top | item 2755599

Netflix introduces new plans and price changes

135 points| evanw | 14 years ago |blog.netflix.com | reply

165 comments

order
[+] Cherian_Abraham|14 years ago|reply
Does anyone share my opinion that Netflix should have taken this opportunity to clarify as to why these price hikes are inevitable, due to the sky high content licensing costs they themselves have to pay to the content providers to keep streaming possible. I didnt see any mention of this in their entire PR release and I think at least the community would have read that and not perceived this announcement as a "more money grab" and as Netflix doing what it has to, to keep offering the best content available for streaming.

I think it threw away that chance and left the door open to a lot of these "entitlement" type comments that harp about how Netflix used to charge $8 per month and can never ever change that. Ever.

I for one, plan to stay with Netflix and opt for the Streaming option as long as it makes sense. As for DVD/Bluray, I will go to my neighborhood Redbox.

Blockbuster? You, I havent yet gotten over the $4.99 rental fee, so you stay in the shit list for a little while longer.

[+] sliverstorm|14 years ago|reply
You sure this is a licensing thing? Maybe they are just putting spin on it, but it sounds like they are saying they were taking a loss on the DVD side of things (or just making minimal profit) in anticipation of DVD's going away, and have discovered DVD's aren't going away as fast as they planned.

I mean, really, post is something like $0.40 these days. Unless a postal service gives them a price break, the $2 DVD fee is entirely consumed by the cost of mailing you (and you sending back) 2.5 DVD's per month.

[+] jasonwocky|14 years ago|reply
Is it possible they're contractually obligated not to discuss licensing specifics with the public?
[+] draz|14 years ago|reply
I keep seeing Redbox mentioned. Financially, it's a rational decision to split consumption between Netflix and Redbox. But I believe that most of the appeal in Netflix is the convenience of getting the movies at home, without having to go outside. It's 87F here in NY right now -- do I REALLY want to leave my AC'ed room and go get a movie? Probably not. Disclosure: I'm a VERY early adopter of Netflix streaming, first through the browser and then through a bluray player I purchased 3 years ago.
[+] natrius|14 years ago|reply
The streaming prices didn't change, so this isn't a licensing issue.
[+] wiredfool|14 years ago|reply
I'm really unclear how the 1 disk out at a time is 'unlimited'. It's more along the lines of 'either I or my wife can see our choice'. And to call their streaming unlimited ignores the lack of depth in their streaming catalog.

I really only want the dvds for things that they don't stream. So, their new dvd plan is essentially a tax on me for their streaming plan not being good enough.

And now, given how often I actually get around to watching something, It's barely worth it at the current price, and not worth it at 2x.

[ edit quantification -- I've been a member this time for a year and a half, and just shy of half the streaming was in the first week, (two sick parents and kids to entertain will do that), and 7 titles streamed in the last year. We've gotten 7 dvds in that whole time, and watched all of 3 of them. Doing the math -- not worth $16/month. ]

[+] jonknee|14 years ago|reply
It's unlimited because you can check out as many different movies as you want (building in transit time obviously). Netflix doesn't know or care you have a wife who wants a different movie, if you want two movies at once get a plan that supports that.

Similarly, unlimited streaming makes perfect sense because you can stream as many as you want. The selection of their available physical DVDs is limited as well, you always have to stay within their catalog.

[+] rdtsc|14 years ago|reply
> And to call their streaming unlimited ignores the lack of depth in their streaming catalog.

Exactly. They spin this as a surprising thing they just noticed:

---

we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members.

---

In other words they are sort of "baffled", how come people still want to watch DVDs by mail ... hmm. Of course, it is because they streaming selection is so poor. I, for example, have reached the limit of dvds I wanted to see in the streaming section. I am just waiting for some new ones to appear or just re-watch the old ones.

I guess a strategy in my case would be to switch to mail only for 6 months, then switch to streaming only later, and just alternate like that.

[+] njharman|14 years ago|reply
The streaming selection is getting better all the time. They are adding stuff faster than I can watch it. And I already have 100's of hours in my queue.

Streaming offers more than I could ever watch...

[+] dasil003|14 years ago|reply
Looking at the comments I'm amazed at how quickly the sense of entitlement sets in. Netflix cut the cost and hassle of entertainment by 80-90% over what was traditionally available from rental stores and cable subscriptions a few years ago. Big content is seeing their profits evaporate and playing hard-ball with Netflix, and all you get is whining from customers about paying $15/month.
[+] zavulon|14 years ago|reply
It doesn't matter that they cut costs compared to "what was traditionally available". What matters is they RAISED costs compared to what they had before. For a long time now, I shared a plan with my parents - they used the DVD's, I used unlimited streaming, and we were happy. Now we have to get two separate plans, and pay more. Since there's no better option, we'll do this, but I think we're fully within our rights to complain.
[+] hnsmurf|14 years ago|reply
I don't think they've cut costs at all. I pay them $9 a month now or whatever. I didn't spend $9 a month at Blockbuster before they existed, and I don't watch very many more movies now than I did then. Might even be less.

