Netflix has had to deal with a lot of criticism after raising its prices, but it seems its execs made the right decision. According to several reports, it appears that 70-75 percent of new subscribers are going for the "Stream Only" option. But despite Netflix seeing a light at the end of the tunnel, its net subscribers increased only by 1.8 million; last quarter Netflix saw 3.8 million in new subscribers.
According to a blog post from spokeswoman Jessie Becker, the new pricing plan was designed to "better reflect the costs of each [service] and to give our members a choice ... with this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail."
In a recent letter to investors, Netflix defended the price increase:
"It is expected and unfortunate that our DVD subscribers who also use streaming don't like our price change," Netflix said. "Some subscribers will cancel Netflix or downgrade their Netflix plans. We expect most to stay with us because each of our $7.99 plans is an incredible value.
"We hate making our subscribers upset with us, but we feel we provide a fantastic service and we're working hard to further improve the quality and range of our streaming content in Q4 and beyond."
Netflix April Shareholder Letter
In a letter released to its shareholders in April, Netflix briefly discussed the DVD/streaming issue:
"We believe that DVD will be a fading differentiator given the explosive growth of streaming, and that in order to prosper in streaming we must concentrate on having the best possible streaming service. As a result, we are beginning to treat them separately in many ways. Already, if you look at our signup page for non-members, it is all about streaming.
"Having said this, DVD rental is still a great business for us, and we are working on solutions to make sure DVD continues to be a profitable business for us in the years ahead, but it is not core to winning in streaming at this point."
The letter continued:
"In January, we spoke of redirecting the savings generated from a flattening DVD shipment trend into additional streaming content and marketing. We took marketing up as much as was efficient in the [first quarter]. ... Going forward in the [second quarter] and beyond, we expect DVD shipments to decline slightly."
But what does this mean for subscribers and those considering becoming a member of online streaming? For one, if you still want to hold onto the glory of Netflix's convenience of DVD streaming and mail delivery, you will have to pay a lot more -- 60 percent more, in fact. Soon, the cheapest option will cost $15.98 a month, a big price increase from the current $9.99 monthly rate.
Although the blissful coupling, that was Unlimited Streaming along with deliverable DVDs, have parted ways, life in DVD/Streaming-land is far from over.
Blockbuster: Their Web site offers movies, TV shows, and games (something Netflix didn't offer). They also have on-demand options to stream, and renting by mail without a subscription (at prices around $4.99 for a seven-day rental, $3.99 to stream). If you want to go for the subscription, they begin at $11.99 per month for the one-DVD/Blu-ray-at-a-time plan. Blockbuster also promises that more releases are available than what Neflix is currently offering to its streaming customers.
Hulu Plus: Hulu has been around for a few years now, but it's only been in the recent year or two that it's really taken off. Viewers can watch Hulu.com for free, but the number of episodes will be limited. But the $7.99/month option, known as Hulu Plus, offers entire seasons of many of your old and new favorite shows, and movies. The free Hulu.com option streams to computers only, but the Hulu Plus plan has options to stream to TVs, smart phones, tablets, etc. The drawback to Hulu and Hulu Plus is the programming is accompanied by advertisements.
Redbox: This is the non-fuss option. No contract, nothing -- just you and a red box. Those who choose to simply pick up a DVD can opt for this option. Redbox is located in supermarkets, outside some fast-food restaurants, such as McDonalds, and convenience stores. It costs about $1 to rent at a kiosk, or you can use the website to reserve a title to be picked up at a specific location. The drawback is the discs must be returned the following day, by 9 p.m.
The benefit to Redbox is they carry recent films, but they are limited to what the kiosk has stored. However, Redbox isn't known for renting out many classic films. So those Marlon Brando fans, who preferred his "Streetcar Named Desire" days better than his "Godfather" Days, will be, for the most part, out of luck.
In addition to Netflix, Blockbuster, and Redbox, there is also Amazon Prime, iTunes, Network Web sites that stream recent episodes, video stores, and more.
With the departure of Neflix's dual option, the days of a $9.99 value may be gone, but hope is not lost. There are other options to consider.
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