Netflix Price Increase: Is It Worth Paying for Separate Streaming and DVD Plans?

[Pengwuino]

So wait, not only do you subscribe to cable, but you also pay for premium movie channels so that you can record decent movies on your DVR. This scheme probably costs you over 6 times what Netflix will cost after the price hike in September. But feel free to take a smug attitude.

Yes! Let's not all forget that the entire reason everyone is on netflix is because they don't want to pay $40-$60 a month on top of their normal cable bills just to get the movie channels which, of course, don't offer new releases and only allow you to see a few movies typically at the provider's choosing.

People say they're going to quit netflix, but let's be honest, the deal you're getting with netflix is so unbeatable that if anyone does quit, they'll be back within a few months.

 

[Ben Niehoff]

Heh...I don't even subscribe to cable. Much cheaper that way.

 

[Greg Bernhardt]

People say they're going to quit netflix, but let's be honest, the deal you're getting with netflix is so unbeatable that if anyone does quit, they'll be back within a few months.

Yup! I haven't had any TV service for several years. Netflix is all I need and even with the increase it's still an awesome deal!

 

[dlgoff]

I'm telling, I'm telling! Give me more chickens or I'll turn you in!

They are all yours now.

 

[turbo]

Yup! I haven't had any TV service for several years. Netflix is all I need and even with the increase it's still an awesome deal!

When I had 1-2 disk Netflix, deliveries were OK. When I stepped up to higher levels they throttled the deliveries so that even if I watched every DVD as soon as it arrived and returned it in the next day's mail it would be days before the next DVD in my queue showed up. The people running Netflix are not dummies. They are crafty business-people who will willingly tweak to avoid providing all the service that they pretend to offer.

 

[Greg Bernhardt]

When I had 1-2 disk Netflix, deliveries were OK. When I stepped up to higher levels they throttled the deliveries so that even if I watched every DVD as soon as it arrived and returned it in the next day's mail it would be days before the next DVD in my queue showed up. The people running Netflix are not dummies. They are crafty business-people who will willingly tweak to avoid providing all the service that they pretend to offer.

I do streaming only :D

 

[turbo]

I do streaming only :D

Can you manage to get me broad-band coverage? I'd try streaming, too. Right now, I have "enhanced dial-up".

 

[Ivan Seeking]

People say they're going to quit netflix, but let's be honest, the deal you're getting with netflix is so unbeatable that if anyone does quit, they'll be back within a few months.

I wouldn't say that. With YouTube shows, Google Videos, Fancast, Hulu and other commercial services, not to mention the many stations that offer streaming, I don't see this as a static situation at all. Now more than ever customer choices can drive the industry the desired direction.

I was thrilled to see commercials on Hulu - hopefully free internet TV is just as viable as free broadcast TV. And I especially like their continuous play feature.

 

[Dale]

Redbox's prices can't be beat (until you forget to return the movie, of course), but they have the worst selection possible and that's a dealbreaker for me.

That is true, but I haven't been that excited about the selection of DVD's we have gotten from Netflix either. Of course, that could be because my wife is the one who always sets up the queue , but I think it is more that the "mood" I am in at the time has no impact on the DVD that Netflix sent me.

 

[Ivan Seeking]

That is true, but I haven't been that excited about the selection of DVD's we have gotten from Netflix either. Of course, that could be because my wife is the one who always sets up the queue , but I think it is more that the "mood" I am in at the time has no impact on the DVD that Netflix sent me.

It pays to do your homework. I have found many excellent back shelf movies but they take work to find. The pop junk is what usually comes up on the main pages.

One of my favorite recent discoveries was the PBS production of the Lathe of Heaven. But I watched that on Google Videos.

 

[Ivan Seeking]

It seems they really took a lot of heat over this, including a big drop in their stock value. This morning I received this email.

I messed up. I owe you an explanation.

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

For the past five years, my greatest fear at Netflix has been that we wouldn't make the leap from success in DVDs to success in streaming. Most companies that are great at something – like AOL dialup or Borders bookstores – do not become great at new things people want (streaming for us). So we moved quickly into streaming, but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

So here is what we are doing and why.

Many members love our DVD service, as I do, because nearly every movie ever made is published on DVD. DVD is a great option for those who want the huge and comprehensive selection of movies.