I do it because it's very convenient, not because it's a way to save money. I'll probably switch to DVD only from them now and actually start using whatever free streaming Amazon gives me via prime. The streaming selection sucks anyway, I probably watch more on Blu-Ray or stuff I torrent.

[+] mfringel|14 years ago|reply
You call it whining from entitled commenters, I call it feedback from customers who are:

a) Having their subscription prices raised by up to 60%. b) Being told so in a blog posting where that info is buried so far down it needs a snorkel to find the bedrock.

[+] achompas|14 years ago|reply
Users have valid criticisms here. Nothing in their post indicates that Netflix's costs have increased, so why would they hike prices by 60%? Why would you expect a positive response to such a move?
[+] kbatten|14 years ago|reply
Netflix is free to set their own prices, and I am free to change my subscription (cancel or drop to streaming/dvd only). However doubling the price of something, and expecting no backlash is silly at best.

In addition they cut the cost and hassle of legal entertainment. With this change they have now increased the cost of legal entertainment.

I'm fine with them upping my costs, as their costs increase, but this seems beyond that.

[+] wccrawford|14 years ago|reply
I suspect it isn't just Big Content. I suspect they are sending more DVDs than they expected, and they have to keep up with costs.

This ends up not affecting me at all, though. The hassle of waiting for the DVD, and then shipping it back, meant that I only ever watch the streaming stuff. (I obviously wasn't a fan of movie rental stores.) And I'm already paying $7.99.

[+] 18pfsmt|14 years ago|reply
I feel like an entitled brat saying this, but fuck it, I'm moving to DVD-by-mail and ~torrents (or that old news service we're not supposed to mention).

Hopefully, we see more studios learning the lean business principles many of us have adopted in order to bootstrap.

Content costs should be reduced over time given current technological abilities, and there should be significant opportunity for up-and-coming talents to get on the screen with significant viewing audiences.

[+] nhangen|14 years ago|reply
What pisses me off is that I was perfectly content with Blockbuster, but they broke Blockbuster's back and now I'm stuck with bad service no matter where I go.

Netflix's streaming library is weak, and now that Blockbuster has dropped store inventory and changed their rental periods, I have to watch a movie in a day in order to avoid a late fee.

Bait and switch.

[+] ddw|14 years ago|reply
I clicked Comments to say the exact same thing. They have access to thousands of films and whole seasons of TV shows and people are complaining because it's going to cost a little more. Unbelievable.

http://youtu.be/8r1CZTLk-Gk

[+] seasoup|14 years ago|reply
My problem with this announcement is they try and tell their customers what a good deal this is for them when it is obviously not good for them. It's a more expensive deal then what they currently have, if they had been upfront about it and said "our costs are going up due to content providers charging more for their content" or "in order to acquire more premium content for our streaming service we need to charge more" then I think people wouldn't have such an issue.

It's the worse deal + treating customers like they won't notice it that is the problem.

[+] mortenjorck|14 years ago|reply
At the very least, it could have been spun as a move "to better serve our streaming customers with more premium content," which might have at least rescued the post from the level of "insulting."
[+] jm4|14 years ago|reply
I wonder how many Netflix members are also Amazon Prime members. I'm currently on a $15/mo 2-disc/streaming plan. But I also have Amazon Prime. I have the Amazon channel on my Roku and have checked out the catalog a couple times. At a glance, it looks pretty similar to Netflix. It never occurred to me to use it because streaming was included in my Netflix plan and I've already been using it for years.

I'm not so much bothered by the price hike. My price will go up to $20/mo. I'm not going to gripe too much considering how much I use Netflix. But now that DVDs and streaming are separate plans it creates a strong incentive for me to use Amazon Prime for streaming. I'm already paying for it so I can get the free shipping. Now I can change my Netflix plan from $15/mo (soon to be $20/mo) to $7.99/mo and get the same overall service. I wonder if they thought this through.

[+] russell_h|14 years ago|reply
That was my first thought as well. I'll almost certainly drop my Netflix streaming entirely come September 1st, and just use Prime for streaming (also convenient because Amazon has a pretty good selection of newer/better content you can pay for, and this way I don't have to make sure I can play Netflix AND Prime on my home theater device).

On the other hand, my guess is that the number of Prime subscribers is tiny compared to the number of Netflix subscribers. So while this could be a great opportunity for Amazon to do something about that, I don't think Netflix has to worry about losing huge numbers of subscribers to Amazon as things stand.

