Netflix price change

[cellio]

So Netflix just raised my subscription fee 60% (effective September 1). They did this by splitting streaming and DVDs into two separate plans, each costing $8/month, instead of bundling streaming with DVD plans as they do now. They argue that the price increase is due to the high cost of (and demand for) streaming (see recent news about them and Sony, for instance), but if so their pricing doesn't make sense. They didn't raise the price of the current streaming-only plan, and they are now asserting that DVDs cost $8/month to support (for one out at a time) instead of the $2/month suggested by the current pricing model. My current plan is $10/month for streaming + one DVD at a time. If streaming is $8 of that, then they have just raised DVD-rental fees 400%. (Ok, less half the overhead of having a customer account -- but I'm betting that's pennies a month.)

I, unlike others, am not looking for an alternate streaming service. Netflix has the largest streaming catalogue out there (though it has many deficiencies) and it already works for me. I want easy DVD rental because of those gaps in the streaming catalogue. What alternatives do I have for that?

Comments

[goldsquare.livejournal.com]

In my case, I use Dish Network for television, and it comes with free on-demand. Free is cheaper than what they have.

I'll be reconfiguring some hardware, and giving that a try. And there is still a Blockbuster nearby that has DVDs for a dollar a night, as well as Redbox for recent movies.

I only recently got Netflix (June). I'm horrendously dissatisfied with sound and picture quality, as well as having Sony movies yanked just as I started the service.

My solution probably doesn't work for you. But it's what I am going to try, before essentially paying nearly twice what I pay now.

[cellio]

That's unfortunate timing. :-( I've had Netflix for a couple years and have generally been loving it. One thing I love(d) about it is that I don't really have to think about DVDs vs streaming much; I watch whatever I want via streaming, always have one DVD from them, and I'm good. I watch 2-4 DVDs a month. The new pricing model forces me to evaluate these as separate propositions.

[osewalrus.livejournal.com]

Few people are aware of how Netflix is being squeezed by the entertainment cartel on one side, and the broadband folks on the other. Netflix raised fees in part because of overall increase in license fees (much higher for streaming, which must be separately negotiated, than for DVDs, which are subject to the first sale doctrine -- once Netflix buys the dvd, they can rent it as many times as they want. NB: They pay a much higher price to purchase than for residential use, since the purchase is for public display.)

Meanwhile, usage based billing and metered pricing squeeze Netflix on the other side. That is why they are developing a low-rez version of the service (now available in Canada).

[cellio]

I've been following some of that through you and the general media, though surely there is much I do not comprehend.

I think what bugs me about this change is that it feels dishonest. If the cost of streaming is so much higher than the cost of the DVD service, I would be more receptive to pricing that reflected that. Even if they ended up at the same number for the joint plan, $12 streaming + $4 DVD feels a lot better to me. With the current plan it feels like they're using streaming as a loss-leader and inflating the DVD price to compensate, knowing full well that down the road they're going to raise the streaming price to something that more closely matches costs.

I'm not saying this is rational; perceptions aren't. But I think they fumbled this one with their current customers.

(I'd also be happy with a plan where I pay them $1 every time I get a DVD from them, however often that is. But I assume they have neither the infrastructure nor the inclination to offer such a plan.)

[osewalrus.livejournal.com]

I suspect you're right on fumbling, and there are a lot of other problems. They don't want to disclose their vulnerability to Wall St., for example.

[goldsquare.livejournal.com]

A major portion of their "fumble" was their marketing approach. They seriously said "we're saving you money".

No. They are unbundling into two services, each of which is priced nearly as high as the original bundled service. To tell consumers that "this is good for you" is bogus.

Imagine if, instead, they said "we're now providing unbundled DVD and unbundled streaming" with the new prices, and then 3/6/9 months later bumped the package price a buck or two. That would have been "savings" at first, and boiling a frog for the rest.

[osewalrus.livejournal.com]

But, oddly, I happen to agree that they are saving some of their customers money. We have the reverse problem in cell phone pricing. We eliminate lower volume, less expensive packages for higher volume packages that drop per minute price but which are more effective over all. If you do not increase your use, you are experiencing a price increase, since you are paying more.

Here, Netflix is saving money for one class of customer -- the DVD only class (like my parents). Others experience a price increase. Netflix has handled this rather poorly in the explanation, but if you look at what they have actually said, that is where they claim to be offering a savings.

I agree that Netflix is not communicating it very well, and they should be up front that it is a price increase overall.

[goldsquare.livejournal.com]

One has to wonder how predominant that class of DVD only is. If it is predominant, perhaps the message makes more sense. But my feeling is that DVD only is not only a minority of their business, but not where their future growth is going to come from.