I also love our streaming service because it is integrated into my TV, and I can watch anytime I want. The benefits of our streaming service are really quite different from the benefits of DVD by mail. We need to focus on rapid improvement as streaming technology and the market evolves, without maintaining compatibility with our DVD by mail service.

So we realized that streaming and DVD by mail are really becoming two different businesses, with very different cost structures, that need to be marketed differently, and we need to let each grow and operate independently.

It’s hard to write this after over 10 years of mailing DVDs with pride, but we think it is necessary: In a few weeks, we will rename our DVD by mail service to “Qwikster”. We chose the name Qwikster because it refers to quick delivery. We will keep the name “Netflix” for streaming.

Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

There are no pricing changes (we’re done with that!). If you subscribe to both services you will have two entries on your credit card statement, one for Qwikster and one for Netflix. The total will be the same as your current charges. We will let you know in a few weeks when the Qwikster.com website is up and ready.

For me the Netflix red envelope has always been a source of joy. The new envelope is still that lovely red, but now it will have a Qwikster logo. I know that logo will grow on me over time, but still, it is hard. I imagine it will be similar for many of you.

I want to acknowledge and thank you for sticking with us, and to apologize again to those members, both current and former, who felt we treated them thoughtlessly.

Both the Qwikster and Netflix teams will work hard to regain your trust. We know it will not be overnight. Actions speak louder than words. But words help people to understand actions.

Respectfully yours,

-Reed Hastings, Co-Founder and CEO, Netflix

p.s. I have a slightly longer explanation along with a video posted on our blog, where you can also post comments.

 

[Evo]

So, the only thing they're doing is changing the name of the DVD by mail.

A name. And this name does what to quell the disappointment some people have from the new pricing schemes?

 

[Ivan Seeking]

So, the only thing they're doing is changing the name of the DVD by mail.

A name. And this name does what to quell the disappointment some people have from the new pricing schemes?

I think he was just trying to explain the reasons for the change.

but I should have personally given you a full explanation of why we are splitting the services and thereby increasing prices. It wouldn’t have changed the price increase, but it would have been the right thing to do.

It isn't surprising that they split the DVD and streaming services as the demands are very different.

 

[Ben Niehoff]

Actually, I think this is even more annoying. I liked having the DVD rentals and the streaming integrated into one website.

His strategy appears to be this: Rename and separate the things so that now we think we are paying twice as much for two things, rather than twice as much for the same thing.

Also, "Qwikster" is a stupid name. Can't marketers spell anything correctly anymore? Was "Quickster" not hip enough?

 

[FlexGunship]

So, the only thing they're doing is changing the name of the DVD by mail.

A name. And this name does what to quell the disappointment some people have from the new pricing schemes?

It isn't surprising that they split the DVD and streaming services as the demands are very different.

His strategy appears to be this: Rename and separate the things so that now we think we are paying twice as much for two things, rather than twice as much for the same thing.

I thought, in general, this was a fantastic move. I signed up for Netflix when they offered streaming services for the first time. Since then, I had NEVER ordered a single DVD. I don't even own a DVD player gosh darn-it (well, I have an XBox 360). Anyway, when they offered to cut my bill by $1, I was ecstatic. Does anyone even use the DVD service? I bet "Quickster" ("Qwikster?") closes up shop within the next few years.

EDIT: upon reading back, I see a few people still enjoy the DVD service. Rest assured, it will be obsolete soon enough, and everything you ever wanted to see in a physical media will be born-anew in the streaming service.

 

[diazona]

Only a small fraction of Netflix's library is available to stream at any given time (well, maybe not that small, but I'd say roughly one out of every 5-10 movies I search for is actually available to stream). So if Netflix terminated their DVD service without making other significant changes, the size of their library drops by perhaps 80% or 90%, which would remove one of the major selling points of the service. Besides, I prefer DVDs since they're not affected by variability in network performance, plus they're less susceptible to technical malfunctions.

 

[FlexGunship]

Only a small fraction of Netflix's library is available to stream at any given time (well, maybe not that small, but I'd say roughly one out of every 5-10 movies I search for is actually available to stream). So if Netflix terminated their DVD service without making other significant changes, the size of their library drops by perhaps 80% or 90%, which would remove one of the major selling points of the service. Besides, I prefer DVDs since they're not affected by variability in network performance, plus they're less susceptible to technical malfunctions.

