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Netflix Raises Prices, Garners Criticism

Jul. 13, 2011 Paul Thurrott | Paul Thurrott's Supersite for Windows

Netflix this week did something that only a very confident and successful company could possibly do: It raised prices for a popular service that, quite frankly, should simply cost consumers less over time, not more. Similar in that way to last year's Xbox LIVE price hike, the Netflix price hike is seen, perhaps correctly, as a blatant money grab for a captive audience. And it's going to be interesting to see how customers react, in real life--with their dollars--after all the bitching subsides.

Here's the email that Netflix sent me:

We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.

Your current $14.99 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, 2 out at-a-time (no streaming) for $11.99 a month

Your price for getting both of these plans will be $19.98 a month ($7.99 + $11.99). You don't need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.

These prices will start for charges on or after September 1, 2011.

In my case, this change will result in about $5 in addition costs per month. Is it worth that? Yes, to me it is. But I understand where the additional cost will be problematic for many people. I also understand that Netflix likely expects many to simply drop the DVD part of their subscription. Which, when you think about it, was likely the plan all along.

Discuss this Article 48

Anonymous
on Jul 13, 2011
I'm gong to drop the DVD, since I never use it anyway. I'm starting to get bored with the streaming selection, so I may drop everything.
Anonymous
on Jul 13, 2011
Oh my god are their actually comments now??? HUzzah!!!
Anonymous
on Jul 13, 2011
my 3 dvd +bluray and streaming went up $4. the amount doesnt really bother me but, i am an amazon prime member and for the first time pulled up their free streaming collection on my roku. i was amazed that it was pretty much the same catalog. everytime i drive past a redbox there is a line so i will probably kill my streaming and keep the dvds by mail.
Jason.Bovberg
on Jul 13, 2011
I'll be dropping the streaming. Apart from instant gratification, the appeal of streamed videos is low. The selection is small. They are made available a month after the release of the physical DVD. They don't have extras. And their visual quality is less than that of a Blu-ray disc.
Anonymous
on Jul 13, 2011
Unless Netflix drastically improves their streaming selection, which I have always felt is subpar, I think many will abandon the service all together.
Anonymous
on Jul 13, 2011
I think everyone ought to send Netflix a message that they aren't willing to put up with this kind of behavior by cancelling all but their one most commonly used service. I use streaming mostly, and don't watch many DVDs so I just switched my plan to Streaming-Only, resulting in me actually paying less than I have been. I'll miss the DVD option, but I'm not willing to pay double for the convenience of "renting" one or two DVDs per month.
Anonymous
on Jul 13, 2011
This move has actually made me (much as I DESPISE myself for doing so) check out Blockbusters mail program. The prices are similar, but with Blockbuster you get games and no 28 day wait on new movies. The streaming options on Netflix are great if you like The Cosby Show, Leave it to Beaver, and any early 90's Jean Cluade Van Damme flicks. Otherwise the selection completely sucks and I won't miss it.
Anonymous
on Jul 13, 2011
I understand why Netflix is raising prices. It has been well-known for quite some time that when their contracts with studios would expire that the growth in Netflix's service would lead studios to raise their own prices. Thus, that must be made up by raising the price of Netflix plans. However, I rarely use instant streaming as their library is pretty lackluster and any time I find shows I like they rotate them out of cycle within a month or two. The DVD service is still good because it has a complete library, but it isn't HD. I refuse to buy any Blu-ray products since Sony collects license fees for the patents it owns on the technology. Moreover, I would never pay the extra fee just to have the privilege to rent Blu-ray discs from Netflix. Regardless, I always felt $10/month was the upper limit I could see paying for a service that still has the aforementioned flaws. I have been debating canceling it for a few months, but this made the decision for me. Come August 31, I'm canceling DVD and streaming services. It just isn't worth it to pay $7 for either one alone.
Anonymous
on Jul 13, 2011
If the streaming library was ANYWHERE near the DVD library, they might have a leg to stand on.
Anonymous
on Jul 13, 2011
I am also going to drop the streaming - will not go along with such a huge increase.
Anonymous
on Jul 13, 2011
