unveiled major changes to its pricing plan today, much to the dismay and disgust of the company's customers. Up until now, Netflix has offered a $7.99 unlimited streaming plan with a $2/month DVD plan available as an add-on. As of now, Netflix will offer two separate plans, one for DVDs and another for streaming. The company's blog explains the situation as follows:
Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan. At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. 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.
Yeah, not so much. Also, we reject the idea that anyone actually drinks wine while eating popcorn
Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering.
No one has a problem with the theoretical existence of a DVD-only plan. Anyone who previously took advantage of both options, however, is screwed. Again, we'll let the blog explain
Our current $9.99 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, 1 out at-a-time (no streaming), for $7.99 a month.
The price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). For new members, these changes are effective immediately; for existing members, the new pricing will start for charges on or after September 1, 2011.
There's no way to spin this into a net positive for customers who actually use both aspects of the service: Prices are going up 60 percent. Netflix can try and spin this into a win for everyone, but the fact is, the speed of the US postal service practically limits the number of DVDs anyone with an 'unlimited' DVD plan can rent. A number of irate users are threatening to switch to Amazon Prime, and it's hard to see this as anything other than a rate hike.
that Facebook users are variously calling for boycotts, 'liking' Netflix simply to leave negative comments, and recommend alternative services. The solution--at least to the actual problem the company claims to want to fix as opposed to the substantial consumer sinkhole it has just created for itself--is to offer an unlimited streaming plan that allows for limited DVD rentals at the same $2 price.
We don't doubt that there are still users who rely on Netflix for DVD rentals, or that this business segment may be shrinking more slowly than the company anticipated. The solution, however, is not to raise prices by 60 percent in one go under the guise of improving a service.