Hmm, I suppose I use the service differently, then. I don't look for something I want (i.e. search for a movie called: "The Great Garglespatula" and then watch it), but instead browse for something that might interest me. This weekend I watched "A Pixar Story." It was fantastic. Prior to seeing it in my Netflix recommendations I had never heard of it. I'm not big on Hollywood movies unless it's something that is theater-worthy.

EDIT: It just occurred to me the difference: I channel surf Hulu+ and Netflix. I originally got both services to replace my cable box and $70 cable bill, and I must say they fill that niche perfectly.

 

[diazona]

True, in that case I suppose the effect of a lower library size is not so important for people who use the service as you do. But it does still mean that there are fewer good movies to watch in total.

 

[ArcanaNoir]

I think splitting the company was the worst thing they could do after raising the prices. I bet they see a loss of customers that's equal in magnitude to the loss from the price increase, but they'll probably report it as an increase because everyone who signs up to both companies will count twice.

Personally, I really enjoyed Netflix in a casual and occasional way. Streaming was nice for movies on the iPad in bed, and DVDs were nice in the technologically-stunted living room. But I only watch about one movie each way per month. What should I do that's economically favorable? It seems like a waste of money to pay for both services, but what alternatives do I have to rent a single movie on occasion? A RedBox vending machine? Fine if I only want to choose from 20 movies, and crappy ones at that. All the physical blockbuster stores here are long gone. I really enjoyed the huge variety of movies offered by Netflix that was never available in a physical retail location. What viable option do I have for occasional and slightly obscure DVD rental??

 

[QuarkCharmer]

I wonder how they will handle the availability of online streaming movies now.

I got netflix a while ago to watch a series that they had. The streaming service only had the first few episodes, and every 5th or so episode was unavailable! It's not like that "dvd" became unavailable for streaming, they picked out key episodes to remove! Forcing me to get the dvd service. Well, I didn't do that, I just canceled the service.

I wonder if they will still pull these stunts, and promote qwikster instead of the "upgrade to dvd!" option.

 

[wuliheron]

Netflix was always ridiculously cheap and its pretty obvious the reason was they were focused on growing the business into another monopolistic company like facebook. The plan was to first develop the market and expand the business as much as possible rather then focusing on profits right away.

Now with their online and mail order businesses separated the online business is much more attractive for potential buyers and mergers. Amazon is about to come out with their new e-reader which is full color and multimedia capable. They already stream new releases for $4.00 a pop and if they acquired Netflix they would completely dominate the market. Whatever happens its pretty clear that streaming digital content like this is the cheapest and most instant gratification delivery system possible. The same kind of struggle to dominate online video game and music streaming is occurring and within five years I wouldn't be surprised if you could buy a multimedia capable tablet PC from Walmart for $50-100.oo.

 

[Chi Meson]

I've had Netflix since 2003, slightly longer than I've been a member here (August 03). Then, I paid $17 a month for 3 DVDs at a time. When streaming started, I was astounded that there was no additional charge, I kept waiting for the other shoe to drop. Instead it was 2 of the 3 DVD's we dropped, and we went to paying just under $10 a month. We nearly exclusively watch streaming now, sometimes 2 videos at the same time. No TV, no cable, that's all we watch. When a DVD arrives, it sits around the house for a week. We sometimes send it back unwatched.

Now we are paying $5 more per month, still $2 less than when we started with Netflix 8 YEARS AGO. I don't quite get what the gripe is about, for those who have a gripe. It's a buisiness's business to stay in business. When "Quikster" comes about, we'll say goodbye to the disk, no issues.

 

[DoggerDan]

If Hulu hadn't come along and offered ridiculously substandard service for the same price, I doubt Netflix would have raised their prices.

As it is, I have close to 500 movies saved in my Instant Que, so it's not like I need to pay another ten-spot for the occasional DVD or Blu-ray. Redbox is better suited for that, anyway.

Even so, a 60% increase is unacceptably steep. There were some movies I could only rent from Netflix that I would like to have seen. Also, splitting out the division without changing the objectionably high prices was an "in your face" move by the CEO. He lost a lot of my respect.