Netflix Price Hike Details: Unlimited Streaming and DVD Plans Now Separate

Published 3 years ago by , Updated July 13th, 2011 at 6:53 am,

Netflix Streaming Price Hike Details Netflix Price Hike Details: Unlimited Streaming and DVD Plans Now Separate

For several years, the exceptional value of Netflix streaming and mail-order DVD rentals has caused near-universal shuttering of movie rental shops – most notably longtime king of the mountain, Blockbuster Video. The growing Netflix streaming library, included as a complimentary feature in all but the “budget” plan, is a major draw for movie and TV fans alike – and now appears on a myriad of hardware platforms including select Blu-ray players, PlayStation 3, and Xbox 360, among others.

However, on September 1st, the Netflix streaming honeymoon is over – as the service will now be charging a separate fee for the feature representing a 63% price hike for users on the 1 DVD + unlimited streaming plan.

On a recent post to the official Netflix blog (as well as customer e-mails), Jessie Becker, Netflix Vice President of Marketing, introduced a series of controversial changes to the company’s service plan offerings – sparking an outcry of angry responses on Facebook and Twitter.

Before we breakdown the changes, it’s important to note the new prices/plans are effective immediately for new customers – and will go into effect for current members on September 1. Becker had to know that the changes would be met with frustration because the lead-in to the announcement was exceptionally brief – i.e. “Jessie Becker, here to share two significant changes at Netflix with you.”

The Netflix executive then went on to break down the changes – which represent a significant price increase on a service that (for many) is still a significant value:

“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.”

“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.”

As a result, members who enjoyed the $9.99 a month membership (unlimited streaming and unlimited DVDs) will now subscribe to two plans: $7.99 for unlimited streaming (no DVDs) plus $7.99 for unlimited DVDs, 1 out at-a-time (no streaming) – totaling $15.98.

The changes are couched in a consumer-friendly angle, where Netflix seeks to offer lower prices to DVD-only customers (since they won’t be using streaming) as well as offer more consumer-specific customization (for customers that still want streaming – but might not be interested in DVDs).

It’s obvious that (in the long run), Netflix will continue to invest more and more resources in the streaming end of their business – given the especially high overhead associated with mail-order rentals and distribution centers. No doubt, the move is primarily fueled by the company’s interest in pushing more people into their streaming service (which has a significantly lower operating cost). However, in recent years, studios have started demanding a lot more money for streaming rights – since it’s quickly becoming a preferable method for savvy movie and TV fans as well as much more widely utilized by mid to late adopters. As a result, they’ll need a more effective revenue model for that side of the service – so they can change unlimited DVD and streaming prices over the years without having to alter a core package.

Netflix DVD Envelope Netflix Price Hike Details: Unlimited Streaming and DVD Plans Now Separate

Admittedly, for many consumers, the announcement came out of nowhere and, as a result, left an especially bad impression on some members – due mainly to the severity of the cumulative price hike.

That said, Netflix still represents a great deal for movie and TV fans – especially as the streaming library continues to grow. Considering the increasing cost of catching a movie in theaters, the convenience of both the DVD and streaming services – not to mention the value of discovering and testing-out obscure films and TV shows without risk (since you won’t spend money on a dud) – even for $16.00 a month, there’s next-to-no current competition that can compare to the Netflix offerings. While the streaming option certainly has a lot to offer (and will continue to grow), the Netflix DVD library still contains a lot more titles than the online-only option. Hopefully, along with the price hike, the company will continue to secure more high-profile program offerings for the streaming service (such as the recent announcement of Mad Men seasons 1-4 on Netflix).

In the end, consumers have a couple of options (obviously neither will be preferable to the current model).

  • Live with the price hike – Netflix is a business and businesses have the right to raise their prices (as high as they see fit) – even if it’s frustrating to consumers.
  • Select a different plan (or even cancel your membership) when the price hike arrives on September 1 – Consumers vote with their wallets. If the updated prices seem unfair, or you feel taken advantage of, give Netflix less money. If enough people join in, you can bet Netflix will be a little more careful the next time they raise prices (and they will).

Follow me on Twitter @benkendrick — and let us know what you plan to do with your Netflix account in light of the price hike.

Source: Netflix

77 Comments

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  1. Well, goodbye Hulu Plus! No way i can afford you now.

  2. This is funny because I actually JUST switched from 3 DVDs and unlimited streaming to 2 DVDs for $7.99 with no streaming. I cancelled the streaming because the movie selection on netflix leaves something to be desired. And by leave something to be desired, I mean it sucks. It’s a horrible, horrible service that I won’t pay for until they get it to where it needs to be. By the way, everyone, the long term plan for netflix is to eventually transfer EVERYTHING to streaming…just the facts. No more red envelopes. It’s no big secret either, the corporate officers at netflix will tell you the same thing.

    • Yeah the movie selection sucks bad. The only reason I keep it is for All of TV shows that would take me FOREVER to get through using the DVD by mail service. Not to mention Netflix Streaming is all I will ever need for my 3 year old daughter.

  3. I had axed the DVD by mail a long time ago and have just used streaming. Streaming Netflix+Hulu and redbox everything else. I have a feeling a lot of people will be cutting their DVD by mail subs. For good reason.

  4. A more detailed response to follow, but I have to ask: Ben (author) & Aknot, are you stooges for netflix ??
    No one I know is ok with the increase except for people who have something to gain from this change.

