Thursday, July 21, 2011

Netflix Sux!! (or does it?)

Welcome to Tony Island Blog!

As you may have heard by now, Netflix, the DVD rental-by-mail company, has decided to restructure its pricing plans to separate the DVD rentals from the streaming option. Previously, for as low as $9.99/month, you were able to have unlimited DVD rental (though only one home at a time) and unlimited streaming.

Now, starting in September, 2011 for current members (immediately for new members), the unlimited 1 DVD plan is $7.99/month and the unlimited streaming is $7.99/month. Together, it will be $15.98. This is a rather large jump to say the least. The increase caused thousands of subscribers to flood the Netflix blog with feedback - much of it against the pricing changes along with threats to cancel memberships.

I'll take a different viewpoint though (don't I always?) - I think it makes a lot of business sense to do this. By separating the income streams for DVDs and unlimited streaming, Netflix will have the cash flow needed to better meet the demands of each group. This should allow them to invest in a deeper DVD library (though it's fairly deep as it is), but, more importantly, to snag more deals for streaming content. This extra $7.99/month should give them a nice cash wad to use for long term streaming deals and to remain competitive with sites such as as they ramp up their streaming offerings. Netflix is bringing Mad Men to streaming next week and has added all the Star Trek series to stream, too.If they can keep consistently adding quality content then it should work out very nicely for their bottom line.

No, I don't like to pay more for any item, especially one that was so cheap as the Netflix DVD/streaming combo plan, but I must see the positive in this and go along with the increase.

What are your thoughts? Feel free to share them with us. Vent a little - it helps!

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