It really is much gnashing of teeth over very little. For other consumables I would happily pay $16 and not think twice.

But the message came across as "we're lying and picking your pocket", and that is not a very forgivable marketing message.

[cellio]

Exactly. If Netflix just cost $16, well, that's still way cheaper than cable. But the way they did it feels slimy and I'm having a visceral reaction to that.

And by the way, they sent individual notices to their customers, and they of course know what plans we have, so they had the opportunity to tailor the message. They didn't; I got the "saving you money" line along with my price hike.

[geekosaur]

If the MPAA is staying in their usual lockstep with the RIAA (see recent money grab attempt which might just shut down commercial radio), then if Netflix divided the prices up properly the MPAA would demand an even bigger cut — so they are in fact saving money by sticking it to the MPAA.

[mabfan.livejournal.com]

"...once Netflix buys the dvd, they can rent it as many times as they want. NB: They pay a much higher price to purchase than for residential use, since the purchase is for public display."

I was wondering how that worked. Thanks.

[thnidu.livejournal.com]

Here's an Inquirer article (http://www.philly.com/philly/business/125472228.html) that discusses the issue. You might get some ideas from it.

[cellio]

Thanks for the link. Hmm, I wonder if RedBox solves my problem. Their web site is not very forthcoming with information (I had to dig a lot to get partial pricing information), but it looks like you can order a DVD from the web and then go pick it up, rather than having to dig through bins like at BlockBuster et al. I wonder how that works? I may spend some time between now and September 1 finding out.

(Also need to find out if RedBox does TV shows, as that's actually the majority of my Netflix queue.)

[dragonazure.livejournal.com]

We rarely rent movies. If we like something enough to buy it, we buy it. Otherwise, we borrow it from the public library. A LOT cheaper than any subscription service, and its an OK route to go if you don't care about being FIRST! or seeing stuff in the theatre....

[cellio]

A lot of the appeal of Netflix for me is that I can manage a queue online and DVDs materialize in my mailbox without me having to take the time to go somewhere to look for a DVD. (Blockbuster is sub-optimal for the same reason. Granted that the library costs less. :-) )

Oh, and very little of my DVD-watching is in the "must be first!" space. So no problem on that front.

Edit: Hmm, I wonder if RedBox is a viable option...

[mortuus.livejournal.com]

I'll go the DVD-only route, so it actually ends up saving me a couple dollars. I've only used streaming a handful of times because most of what I want to watch isn't even available as streaming. If they ever reach a point where everything is available (and by then hopefully the streaming will be higher quality; it's pretty good now, but I've had a couple hiccups), then I'll reevaluate, but for now, DVD-only actually works best for me.

[cellio]

It's frustrating that some things are only available on DVD and some things are only available via streaming. The latter category is small, but it exists. :-(

[miz-hatbox.livejournal.com]

We were already getting the 3-DVD plan and doing a tremendous amount of streaming, so the price hike is minimal to us. If we decided to drop a service it would probably be cable TV instead.

My mom, on the other hand, does not have a TV that is set up for streaming--anything they want to stream, they have to do it on their computer--so they're going to disk-only.

[cellio]

I wouldn't stream without the ability to watch on my TV. Roku to the rescue! :-)

[mbarr.livejournal.com]

I'd much prefer the $1 or $2 dollar per dvd, along w/ a fee for running the account. Maybe 2 dollars. I'd be better off because we barely watch the DVD's as is.

Of course, we were watching through B5. Now we'll have to get them shipped, unfortunatly.

(I've seen it already, but T hasn't.)

[cellio]

Yeah, if Netflix made it easy for me to rent DVDs from them as one-shots, like going to Blockbuster but without the leaving-the-house part, I'd be all over that. Without that, I don't know if I'll keep the DVD service; I might just stream.

Y'know, sometimes my DVD-watching is bursty. Most of what I watch is TV shows, so, for example, when the last season of Burn Notice came out on DVD recently, I watched more DVDs than I usually do in a month. So I wonder, given that I'm going to remain a customer on the streaming side, how much trouble it would be to start and stop DVD service as needed...

[http://users.livejournal.com/merle_/]

I'm switching to just streaming. It's nowhere near as good -- for example, A-Team streaming has 80 episodes or so when there are really 100, and anything recent won't be streamable. But dealing with mailing things back is such a pain that there's no way I want the DVD-only plan. And if Sony wants to try to shaft them, I'll shaft Sony by refusing to watch their stuff and telling people why. *sticks out tongue* Pffft!

[cellio]

Go you! Say it together now: pffft! :-)