  5. A more detailed response to follow, but I have to ask: Ben (author) & Aknot, are you stooges for netflix ??
    No one I know is ok with the increase except for people who have something to gain from this change.

  6. A more detailed response to follow, but I have to ask: Ben (author) & Aknot, are you stooges for netflix ? No one I know is ok with the increase except for people who have something to gain from this change.

    • Nope. Let me ask you something MattinRC do you know what it takes to run a business? Do you know for a fact why Netflix is doing this? Do you NEED Netflix?

      The answer is probably NO to all of those questions. So since you dont NEED Netflix a price increase should have you asking yourself can you AFFORD Netflix and do you want Netflix.

      If you can afford Netflix and WANT Netflix the increase should not bother you.

      However if you can afford Netflix but dont want it or have another option to persue you should cancel Netflix and not worry about it.

      Simply said and done I want Netflix and can afford it at this time. If there comes a time that I feel what I am paying for is to expensive or is not worth the cost or I cant afford I will drop it.

      However until that time I am perfectly fine (will be dropping the DVD as we dont really use it) with it.

      Much like when Blockbuster went to their over priced model I stopped visiting them and went to Netflix. I didnt complain, whine or moan about it. I said pffft its not worth the cost when there is something less expensive that suits my WANTS.

      Who do you know that has something to gain from this change? People who understand business should understand it. They may not like it but they can still be ok with it. Do I want to have an additional $7 in my pocket a month? Sure…. but I understand and am ok with Netflixs increase as I can afford it, think it is still worth it and understand why tehy might be doing it.

      • AKnot, I have plenty of friends who are successful in business, and not one of them ever gouged their customers with these rate hikes without at least offering something in return. One of them, a successful food importer, told me that if his business ever raised their prices like this and provided such flimsy excuses as to why, they would lose customers and ultimately damage their name. That’s what Not-flix has done. Everyone knows that Notflix is in trouble, and that their middle-man business model only works if the studios play nice. It doesn’t help when they damage their name and alienate customers with three rate hikes over the past 12 months. I have a business as well and could never envision raising prices like this without a better explanation or attempting to offer something in exchange. The numbers simply no longer work.

        You are correct that we have choices – I’m making the choice to drop my service on August 31st and return to Blockbuster for their $.99 and $1.99 plan.

        I strongly encourage you to consider the ‘value’ of Notflix in relationship to other things. Under the new regime, I would be paying about $300 per year on just this. I can do better with my money, and so can all of you.

        • See that is the niche Netflix has and as such can do what your friends could not.

          Of course your friends need to stay competitive. That is business however when you really have no competition raising your prices will get a bunch of people griping but in the long run I dont see it affecting them.

          In looking comparatively at all options Nerflix is still the better deal.

          Again its not like this service is a need. So it does not bother me. If it was something that I needed and prics were raised just cause they could then I would have issue. However I can accept the increase and I have no problemn with it. Everyone elses mileage may vary.

          “Under the new regime, I would be paying about $300 per year on just this.” Really? With DVD I would be paying under $200. Since I am choosing not to get DVDs it will be under $100. I dont see how you could pay that much unless you choose to…. You cant change change to a different model?

          The value is $7.99 a month to have the ability to watch different shows and movies on multiple TVs (and computers) in my home whenever I want.

          Just last month we watched with our son 2 Abbot and Costello movies I hadnt seen since I was a kid not to mention some decent “kung fu” movies about 20 episodes of Dirty Jobs, a few of Futurama and for myself a scary movie or two. After briefly watching others and changing my mind. My niece and nephew was also over (either last month or the month before) and watched a ton of Naruto(sp?) episodes. Previously I watched the complete X-Files and most of Sliders….

          All of that for $7.99 a month…… Sorry the value of Notflix as you so put it is still a great deal in my mind, my pocket and my famlies entertainment. Again as stated above others mileage may differ.

  7. I have had Netflix for quite awhile now, and have found their services overall to be one of the most competant and reliable companies I have ever found. To save money, I dropped my cable entirely and saved a bundle with Netflix, and there is so much more to watch! I have both the DVD by mail and the Roku/Netflix streaming, and love it! My whole family enjoys it, and we will keep it. This latest price-hike is a bit of a big gulp to swallow all at once, but we will still keep it. However, despite the fact that they have a wonderful and smartly-run company (until this latest price jack-up, anyways), my only complaint is for months they have been saying in the media how they were going to increase the number of titles available for streaming, and while they do have a great over-all selection between the two methods & number of things available, they do not seem to be increasing the titles available nearly as fast as they implied. I hope this will speed up in the future, as my family currently has about 300-plus titles on our by-mail list, plus alot on our save/not available yet but may come soon list, and about 6o or 70 on our streaming list. Somehow we thought more of that by-mail list would have also been available for streaming. Netflix has an excellent catalogue, but they need to catch up to some things besides just big budget-buster price-raises. (If it is any comfort, Netflix, I do understand that when studios raise their rates, as well as the post-office, you may be forced to follow suit. Maybe you could offer some package-reduced-rate plans that are cheaper if you commit for a long time like cable did??). I still love Netflix, but like the Nazareth song says, “Love Hurts!”.
    For the home-movie buyer, there is a huge catalogue available by mail or on the internet for the movie purchaser at http://www.moviesunlimited.com that you may want to check out!

  8. Its 15.98, Unless you get Blurays then Its 17.98 a month.

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