Netflix May Launch Streaming-Only Plan in the U.S.

12 Comments

Netflix (s NFLX) CEO Reed Hastings doesn’t usually reveal future plans, but he decided to throw us a bone today after two days of bad publicity, hinting at the option of a cheaper subscription plan that comes without any physical DVD rentals in the U.S.

The official Netflix blog just published a post attributed to Hastings in which he writes:

“We are looking at adding a streaming-only option for the USA over the coming months.”

Hastings used the post to apologize for remarks he made in an interview yesterday with The Hollywood Reporter. THR’s reporter had asked Hastings if he expected a backlash from U.S. customers, given the fact that its U.S. plans are more expensive than the newly-launched Canadian subscription offering. Hastings’ response:

“How much has it been your experience that Americans follow what happens in the world? It’s something we’ll monitor, but Americans are somewhat self-absorbed.”

He called this statement an “awkward joke” today, and added that Netflix is simply cheaper in Canada because it doesn’t include any physical DVD rentals. Hastings’ apology was published just hours after the company’s VP of corporate communications apologized on the blog for using actors pretending to be an enthusiastic audience during a public unveiling of the Canadian service.

All of these PR blunders aside, moving toward a streaming-only makes economic sense for Netflix, as digital delivery is much cheaper. Adding digital-only subscribers could also help the company to offset some it its huge investments in streaming video rights. Netflix signed a deal with the pay TV channel Epix this summer that is valued at nearly $1 billion.

Image courtesy of Flickr user Scott Feldstein.

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12 Comments

john

how does it make any sense for them to reduce the price of digital streaming? as users migrate away from the physical DVD library, they will find themselves in a predicament when they have established an artificially low price point for streaming (subsidized by high-end physical plans) and still need to pay all of the license fees they are paying now and in the future. doing that is a no-win for them and a strategic blunder, if you ask me.

Mike

There’s a country north of the US? j/k

I would sign up for a streaming only plan when they have all titles available for streaming.

Matt

Maybe Hasting would prefer that I take my “self-earned” money and spend it elsewhere. I really don’t understand how a CEO of such a company (or any company for that matter) could be so stupid. In what way does it benefit your company to insult the majority of your client base?

A$$hole.

Jim

Hastings is right Americans are self-absorbed in the marketplace, in domestic politics, on the world stage, etc. He really doesn’t need to apologize for speaking the truth.

The only ones who care about Hastings making that comment is the self-absorbed media who think what they write matters to us…the self-absorbed public.

Pistol

A streaming only plan is definitely the future of Netflix’s business model outside the US. Fans (like me from Australia) are waiting patiently for such a service to operate here, but with the sheer power Netflix has for license negotiations it will allow for a much easier launch into territories where a DVD-by-mail service is too cumbersome. Fingers crossed in 2011 territories outside US/Canada roll out with streaming only services.

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