Netflix: Watching Flix on the Net; You’re Still the One I Love

You say potato, I say pricing equity when it comes to the recent DVD rental plan changes announced by Netflix.

Netflix

Photo from: Netflix.com

The online DVD rental mega store announced it was separating out its instant streaming plan and unlimited DVD mail-rental plans. Previous to the shake up heard round the web, Netflix offered an unlimited instant movie streaming-only plan, as well as unlimited streaming with all DVD rental plans. Now, if DVD renters want unlimited video streaming, they’ll have to add on the streaming plan (currently $7.99/month) to their DVD rental plan (now also starting at $7.99/month).

Netflix admits the price change is a result in underestimation of the DVD market:

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.

In essence, DVDs aren’t going away any time soon and the cost of streaming digital movies and television shows, while continually expanding library offerings, isn’t going to pay for itself if the company is essentially giving away unlimited monthly DVD rentals. Consider this, previously renters were paying $2 a month to rent DVDs, in addition to streaming instantly cost ($7.99). If a user rented a modest 4 movies a month, the cost of shipping alone would be in excess of the $2 monthly fee. That’s bad business and would quickly lead to the end of Netflix.

redbox

Photo from: redbox.com

Why am I OK with the price hike? I get it. I previously subscribed to a combination DVD rental and streaming plan. Then last year after the streaming only plan was announced I made the switch, ditched the DVD. Like many users, who have complained in recent weeks, I wasn’t watching my DVDs quickly enough and it was becoming a waste of money to pay for the additional rental I wasn’t utilizing. I’d rather pay a buck for a Redbox rental (which also features new releases that Netflix can’t offer until weeks later). If I was going to utilize both my DVD rentals and instant streaming, the dual $7.99 (each) plans would work and be a decent value, considering on average, I could potentially watch 2 DVDs a week, including the mail-turn-around time.

The two main arguments I’ve seen filling Twitter, Facebook and blogs are as follows:

  1. My DVDs just sit on the table for weeks at a time
  2. The instant streaming library is crap
Rarely are the two arguments/complaints posted together from one user. Therefore the plan change is perfect for these complainers. If you’re not watching your DVDs, stop paying for them and stream only! Think the instant streaming library is crap? Stop paying for it, and go with the DVD only plan. Problem solved. Hate both? Alternatives do exist.
Netflix may not be perfect, but it works for me and I find it to be a great value. If you’re not getting your moneys worth, shame on you. Make the change. Stop getting riled up about a smart business decision that Netflix made to avoid becoming the next Blockbuster – remember them? How quickly we forget.
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About Jordan
Just another guy on the Interwebs.

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