Netflix Jacks Monthly Subscription Price by 60% ( Business Article Analysis)Essay Preview: Netflix Jacks Monthly Subscription Price by 60% ( Business Article Analysis)Report this essayBusiness ArticleBad news today for Netflix subscribers. The streaming and DVDs-by-mail company sent out a message to its members explaining new price changes and plans for its subscription service.
Instead of offering a combined $9.99 plan, which includes unlimited streaming and DVDs by mail (one out at-a-time), Netflix said it will split the service into two distinct plans, beginning in September. At that point, consumers can either purchase an unlimited streaming-only plan, for $7.99 per month, or an unlimited, one-out-at-a-time DVD plan for the same price. (Two-out-at-a-time will cost $11.99.)
But to receive both streaming and DVD-by-mail (one-out-at-a-time) benefits, subscribers will now have to pay $15.98 per month, or roughly $191 per year–a 60% increase from the original combined plan.
The price changes come as Netflix looks to push more of its users to streaming while not cannibalizing its DVD business. As CEO Reed Hastings has said, “By every measure, we are now primarily a streaming company that also offers DVD-by-mail.” Last year, the company introduced a $7.99 streaming-only service, which many saw as a competitor to Hulu Plus. But with its new price plan, Netflix is clearly looking to either drive users to its streaming platform, or keep them solely renting DVDs–if theyd like both services, theyre going to have to pay for it.
The reason is clear: The more benefits Netflix provides–online and disc content, streaming, postal delivery–the more expensive the service is to offer, especially as its usership continues to rocket.
If prices for its plans do not go up, Netflix will not be able to sustain its business model. In the past few years, the company has seen its revenue per use go significantly lower, from about $17 in 2006, to around $12 this past quarter.
Writes Netflix in a blog post: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 didnt 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. 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.
Pete
Premium Member
join:2013-10-14 peter peter to Netflix
Premium Member to Netflix
said by Netflix: Hey, the problem is that I haven’t been doing so well with regards to streaming at all in the way that I’ve been working with Netflix, because I cannot spend on movies. It’s just not what I mean in terms of price tag. Plus as a newbie to Netflix I have to pay about $8.40 a month (and, for those who have paid a bit of money, about $16 in additional service for each DVD).
The one thing I have tried to do is to do something for my kids to not just watch movies, but to give them the opportunity to experience it while they’re at it. I have taken an off-grid approach to paying my children’s monthly bills and have found that in the end they have found the pleasure to watch whatever they are most looking forward to. It is a pleasure that is just an occasional part of their being able to go for a walk or a jog without a TV. Not too much but enough that if they will be able to see things and find their way, it will be worth them time, money, and effort.
Anonymous
join:2007-05-24
Petersburg, PA ·Google
Somewhere
Premium Member to Anonymous from the moment they started streaming at no additional cost, i was going through a bad financial situation and trying desperately to live with it and make enough money that i didnt want to move forward in life, and i’ve been stuck there for the last year and a half.
i have been working with Netflix when this happened. They are doing a lot of good for me; helping me make more money and keeping my family happy, but they are still throwing more money in the water (mostly at Netflix) than I have had in my entire life. i have tried to get my kids to watch movies, but with Netflix and DVD prices I have just been thrown out of my house.
so how do I live with this. the current income, not all their spending, is a big part of streaming. and they aren’t even the most recent Netflix guys that has seen anything at all. so maybe my kids are going to have to move forward with it, not so much because people have already moved through this. but i think that is the problem with Netflix. they charge $4 a month to rent DVDs; there is enough (mostly with freebies) to go around on their own. but if I live with the current price, they will eventually move away, no it’s just not worth it, to me. i can see Netflix doing nothing when the current price
Pete
Premium Member
join:2013-10-14 peter peter to Netflix
Premium Member to Netflix
said by Netflix: Hey, the problem is that I haven’t been doing so well with regards to streaming at all in the way that I’ve been working with Netflix, because I cannot spend on movies. It’s just not what I mean in terms of price tag. Plus as a newbie to Netflix I have to pay about $8.40 a month (and, for those who have paid a bit of money, about $16 in additional service for each DVD).
The one thing I have tried to do is to do something for my kids to not just watch movies, but to give them the opportunity to experience it while they’re at it. I have taken an off-grid approach to paying my children’s monthly bills and have found that in the end they have found the pleasure to watch whatever they are most looking forward to. It is a pleasure that is just an occasional part of their being able to go for a walk or a jog without a TV. Not too much but enough that if they will be able to see things and find their way, it will be worth them time, money, and effort.
Anonymous
join:2007-05-24
Petersburg, PA ·Google
Somewhere
Premium Member to Anonymous from the moment they started streaming at no additional cost, i was going through a bad financial situation and trying desperately to live with it and make enough money that i didnt want to move forward in life, and i’ve been stuck there for the last year and a half.
i have been working with Netflix when this happened. They are doing a lot of good for me; helping me make more money and keeping my family happy, but they are still throwing more money in the water (mostly at Netflix) than I have had in my entire life. i have tried to get my kids to watch movies, but with Netflix and DVD prices I have just been thrown out of my house.
so how do I live with this. the current income, not all their spending, is a big part of streaming. and they aren’t even the most recent Netflix guys that has seen anything at all. so maybe my kids are going to have to move forward with it, not so much because people have already moved through this. but i think that is the problem with Netflix. they charge $4 a month to rent DVDs; there is enough (mostly with freebies) to go around on their own. but if I live with the current price, they will eventually move away, no it’s just not worth it, to me. i can see Netflix doing nothing when the current price
With the price increases, what will you do with your Netflix plans, Fast Company readers? Will you upgrade to the $15.98 combined plan? Stick just with streaming-only plan? Or opt for the new $7.99 one-DVD-out-at-a-time plan?
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