Netflix is raising the price of its DVD rentals and online movie packages by 60%, removing the convenient low-price option of choosing to stream as well as having DVDs home-delivered. The current plan for both DVD rentals (one at a time) and unlimited streaming was a bargain at $9.99. However, the price is now $15.98 a month.
Blockbuster quickly grabbed the spotlight after the wake of Netflix's price increase, reminding members of their low-cost DVD rentals. While many of its retail outlets have closed, Blockbuster still offers thousands of videos at 99 cents a day for most DVDs, with new releases at $2.99 for only the first day out of store.
Netflix's company blog tried to take a positive spin on the situation, stating the company has created its lowest prices ever for unlimited DVDs, at a cost of $7.99 a month. But the plan still limits viewers to only one DVD out at a time. The plan jumps to $11.99 if the subscriber wants the ability to have 2 DVDs out at one time.
The only qualm we foresee with this is that the streaming option may not provide full access to all new releases, as the DVD option currently does.
This, though annoying to members, is a logical step for Netflix. And with the ability to share one existing streaming account with multiple people by just typing in their email and password, Netflix has to find a way to sustain their business.
As television and film viewers evolve, corporations have to evolve as well. And with downloading easily accessible, it's possible this wasn't an option for Netflix, but a necessity.
It's more than likely that people will opt for the Unlimited Streaming option as it requires less work on the member's behalf, and provides instant gratification. When Netflix started out, the DVD rental was the base, its core, its strength. However, 2011 saw a boom in online streaming and content.
Netflix wanted to be paid more from studios for the content that Netflix was streaming, but the studios had the upper hand.
With competitors out there, such as Blockbuster, Red Box, Hulu, and iTunes, Netflix has to find a way to keep its infrastructure costs low.
Netflix has another year or two on most of these contracts, and then the game completely changes, said Michael Pachter, an analyst at Wedbush securities.
Pachter told CNN earlier this week that Netflix's content cost could grow from $180 million in 2010 to $1.98 billion in 2012.
On Monday, the company saw its stock price top $300, today the last trade was at $291.27. Over the weekend, Netflix stated that it wouldn't be placing a bid to acquire Hulu.com.
Also, if you're not bothered by the sudden increase in viewing prices, and if you own an Android, you can watch TV shows & movies on your phone with the Android App: The app is currently part of the unlimited membership. Viewers can watch as often as they want, or, resume a film or program where they left off on their TV or computer. One of the best perks for those who may not want to squint to watch a show on their Android, is that they can update their Queue from their phone.
Tell us what you think about the new Netflix renting prices in the comments below.