[+] ghaff|14 years ago|reply
I'm not sure how the streaming catalogs compare (and how they're trending relative to each other) but switching streaming over to Amazon Prime come September is certainly an option I'll look at. I buy a lot on Amazon and, while I've never felt that Prime was quite worth it, it becomes almost a no-brainer for me to switch from Netflix to Prime if I can get faster shipping with no minimum in addition to streaming for ~ the same amount of money as on Netflix.

(And probably switch to the limited DVD plan.)

[+] smackfu|14 years ago|reply
Would be nice if Apple TV supported Amazon Prime.
[+] eck|14 years ago|reply
TLDR: Netflix raises subscription cost 60%. The comments on the post are vicious.

They are duplicitous. DVD by mail is not a separate product. It is a workaround for the fact that they have failed to license their entire library for streaming. Now they have a perverse incentive to limit their streaming library to encourage people to pay extra for DVD service.

[edit] Now had they just said, "Hollywood is putting the screws to us, we need to raise our prices" I could respect that.

[+] brettnak|14 years ago|reply
I find the (dis)honesty of this post baffling. I understand that they want to increase prices, whether because of greed, licensing, or other costs - I don't care. What seems extremely dishonest to me is to say that this somehow benefits the customer when it just doesn't. People want streaming w/ physical DVD as a backup for things that aren't there on streaming. This, therefore, is just a price increase.
[+] m0nastic|14 years ago|reply
I pay ~100/month for cable. I've had a Netflix subscription for ~6 months. Since subscribing to Netflix, my girlfriend and I have watched less than 20 hours of television via cable. We maintain a cable subscription for pretty much the same reason people rationalize a landline phone (just in case).

Netflix can raise their prices about 10x before I'd even consider not renewing my subscription.

"But comparing Netflix to Cable is a bullshit comparison, the content on Netflix is way less" you might say. In theory, you are right. The content available via Instant Watch is way limited; and it has less newer content.

All I know is that since we've started using Netflix, I've stopped buying DVD's (I used to order 15-20 a week from Amazon), I've stopped watching the DVD's I already own (I have about 1000 sitting in giant plastic tubs in the closet that I never dig through), and I've stopped watching regular television.

[+] smackfu|14 years ago|reply
15-20 a week from Amazon? What the fuck. I know one series you may end up on: Hoarders.
[+] qq66|14 years ago|reply
You used to buy 15-20 DVDs per WEEK from Amazon? Did you even watch half of them? I'm confused.
[+] anonymous246|14 years ago|reply
You're acting wealthy. I hope you are. :)
[+] silverlight|14 years ago|reply
I really think they could have done a much better job of framing the discussion around this increase. Talking about why they're doing it (not some B.S. about how "they really want to show people that they are committed to DVDs by mail") would have been appreciated.

Customers are not stupid. They see right through PR speak, and you can clearly see that in the comments.

[+] chime|14 years ago|reply
I don't know why people are complaining so much. The company did exactly what they should have - they hiked the price to stay in business and clearly informed their customers in advance. Evidently many people were abusing the unlimited streaming + DVD subscription before and it was not cost-effective for the company to continue to offer the deal.

Percentage-wise while it sounds a huge increase, it is absolutely nothing when you look at the real dollars. My cell phone bill is $100+, ISP is $70+, web hosting is $30+, and I pay $10+/month for many different web services (include many startups I found via HN). How is $8/mo for renting 3-4 DVDs a month too high? Sure, it was $2 before but you can't expect any company to make money on deals that get abused by more than a few.

I'd rather have Netflix charge their customers appropriately than go out of business or start nickel and diming like airlines or cellphone companies.

[+] sologoub|14 years ago|reply
The pricing doesn't seem all that great. Take $7.99 per month for 1 DVD out. That equals to 8 DVDs rented for one of those DVD rental boxes in a grocery store (RedBox, BlockBuster) assuming you return them the next day. In order for you to rent 8 DVDs in 30 day month, you have to be getting new DVDs every 3.75 days.

So basically, in order for it to equal the cost of a comparable product, you have to get the DVD and watch it the same night, then ship it back and hope 2.75 days is enough for Netflix to ship you another one.

Don't know about others here, but I don't really get time to watch DVDs during work days. This leaves the weekend, so for $8 a month, I can rent 2 DVDs per weekend and receive greater amount of entertainment during a more convenient time.

So using your example of 4 DVDs per month, that's $2 per with Netflix or $1 (50% less) per with box rental services. So in terms of actual spending, you are still only saving 4 bucks (not even a cup of coffee), but % wise, you save 50%.