I don't understand why everyone in the US seems to be enraged by this. You should be glad that you have services like this, because in many countries (I live in the Netherlands) there is nothing like Netflix.
Anonymous
on Jul 13, 2011
Just joined Netflix and am wondering why. The limited selection of streaming videos has caused me to rethink the service. Guess it's back to Redbox for me. My mailman loses too many things for me to rely on that service for anything.
Anonymous
on Jul 13, 2011
I'm dropping streaming too.. you'd think that those already getting streaming and dvd's for about $10 would get a deal such as $12/mo for both... but no, you get to pay full price for both. lame. - captain betty
Anonymous
on Jul 13, 2011
I will be dropping the streaming as well. Not only is the selection poor and the quality less than Blu-Ray, but I have to pay an additional fee for XBOX Live service every year (I don't use it for anything else). My Blu-Ray player has a Netflix app, but streaming on it is unreliable and of terrible quality. I went ahead and changed my plan immediately, as I am saving $3 a month by dropping streaming.
JK75
on Jul 13, 2011
I will be dropping the streaming as well. Not only is the selection poor and the quality less than Blu-Ray, but I have to pay an additional fee for XBOX Live service every year (I don't use it for anything else). My Blu-Ray player has a Netflix app, but streaming on it is unreliable and of terrible quality. I went ahead and changed my plan immediately, as I am saving $3 a month by dropping streaming.
Anonymous
on Jul 13, 2011
I'm wondering if this will result in people dropping the streaming portion (which, while convenient, is 80% garbage content) and keep the DVDs... which is the opposite of what Neflix wants. Their cost structue on the DVD plan is not nearly as profitable. When combined with a number of people dropping their subscriptions all together, this could definitely backfire on them.
jbrigance
on Jul 13, 2011
I know everyone is saying this - but for my part, it's true: I will probably just cancel my account. @JasonBovberg posted that the streaming doesn't have any extras. The DVDs I have been getting have the extras removed, because it's a "rental" DVD. I like the DVD only part, but every once in a while, I want to watch something on my Xbox that I don't necessarily have the DVD for. I am on the basic plan, so my plan went up about $7 overall (with taxes added in), and that's not in my budget right now. I know - $7 isn't much...but it is in my family.
Anonymous
on Jul 13, 2011
If streaming DVD's were as reliable as a disk and available at the same time as the disk, I'd agree with the streaming only option. Right now the quality and avilability both stink. So I've dumped the streaming option. Perhaps the disc only option will go soon because Redbox is just down the street at the local 7-11.
Anonymous
on Jul 13, 2011
This does annoy me and give me a less positive view of Netflix. The Netflix streaming library is pretty anemic. I'll likely keep but adjust my DVD plan down, be less likely to recommend Netflix, and start looking into the Amazon offering more. (I've been a Nfx customer for over a decade.)
Anonymous
on Jul 13, 2011
In Canada netflix only has streaming. I tried the trial, and to be honest it was kinda crappy. I think i watched half of one movie, and Hudson Hawk. (good call btw). To me it wasn't worth it and so I cancelled before my trial was up.
Anonymous
on Jul 13, 2011
I agree with you, Paul, that $5 isn't enough to throw such a fit about. I currently have the 2 Blu-Ray + Streaming plan. I may drop down to 1 Blu-Ray only because I rarely watch two disc movies in two days, and get quick turnaround in the mail. But I would have considered that even without the price increase.
Anonymous
on Jul 13, 2011
So with your plan it's a 33% ($5) increase. I have the $9.99 plan. The equivalent will cost $7.99 + $7.99 = 60% ($6) increase. Time to rethink Netflix.
FlyerMike
on Jul 13, 2011
Agreed. To me, the streaming catalog is not worth $8 a month yet.
leuqarte
on Jul 13, 2011
I'd keep the streaming myself... Both Redbox and Blockbuster have $1 kiosks within walking distance to my residence, and I don't rent 8 discs a month to cover Netflix's rate. And as most current rental copies of DVDs and BDs exclude the extras, I wouldn't make that a factor in the decision.
Anonymous
on Jul 13, 2011
I've been a subscriber for 11 years. I paid $17.99/month for 4 discs, and that was before streaming. Until recently, the only price increase was to add Blu-Ray. Now, that plan is finally going to increase in price to $34.99, which is a bit high, considering how much I stream compared to my disc usage. So I'll downgrade to 1 disc + streaming, and pay...$17.99/month. Pay the same price 11 years later for a service I now get more out of, even with fewer discs? I think I can live with that, if it keeps Netflix afloat amid the upcoming price hikes of movie studios that can't figure out how to stay profitable in the changing media environment. Captive audience? It's not like there aren't alternatives if Netflix customers really object to this. Again, Netflix is looking at huge price increases in the near future. Should it just pack up and go home instead of trying to continue serving its customers? I see this not as a money grab, but as a regrettably necessary measure that they've put off for too long.
