Netflix on Tuesday announced price changes that add about $6 to the monthly bills of subscribers for unlimited streaming video and DVD rentals. Cecilia Kang reports:
Those services were together offered at $9.99 but are now being offered separately: $7.99 for unlimited streaming and $7.99 for unlimited DVD rentals (with one disc checked out at a time).
Previously, Netflix offered unlimited streaming for $7.99 with a add-on of $2 for DVD rentals.
The changes come amid a massive shift in entertainment, with more content being provided online. Internet service providers, meanwhile, are putting into place data caps that companies such as Netflix fearwill hamper their businesses.
The changes take effect immediately for new members and on Sept. 1 for current subscribers.
The company said in a blog post that changes were meant to accommodate subscribers who want to only subscribe to DVDs. That’s a change of pace Netflix, which has said in shareholder letters and conference calls that it was retreating from its mail-order DVD business as more consumers turn to the Internet for video entertainment.
“Given the long life we think DVDs by mail will have, treating DVDs as a $2 add-on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs,” wrote Jessie Becker, Netflix's vice president of marketing.
Becker said the online video giant is so confident that many of its 23 million subscribers will continue to want DVDs that it has created a management team for DVDs by mail led by Andy Rendich, the company’s chief service officer.
Its new pricing plans could drastically change its business. DVD-only plans could actually make that business disappear earlier. Streaming customers may be more inclined to give up their DVD services.
The DVD-by-mail service is much more costly than streaming. Postage, inventory and handling of DVDs are expenses that have weighed on the company’s bottom line.
On the other hand, as broadband Internet service providers end flat-rate data plans, the company may see users reduce how much video they stream from the Internet.
Customers unhappy with Netflix’s pricing plan changes are turning to social media to let the company hear all about it. Hayley Tsukayama reports:
On Wednesday, #DearNetflix was a trending topic on Twitter, as frustrated subscribers spoke out against the changes, with several threatening to cancel service.
Others said that the selection of movies on Netflix’s streaming service alone is not worth its own plan.
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.
Yet while it’s understandable that people are upset about the changes plans, they may want to stop themselves from that knee-jerk cancellation.
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