Tuesday, July 12, 2011

Nuts, Netflix!

I'm sure you've heard by now that Netflix is raising its rates, and has decided to charge separately for its DVD-by-mail and Instant Watch streaming services. The plan I'm currently using, the Instant Watch streaming plus one-DVD-by-mail at a time, will jump from $9.99 a month to $15.99 a month, a 60% increase. Each plan separately costs $7.99. For each extra DVD out at a time, add $3. For Blu-Ray, add $2. No bundling discounts. The new prices go into effect starting in September for existing customers, and immediately for new subscribers.

Neflix customers are not happy, and making sure that the company knows it, flooding the Netflix blog and Facebook pages, and writing angry screeds all over the Internet. I, on the other hand, after comparing my options, have to conclude that even with the extra six dollar charge, Netflix still offers a better deal than anything else I could name. I don't live close enough to a Blockbuster store to do one of their unlimited plans anymore. The Redbox kiosks don't have nearly good enough selection to keep a cineaste like me occupied - though I admit that they are getting better. Hulu, Amazon, and all the rest aren't nearly up to speed yet either. Netflix, for all the complaints about disappearing content, still has more than enough on their streaming service to keep my queue full, and a pretty good DVD selection. Others who want newer movies and TV shows faster, however, are less thrilled.

What worries me is the suddenness of the announcement and the high amount of the increase. Surely Netflix could have eased their customers into the higher prices by raising them at a slower rate? Or given the most affected customers a little leeway by knocking a dollar or two off the total price if they subscribe to both services? Or is Netflix hurting for cash to such an extent that they can't even allow that much? Sure, we know that Sony pulled its titles in a scuffle for higher licensing fees recently, and the Starz deal is supposed to be coming to an end soon, but are things really so bad at Netflix that they would risk alienating so many of its customers like this? Is the announcement a sign that the studios have finally managed to get under the company's skin? Did they make that Epix deal and those original content acquisitions without checking if they had enough in the bank to acutally pay for them? There's too much room for speculation here, so let's just deal with the immediate fallout.

I can deal with a $6 increase (there goes another matinee ticket) but many Netflix users can't and will have to choose between the DVD or streaming services. It'll be interesting to see which wins out. Up until now, the prevailing wisdom was that Netflix would be concentrating its efforts on the streaming service, since it's more profitable than DVD-by-mail, without the hassles of postage fees and physical media. However, if the DVD and streaming plans are being priced the same, it may indicate that there's more demand for the DVDs than previously believed. Or some have postulated that this is a tactic to get more of the DVD watchers to move to streaming only so they can phase out the DVD service quicker. I'm not sure I follow that logic, since I've seen so many complaints about the limited streaming selection. However, I definitely don't want that to see the DVD plans go away, at least not until they start doing a better job of digitizing the DVD extras.

If I had to choose, the streaming service would allow me to consume so many more films. With the DVDs-by-mail plan, I can average only seven or eight a month due to the constraints of the postal system. However, those seven or eight films are the ones that I specifically want to see, and therefore I value them more. In the battle of convenience versus selection, I'm afraid I have to go with selection. Costwise, however, the one-per-month DVD plan works out to about $1 per film, exactly the same as what Redbox and the Blockbuster kiosks are currently offering. If their selection gets better, I might not be inclined to wait for the postal service. Netflix is moving into some dangerous competitive territory here. If Redbox or Blockbuster start a streaming service, which they've been rumbling about for a while, the situation could really get interesting.

Until more details come out as to how Netflix came to this decision and we see how many subscribers actually drop Netflix service come September, I guess there's really nothing to do but wait and see what happens next. Enjoy the rage and the schadenfreude while they last, everyone. There's lots to go around.

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