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Posted at 11:16 AM ET, 07/13/2011

Investors like Netflix prices changes, stock rises

Netflix customers may not like new price changes, but investors do. The company’s stock was up 2.8 percent to $297.3 in early morning trading.

Investors saw the move as a smart business decision by the Silicon Valley online streaming video company. It raised prices for DVD rentals, which industry analysts suspect will lead users to leave that service more quickly.

That’s good for Netflix in the long run, analysts say, because sending DVDs by mail is expensive and the company ultimately wants to go all-streaming on the Internet.

“Netflix has a market cap of $16 billion dollars and to go into that, they aren’t going to do that through DVD services. That business just isn’t big enough and it isn’t growing,” said Eric Bleeker, a tech analyst for investment research firm Motley Fool.

Effective immediately for new subscribers and starting Sept. 1 for current ones, the company will split its streaming and DVD services, offering each for $7.99. The company had providing streaming and DVD rentals together for as low as $9.99, so the rate hike is almost 60 percent.

The company may lose customers in the short term, judging by the anger Netflix’s decision has generated on the Web.

On Facebook, the company’s post announcing the change has more than 20,000 comments — and few of them are positive. Most take issue with the fact that the company isn’t adding services to justify its rate hike.

“Nothing like doubling your price and adding no value,” commented Facebook user Tim Smith.

CNET reported that several people seem to have “liked” the Netflix page only to share their displeasure with the company.

Related:

As telecom industry evolves, Netflix is biggest threat

Netflix criticizes billing by the bits

By  |  11:16 AM ET, 07/13/2011

 
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