minority.
"We knew there would be some people who would be upset," company spokesman Steve Swasey said.
The increase amounts to $6 a month for one DVD at a time plus unlimited streaming.
"To most people, it's a latte or two," he added.
The company expects some cancellations, Swasey said, but he declined to say how many.
Some industry analysts argued the higher prices should make up for cancellations, in part by driving customers toward more profitable Netflix plans.
Subscribers who cancel are likely to be in lower-priced plans, with one DVD at a time, who turn in more DVDs, saidGoldman Sachs analyst Ingrid Chung.
"Gross margins should benefit as we believe that the majority of lower-priced (subscribers) were less profitable for Netflix," Chung said in a research note.
Lower-priced subscribers also might be drawn to the streaming service, "which has very incremental margin," wrote Chung, who has a "buy" rating on Netflix shares.
The new prices take effect immediately for new subscribers and in September for current customers.
Netflix's price rise comes as it finds itself writing increasingly large checks for the rights to the movies and TV shows its customers expect to find from its streaming service.
In one such deal, Netflix renewed on Wednesday a multi-year agreement with Comcast Corp's NBC Universal, giving it rights to stream previous season hits such as"The Office" and Parenthood" from NBC and series, including "Keeping Up with the Kardashians" and "Psych", from its cable networks. The financial details were not disclosed.
Netflix said on Tuesday it was raising by 60 percent the monthly price of a plan that lets subscribers watch unlimited movies and video online and get DVDs by mail.
The price for unlimited streaming plus rental of one DVD at a time will run about $16, up from about $10. Subscribing to just streaming, or just one DVD at a time, costs about $8.
One comment on the Netflix blog was more accepting.
"If you can improve your streaming selections it would be a benefit. I now pay the price of both anyway so I don't see a downside for me," wrote a person identified as "Scott."
While customers vented on the Netflix blog andFacebook page, the company's shares rose 2.6 percent to close at $298.73 on Nasdaq.

[Grey Fox]

Complaining of unlimited for 15$ a month.

You don't know how lucky you are.

[DontSayBanana]

Complaining of unlimited for 15$ a month.

You don't know how lucky you are.

Seriously.  Unlimited for both for less than $20 is still a steal.  A company running at that price point basically has to raise their prices sooner or later in order to turn a profit.

[Eddie Teach]

Complaining of unlimited for 15$ a month.

You don't know how lucky you are.

Depends how often you use it. I'm not sure if either plan is worth it for me with the increase. The dvds pull even with Redbox(and with better selection, except you have to wait a couple extra months for newest ones) but that's if you want to watch a movie every 3-4 days. If you sometimes go a week without watching one, those 7-8 movies a month can turn to 3-4 pretty easily. The online plan is subject to their very limited selection of newish stuff. Also, I've been a member only a year and this is the 2d rate increase already. 

[HisMajestyBOB]

Complaining of unlimited for 15$ a month.

You don't know how lucky you are.

Seriously.  Unlimited for both for less than $20 is still a steal.  A company running at that price point basically has to raise their prices sooner or later in order to turn a profit.

And now that Blockbuster is out of business, they can afford to.

[grumbler]

And now that Blockbuster is out of business, they can afford to.

Blockbuster isn't out of business.  But it has never been competitive with Netflixs, and is less so now that it is smaller.  However, Dish has plans for expanding BB's online offerings, so Netflixs should take care to keep their customers happy and loyal.  Raising prices without any offsetting increase in service isn't the way to do that (though it may be necessary if they are to make a profit).

[Josquius]

You'd think there'd be some sort of discount for taking them both.

[derspiess]

Blockbuster got ridiculous with the assorted crap they were trying to sell in their stores to desperately bring in revenue (individually packaged pickles?  Really??).  They put a lot of their electronics stuff on clearance a few weeks ago, and I helped one of my stores reduce their inventory, so I have enough batteries to last me a few years plus a buttload of small electronics crap to use as stocking stuffers.  Only thing I regret buying was the official Blockbuster streaming (Roku wanna-be) set-top box.  It was only $10, but since it had SD card and USB slots I thought it would do more than

Anywho, I hope Dish finds a way to keep Blockbuster's physical retail presence in some way.  The location near me seems to do a lot of business (same was true with my Circuit City before the chain went under).

Re: Netflix, I dropped from the 2 disc to 1 disc plan in December because we had gotten to the point where we were only watching one disc movie every couple of weeks.  With the pricing change we've been bumped back up to what our 2-disc plan used to cost.  So at this point, screw it-- I'm going streaming-only for $7.99/mo & If I really need to rent something I'll start doing the Redbox thing.  Or maybe I'll throw Blockbuster a frickin' bone every now & then and rent from their store.