(and yes, I go to the store regularly, so I'm not counting cost of gas in this example)

Now, if they only had the latest stuff in the streaming catalog... that would be entirely different story.

[+] evanw|14 years ago|reply
The really bad news: No more Unlimited Streaming + Unlimited DVD combines plan.

---

Second, we are 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. With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail.

So for instance, our 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.

The price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). For new members, these changes are effective immediately; for existing members, the new pricing will start for charges on or after September 1, 2011.

[+] encoderer|14 years ago|reply
So for folks like me, who have Unlimited Streaming + 1 Disc + Bluray, we've been paying $11.99 before taxes.

Now, we'll be paying $17.99.

That is a very significant increase and very unfortunate.

I don't begrudge what they're doing: Weaning you off your DVD habit and onto their streaming service.

But I just think they are jumping the gun. Get some more first-run content available first.

As it is, I'm going to take it on the chin and pay the extra $6, but with a lot less love for Netflix, for at least a little while until I forget about this.

[+] bshep|14 years ago|reply
Not happy at all.

They just increased my bill by ~60% (9.99 -> 15.98), I use streaming for the most part and order DVDs when they don't have the movie for streaming.

At this price point I might as well go with Vudu or some other streaming service

[+] mattcurry|14 years ago|reply
I've taken to getting DVDs from my local library.

- I can reserve online and they'll get it from any library in the network.

- Generally get new release DVDs much faster then Netflix

- Get entire seasons of TV shows at once instead of a disc at a time.

- Free

The big negative is I have to actually go and get them, but I generally pass the library daily, so it isn't that big of a deal.

[+] jjm|14 years ago|reply
This sucks. The streaming collection sucks even more. Every time I login the only titles being added are bottom rated movies and "Mock busters". Complete crap honestly.

It also looks like the meat of the customers are in these lower end plans.

I have no intention of passing Netflix on as just another cable bill.

We need more innovation in this space.

[+] smackfu|14 years ago|reply
Netflix brought this on themselves by including streaming in the plans for free to start with, which gave the message that this should be valued at $0. Now they want to charge $8 for that, and should not be surprised if there is a backlash.
[+] vaksel|14 years ago|reply
seems nothing more than just a price hike.

at the very least, they could have thrown in some good news about how they are increasing the quality of each service by adding a ton more stuff to netflix instant etc.

[+] alexgaribay|14 years ago|reply
I think this is a horrible idea. I was actually thinking about upgrading my unlimited streaming plan to get the unlimited dvds option for $9.99. That price is such a good deal and I think it attracted a lot of customers because they were getting bang for their buck. But now that Netflix has announced this new pricing schema, I will definitely will not be doing so and I'm sure many customers are unhappy about this change.
[+] quandrum|14 years ago|reply
For everyone complaining in this thread, I will remind them of the article from several days ago indicating studios have increased their streaming licensing costs from ~180 million to ~1.98 Billion.

If they think this price increase is enough to stay afloat, honestly, I'm impressed

http://money.cnn.com/2011/07/08/technology/netflix_starz_con...

[+] smackfu|14 years ago|reply
They didn't actually raise the price of a streaming-only plan though.
[+] parfe|14 years ago|reply
They should have just canceled streaming. "Sorry we cannot provide you affordable streaming service at this time. You will continue to receive unlimited DVDs. Please send any comments or concerns to Sony Entertainment."
[+] jerhinesmith|14 years ago|reply
I wonder how many people now live close enough to a Redbox location that dropping the Netflix DVD service and going streaming + Redbox ends up being cheaper and affording of more DVDs/month.
[+] healsdata|14 years ago|reply
Interesting point. Since Redbox is $1 a movie and the "1 movie at a time" Netflix plan is a minimum of about $.80 per movie, it really does make the two pricing plans pretty equal. The Netflix cost per disc goes up if you don't watch and return them as soon as possible.

On top of that, Redbox would let you get four movies on a Friday night to watch Friday & Saturday while Netflix would require you to watch movies during the work week (to keep the price per disc equal, at least).

[+] nplusone|14 years ago|reply
To those who are unhappy that customers are whining, I'd like to offer some context:

The instant viewing section is almost unusable since they launched their layout redesign in early June. The only logical explanation for introducing such a poor UX is to restrict users from accessing content in the first place, to reduce costs.

There continue to be a substantial number of complaints following that redesign, to which Netflix never adequately responded. Now they are raising prices on an already reduced customer experience. It's possible that Netflix could have gotten away with raising prices (with a reasonable explanation for doing so), but this change is happening in a broader context where Netflix is essentially taking its customers for a ride.

I suppose I could be completely wrong. The redesign might offer a wonderful experience that somehow I can't grasp. But that seems unlikely.