Posted on Tuesday, July 12th, 2011 by Russ Fischer
The free ride had to end sooner or later. Looks like it is sooner. For the past seven months, even after a price increase, Netflix has been the best deal in movies for US subscribers, as a monthly subscription priced at $9.99 allowed customers to have one DVD out at a time and watch unlimited streaming content at the same time. That wasn’t free, exactly, but it was a pretty damn cheap way to consume a great many movies every month.
That is changing slightly. The company today announced new pricing that will split DVD and streaming subscriptions into separate tiers. The cheapest plans will be $7.99 for unlimited streaming each month (remaining the same after the last pricing changes), and $7.99 for a new plan offering only DVDs, with one out at a time. So instead of paying $9.99 for both, you’ll now pay $15.98.
For new members, this pricing takes effect immediately. For existing subscribers, the changes go into effect “on or after September 1, 2011.”
The news comes from the official Netflix blog, which spins the price change as being the ‘lowest ever’ for unlimited DVDs. And that’s true. If you have no interest in streaming, or no interest in delivery of physical media, this won’t be a big deal. And, frankly, if you have interest in both, there’s no argument in which sixteen bucks a month is an unreasonable price to pay for the content available on Netflix. But if you want a lot more DVDs delivered per month, your prices will be escalating. And how much will a blu-ray plan be? That’s data we don’t have now.
(Netflix was down for maintenance at press time, so I couldn’t make a new subscription to check. The blu-ray surchage that applies to current plans may not be changing.)
After Netflix seemed to really de-emphasize physical media in the past year, this stands as a definite change of plan (ahem) as explained in the blog entry:
Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix.
There are many possible reasons for these changes, but in the end what will matter is what effect this has on the overall catalog(s) available via Netflix.
Given the company’s dominance of the DVD delivery and streaming marketplace, I can’t pretend to be surprised by these changes. A price hike was basically inevitable. Now we’ll see what it does to the Netflix stock price at the end of the day today, and the company’s customer base over time. So will the new prices change your interest in Netflix? Will you desert for other options?