Netflix is making some changes to its pricing model and having a difficult time convincing its subscribers to be happy about it. It’s a 60% price hike. People are complaining, but the company argues that the change makes good financial sense based on the foreseeable future of DVDs.
Subscribers formerly paid a flat $9.99 per month for unlimited streaming and unlimited DVD rentals, provided the subscriber had only one DVD out at a time. Other plans allowed viewers to rent more DVDs at once, but the new plan completely separates the two services into individual offerings priced $7.99 each.
Netflix principals have been devising a way to, in their words, “evolve the Netflix service so that it feels more natural to have a personal account” as opposed to a household account, a goal that is promoted by the growing use of tablets and other mobile devices to view media. This change in pricing will, supposedly, assist this goal as well, because viewers will now have a streaming only option as well as a DVD only option. Mobile viewers typically won’t bother with a DVD only plan, while that may just be what others want.
But to get both, the price is now $15.98 month, which constitutes a bit of a shock to viewers that have grown comfortable with their current Netflix habits. But really, how many Netflix subscribers use the DVD option as regularly as they take advantage of the instant streaming? I’d argue that DVD rentals are relatively infrequent considering that high-demand DVDs require such a long wait. What Netflix is doing makes sense, but it’s still annoying.
When Netflix started, DVD rental by mail was a novelty that took off like a shot, and then there was the addictive and irreplaceable instant streaming option. Video rental stores became virtually obsolete, and Netflix enjoyed the fruits of a product that practically sold itself. It could afford to bundle up its services for a deliciously low price. And then there came the competition (Hulu, Amazon, Facebook, and even YouTube to an extent), and it has had to adjust to keep its footing.
People will leave in favor of Netflix’s competitors, others will grudgingly accept the price hike, and still more will happily drop the DVD plan in favor of a less expensive streaming only option and the occasional Redbox rental. But in the end, I don’t think either the outages or price tweaking will make Netflix suffer too badly.