17 Comments

Summary:

Netflix announced changes to its service plans today, as part of a move that effectively unbundles its unlimited streaming plan from its DVD-by-mail business. The price of a DVD-by-mail plus unlimited streaming plan will now be $15.98, up from the $9.99 it charged previously.

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Netflix announced changes to its service plans Tuesday, with a move that effectively unbundles its unlimited streaming plan from its DVD-by-mail service.

As we reported last week, Netflix quietly released a new service plan focused entirely on DVD usage. Now the company is taking that as step further, with new service plans designed to give users the choice between streaming or DVDs at $7.99 each. As a result, the company is doing away with the “discount” that had come with subscribing to both services. While previously its streaming-plus-DVD plan cost $9.99, it will now cost $15.98, or the price of both services combined.

In a blog post, Netflix VP of Marketing Jessie Becker announced the new plans and the reasons for the change. According to Becker, when the company began offering its $7.99 streaming-only plan, it didn’t anticipate the DVD-only service. But continuing demand for DVD-by-mail plans meant that asking $2 more for the add-on didn’t make financial sense. So it broke that offering out as its own service.

In addition to the change in plans, Netflix is making a change in its organizational structure: the company is creating a separate team devoted just to the DVD-by-mail service, which will be led by Chief Service and Operations Officer Andy Rendich.

According to the blog post, the change in service plans go into effect immediately for new users, but pricing for existing users will go into effect after September 1, 2011.

Image courtesy of Flickr user Scott Feldstein

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  1. Sept. Second I cancel.. Netflix

  2. Red box here I come

  3. Disappointed Netflix Customer Tuesday, July 12, 2011

    I’m very disappointed in this change, especially because the DVD delivery and streaming content have complemented one another. Right now, there are things I can’t get on streaming, so that’s why I like having the DVD delivery. If they had the same content on DVD and streaming, then perhaps I’d go for streaming only and be done with it.

    I’m not sure which plan I’ll go with yet, but perhaps I’ll cancel altogether and just check out more DVDs from my local library. They tend to have the majority of what I would get from Netflix, though it has to be watched in a set amount of time.

    1. +1

      This kind of pricing makes snese only if there was almost identical content available on DVD and for streaming. Come September, I’ll either go down to a lower plan or cancel altogether. In either case, Netflix will get less money than it currently does for my streaming + 3-DVD plan.

  4. Are u effing kidding me? From 10 to 16 bucks? F u netflix

  5. Sounds like trying to get a revenue stream to subsidize the rising licensing fee cost for streaming.

  6. The true reason is very obvious.

    By breaking apart the services, Netflix positions itself to sell off either side of the company independently. Apple for instance has no interest in mailing Movies to subscribers. But now Netflix has made its streaming business absolutely prime for a buyout by Apple or a similar company.

    Mark these words. Netflix streaming will be sold soon.

  7. tetracycloide Tuesday, July 12, 2011

    I have a really hard time believing the marginal cost for each subscriber is the same for both the DVD and streaming services. One is clearly going to subsidize the other and I have a strong suspicion it will be DVD subscriptions subsidizing streaming.

    That said, $16 for netflix plus $8 for hulu is still far less than even basic cable in my area and the experience infinitely superior.

  8. el notational Tuesday, July 12, 2011

    I went ahead and cancelled my account. Their streaming catalog is mediocre, Hulu’s is better for the same price.

  9. I am NOT a Netflix hater when I say this —
    I think this is the beginning of the end for Netflix.

    We cancelled in March after their previous Price Hike and a declining interest in their mediocre streaming library.

    Come Sept. 1st, expect armageddon to begin for Netflix’s stock.

  10. Kevin Herrera Tuesday, July 12, 2011

    I’m too happy with Netflix to give up either streaming or DVD mail. Even with the price bump, I’m still far more satisfied with both pricing and selection than cable. I don’t have to sit through overly loud commercials, or be bothered with the crap that’s on cable now.

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