Netflix hikes prices for many consumers with separate pricing for DVDs, streaming
Netflix consumers who like to receive both a DVD and watch movies online through the service are about to pay 60% more a month in subscription fees.
In a reflection of the more challenging economics, the company faces to acquire digital content and ship DVDs, Netflix announced Tuesday that it will no longer offer combined DVD and streaming plans. Instead, the company's more than 22.8 million U.S. consumers will have to pay separately for each service.
Unlimited streaming will cost $7.99 per month, as will taking out one DVD at a time. The combined cost is $15.98 per month, a huge price increase for those who currently pay $9.99 for a combined streaming-plus-one-DVD plan.
In a blog post, the company positioned the price increase as a way to bolster its DVD business, which executives had previously deemphasized.
"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," the corporate blog post said. "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."
However, the higher prices could also encourage some users to abandon DVDs and utilize only streaming. In either case, Netflix could end up with more money to pay for the rising costs of content for its digital service.
If some consumers switch to DVD-only plans, that may also help Netflix access more digital content. For example, it recently lost films from Sony Pictures that it acquired from Starz because its subscriber total exceeded a cap established by the studio.
The price changes are effective immediately for new subscribers but take effect in September for preexisting ones.
Consumers who want two DVDs out at a time will pay $4 more for the additional disc. There are also surcharges for access to Blu-ray discs.
-- Ben Fritz
Photo: Netflix Chief Executive Reed Hastings at a California distribution center. Credit: Randi Lynn Beach / For the Times