PStansb
on Jul 13, 2011
As much as I'd like to drop streaming, I can't. Because we have 3 Roku boxes in use (often at the same time) in my house. What they DON'T tell you is that your ability to stream to multiple devices simultaneously is linked to the number of disc you have in your plan. So, for example... in order to simultaneously stream to all 3 Roku boxes in my house I have to maintain a 3 disc a month plan. So, in reality I CAN'T cut my DVD plan without also affecting my streaming abilities.
yoshipod
on Jul 13, 2011
Blaming Netflix for this is a mistake. This is because the major studios who license the streaming rights are trying to drastically increase their fees.
Anonymous
on Jul 13, 2011
As long-time hold-out, I just signed up for Netflix a few days ago (all that arm twisting on Windows Weekly was too much to resist). So I'm disappointed that I won't be able to augment the streaming service with DVDs, but honestly I'm not certain I would have. The test for whether I'll stay with Netflix longer than a few months will be if I find the streaming library limited after a while.
mikerisner
on Jul 13, 2011
A long-time hold-out, I just signed up for Netflix a few days ago (all that arm twisting on Windows Weekly was too much to resist). So I'm disappointed that I won't be able to augment the streaming service with DVDs, but honestly I'm not certain I would have. The test for whether I'll stay with Netflix longer than a few months will be if I find the streaming library limited after a while.
Anonymous
on Jul 13, 2011
May not be so bad only IF, Netflix offers the same selection for BOTH streaming and DVD.
Anonymous
on Jul 13, 2011
I joined about a year ago based on the advertising on Windows Weekly thinking their entire library was streamed. I soon found out most of the new releases and newer selections were available only by DVD. I thought this was their way of getting an addtional couple bucks from me by forcing me to add the DVD component to my membership. I would prefer streaming of their entire library and would be happy to pay an additional few bucks for it. I don't like the DVD component of the membership.
Anonymous
on Jul 13, 2011
I would totally drop the streaming, if not for my kids who like to stream kids shows occasionally during the day. It's great for that. But otherwise for the same $16 / mo, I'd rather just get 3 DVD's instead of 1+ streaming. You're normally able to watch a DVD a night that way and never run out. If they gave some sort of break to do both, I would feel better about keeping both, and they really should do that. Both for $14, or even $15 would feel better.
Anonymous
on Jul 13, 2011
Actually, I think this is a great move. I've also dropped streaming from my account and will be paying LESS than before. And, as Netflix continues to make expensive deals for those streaming rights, I will "theoretically" not be forced to shoulder those costs with my by-mail-only plan.
Anonymous
on Jul 13, 2011
Would not mide the increase so much if they removed the new release delay, and included bluray instead of charing extra for the honor of waiting longer.....
Anonymous
on Jul 13, 2011
I went to streaming only a couple months back and I was thinking about going back to a DVD plan as well. Streaming is nice but there's still so much missing from streaming. It's like the app situation with smartphone platforms--how many movies are available for streaming isn't the issue, it's is the movie you want available. Netflix is full of tons of indie films but it lacks a lot of popular films, both new and old. Not sure what I'll do, might pick up a DVD plan, might rely on Red Box more.
Anonymous
on Jul 13, 2011
Not worth it for me, dropped my plan right down to just streaming, they lost $2 a month rather than gain an extra $8 from me.. bastards.
Anonymous
on Jul 13, 2011
I am dropping the streaming as well, at least until they have a better selection of movies. The TV shows are worth it, but they lost Dexter and that was my major TV show from Netflix. I can see them increasing it by a dollar, but $5 is pretty dramatic, especially for long term cutomers.
Anonymous
on Jul 13, 2011
I'm keeping my plan, streaming and DVD as is, which $15 and change won't bother me. I just recently canceled cable so I'm still saving money. If netflix wants me to just use streaming and not DVD's (which I'm ok with) then they need to update their content with offerings on par with what I can get from Xbox Live Video, I mean Zune Video. Or at least announce some new content partnerships. Don't just raise it and not mention what's coming soon. At least when XBL went up, we keep getting more content choices, Hulu, now YouTube in the future. I love Netflix and I'll stay a subscriber, no bitching here.