IIRC, Netflix's rationale for increasing their pricing was their increasing cost of licensing for streaming content, which I believe.  But then why didn't they raise the price for streaming-only?  That only encourages people like me who under-utilize the disc service and watch a lot of streaming content to drop the disc service & go streaming only.  Maybe that's their long-term plan?

Netflix streaming is an awesome service.  I can stream content to my PCs, Xbox 360/PS3, my parents' TV and now my phone.  I'd probably pay 2x or more for the streaming service.  But it's good to see competition out there.  If Amazon improves their streaming content, I might take the plunge and sign up for Prime.  And Hulu Plus on Xbox 360 was sweet while I had my trial subscription.

[Grey Fox]

IIRC, Netflix's rationale for increasing their pricing was their increasing cost of licensing for streaming content, which I believe.  But then why didn't they raise the price for streaming-only?  That only encourages people like me who under-utilize the disc service and watch a lot of streaming content to drop the disc service & go streaming only.  Maybe that's their long-term plan?

It is. Netflix expanded to Canada with streaming only & there's no plan for the disc based toe ver come here, iirc.

[DontSayBanana]

Blockbuster isn't out of business.  But it has never been competitive with Netflixs, and is less so now that it is smaller.  However, Dish has plans for expanding BB's online offerings, so Netflixs should take care to keep their customers happy and loyal.  Raising prices without any offsetting increase in service isn't the way to do that (though it may be necessary if they are to make a profit).

Seriously.  My personal feeling is that this is going to have a similar effect to megaplex movie theaters- one titan of a service deliberately operates at a loss to choke out the competition, then it begins to die a slow death.

With the megaplexes, one theater took over the market of a whole community's worth of movie theaters, they operated at losses at the beginning, choked out the smaller privately-run theaters, and then found the public was less than sympathetic when they had to jack up their prices to cover their massive operating expenses (property taxes, many more reels leased per theater, more employees, sky-high utilities, bigger bulk insurance policies, and parent-provided vending contracts for concessions requiring much more in transportation costs).

In the case of Netflix, a lot of the problem is that they still deal in physical media; a certain percentage of the DVDs and Blu-ray discs (I'd wager a higher percentage of the Blu-rays, because of their higher cost) will be lost simply because they're not returned.  In addition, physical media also equals storage and transportation, requiring more employees and more resources.

[derspiess]

In the case of Netflix, a lot of the problem is that they still deal in physical media; a certain percentage of the DVDs and Blu-ray discs (I'd wager a higher percentage of the Blu-rays, because of their higher cost) will be lost simply because they're not returned.  In addition, physical media also equals storage and transportation, requiring more employees and more resources.

But that also brings in a huge chunk of revenue.  Whatever the future physical media has vs. streaming, physical DVDs aren't dead yet by a longshot.  If Netflix drops its core service too soon, that could be suicide.

[grumbler]

But that also brings in a huge chunk of revenue.  Whatever the future physical media has vs. streaming, physical DVDs aren't dead yet by a longshot.  If Netflix drops its core service too soon, that could be suicide.

Yeah.  I think we overestimate the percentage of people with connections fast enough to make streaming viable.  For a lot of people, it is a physical disk or nothing.

[garbon]

I think I'm going to stopping sharing the account with my sister and get my own streaming-only account. She's likely to cancel hers.

[derspiess]

Yeah.  I think we overestimate the percentage of people with connections fast enough to make streaming viable.  For a lot of people, it is a physical disk or nothing.

And some are just too set in their ways to adapt quickly.  I bought my parents a Roku box 2 or 3 Christmases ago, set it up for them, and showed them how to stream Netflix movies, thinking that they'd be all over that.  But they almost never used it.  My dad got a nice new Samsung TV that has Netflix streaming built-in, but I swear they'd rather wait to receive a DVD in the mail than watch it instantly.  I know they understand how it all works, and they definitely have a fast enough internet connection, but they just can't change their routine.

Maybe that's a generational difference, but I've also known younger people with whom the movie streaming thing just doesn't 'click', despite them having the complete ability to take advantage of it.

[derspiess]

I think I'm going to stopping sharing the account with my sister and get my own streaming-only account. She's likely to cancel hers.

I'm half tempted to set up a seperate account just for my son at some point.  I'd like for him to be able to watch Netflix movies in his room, but I want to limit his instant queue to kid-friendly stuff and not have my wife's stupid zombie movies showing up in the queue or as suggestions.  And it looks like the profiles function only separates DVD queues, with no way to do that for instant.