If you’re one of the over 23 million people who subscribe to Netflix, get ready to pay more to keep those little red envelopes coming. Yesterday, the company restructured their service by separating the DVD and streaming plans. If you had been on the $9.99 a month plan, which got you one disc at a time plus unlimited streaming, you’ll now have to pay $15.98 per month. Or you can decide to get rid of one of those options and pay just $7.99 per month. Based on comments exploding around the internet, loyal Netflix customers are not happy.
Netflix launched its subscription service in 1999. I became a subscriber in February 2000, so it’s fair to say I’m a loyal customer. Believe it or not, I wouldn't be totally against a small price hike. I’m on the four-discs-at-a-time plan and have been using the streaming option more frequently of late. If I did the math, Netflix would probably still be cheaper than most video stores considering all the movies I rent. Of course I’m not going to do the math, since it would involve some sort of algebraic equation factoring in the massive late fees I’d accrue from the two-and-a-half-hour Swedish drama that sat for weeks before I got around to watching it, which is exactly the kind of fuzzy thinking Netflix relies on.
If Netflix made a mistake, and clearly most people think they did, it was in making such a dramatic increase all at once. Prices go up all the time but when it’s a slow, gradual increase, people barely notice. But when something suddenly goes up by 60%, you have to start making choices. That’s true whether it’s a necessity like gas or a luxury like Netflix.
With the new pricing structure, Netflix customers will have to decide if the streaming or DVD option is really worth it to them. Netflix CEO Reed Hastings has been very clear that he’d like the disc-by-mail service to eventually go away. From a business standpoint, I can’t say that I blame him. Streaming is infinitely more cost-effective and profitable than mailing little discs. But for Netflix to succeed as a streaming-only company, they need to have a lot more content than they do now.
Netflix Instant does have a decent selection and I’ve been particularly surprised and impressed by how many titles they offer that have never been released on DVD. But not everyone enjoys digging through the obscure back corners of film history. My account is divided into profiles, one of which is reserved for new movies. There are 69 titles in that queue right now and only three of them are available for streaming. If that was all I was interested in, it wouldn’t make much sense for me to pay an extra eight bucks a month for the streaming option.
The new pricing goes into effect for current subscribers on September 1. Until then, I’m going to be paying close attention to my Netflix habits. I may end up scaling back on the number of discs I have out at a time and using the streaming option a lot more. I won’t cancel the service entirely but I’m sure many people will. Netflix isn’t the only game in town anymore. They need to stop acting like they are.