thoughtsbin
on Jul 13, 2011
First of all, why do all your articles have the pagination at the bottom of the comments when really there no comments past the first page? Seems like a bug. Also at the very bottom it says "You must log on before posting a comment" which seems misleading since I'm already logged in. Okay, no finally about this Netflix topic... if they had a equal selection for streaming then this price change and plan changes would make sense. Over the last month they had to even cut the streaming selection because they lost the Starz Play license. Shouldn't they have charged us less since now they are saving that license fee? How is major studios charging more or less for content our problem? Sneaky way to pass the buck in my opinion. Mukesh www.thoughtsbin.com
Anonymous
on Jul 13, 2011
I think this is Netflix way of saying, we don't want to send you DVD's anymore, it costs to much and we have to inventory the stuff, ship it around and keep track of who has what. The streaming offer is getting better all the time, still could get better in my estimation, but regardless, who watches DVD's any more? I can't remember the last time I walked into a video store.
Ludikraut
on Jul 14, 2011
I agree with yoshipod. Dig a little bit deeper, and it's a money grab by the major studios, with Sony leading the charge (no surprise there), not Netflix. I was expecting Netflix to raise their prices as a result of this.
Waethorn
on Jul 14, 2011
Netflix is changing, and I don't like it. First off, they don't have an "unlimited catalogue". Movies switch out every month, and at least half of them are crap. Almost none of them are new too. Netflix also knows that Internet bandwidth allotments are going down, not up, so they have to charge based on the idea that consumers aren't going to pay a lot if they can incur additional fees for service from their Internet carrier. In fact, how much different is this from having one of those mostly-reruns specialty TV channels with on-demand access? If they try to include newer programming or increase their monthly catalogue, one of two things is going to happen: either the price is going to climb, or they'll start playing ads with their programming.
barcodenut
on Jul 15, 2011
Yes, some of the contracts are up for renewal so the prices will go up. This was drastic...I would expect something more gradual. They should have been increasing the prices in anticipation. I am a streaming guy. My one video usually hung around the house a while so I will be using Redbox now and staying with the instant gratification. They didn't loose but a couple of bucks a month on me dropping the DVD delivery.
barcodenut
on Jul 15, 2011
Yes, some of the contracts are up for renewal so the prices will go up. This was drastic...I would expect something more gradual. They should have been increasing the prices in anticipation. I am a streaming guy. My one video usually hung around the house a while so I will be using Redbox now and staying with the instant gratification. They didn't loose but a couple of bucks a month on me dropping the DVD delivery.
wosully
on Jul 16, 2011
I agree the studios have much to do with Netflix problems (physical disks versus streaming options, and pricing). However, the company has done an awful job of communicating that fact to consumers. There has been no explanation of this price increase, and it makes sense for many of us to drop the DVD / Blue Ray option and just get a Red Box when we need it if we do not watch that many movies on physical media every month.
Waethorn
on Jul 16, 2011
No choice in the Great White North. It's streaming or nothing. I just hope they don't increase the cost. When you offer something that could potentially cost buyers an extra charge for delivery service (in this case, bandwidth overage costs), you had better keep the initial cost down or else nobody will buy it. My satellite TV might cost several times more money, but I don't have to pay an additional fee to another carrier for viewing over X hours of programming.
alamfour
on Jul 17, 2011
Check out my new tablet blog at http://tabletslatepad.squarespace.com
stevenclaflin
on Jul 17, 2011
Actully this makes a lot of sense to me. When they created a streaming only subscription, I felt that was pointing to a day when there would be no physical media. The streaming price remained the same and they increased the cost of all the dvd plans, which reinforces my feeling that they are trying to push people away from dvd's to a streaming only service. If they were to increase their stock of shows(which they are, slowly) and were able to keep the quality up(debatable) streaming is better because you don't have to wait for a dvd, and it's much less of a logistics nightmare for the company.

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