Netflix Raises its Prices

There's been a lot of outcry over Netflix's recent announcement about changes in not only its prices, but its plan structure. We subscribe to the unlimited streaming + 1 DVD out-at-a-time plan, which currently costs us $10/month. When the changes take place in a month, that same plan will now cost us $16. Quite an increase!

Now, for us, the change isn't particularly drastic or unmanageable, for a number of reasons:

1. Netflix serves as a TOTAL replacement for cable, not a supplement. $80/month vs. $16/month is still an incredible savings. Plus it cuts down on channel-surfing-- we only watch TV when there is something we want to purposefully watch.

2. We use Netflix primarily for TV shows, secondarily for movies. There are really only one or two shows that we can't get either on Netflix or on another website (like Hulu, or the station's website), so Netflix's offerings, when it comes to what we like to watch, is pretty substantial. Between me and Allan, we probably watch nearly a dozen TV shows on a regular basis.

3. Now that we have our brand-new, huge flat-screen HD TV for the new house, we REALLY take full advantage of the Netflix streaming service, because the TV has a built-in Netflix app. We can watch everything that Netflix streams (commercial-free and in hi-def!) with just a wireless internet connection.

In fact, we're even contemplating upgrading to the 2-DVD-out-at-a-time plan, which would cost $20/month-- still a fraction of cable cost. Although I primarily use the DVD subscription to watch TV shows that aren't streamed, it would be nice to also be able to check out the occasional movie, without having to wait until the current DVD is finished.

So, although for us, it still makes economical sense to stick with Netflix despite their inflated prices, I can also understand where a lot of other consumers are coming from with their outrage.

First, Netflix did away with their combo plans and instituted separate DVD vs. streaming plans. So now we're essentially paying for two separate services: streaming and DVD. This makes sense when you have customers that use one exclusively over the other, but it penalizes those that actually use both. Why isn't Netflix offering a discount for those who subscribe to a combination plan?

Second, if the pricing structure is undergoing such a drastic change, why aren't existing customers being allowed to grandfather in their current price/plan, or at least have their prices raised by a much smaller amount-- essentially the same as receiving a discount for a combo plan? I know that when we significantly change features on our products, we try to mitigate the effect of taking AWAY a feature-- at the very least by making it user-configurable.

These changes don't seem to be making much sound business sense. I am really curious to see what happens to Netflix's customer base once the changes take effect. Whatever decisions they decide to pursue between now and then, or even afterward, it definitely won't be without lack of consumer outrage! Wonder how much they'll take that into account...