The Netflix Pricing Fiasco: Know Why and What It Could Mean in The Future

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Juanita had to find new work once her gang leader was busted on illegal distribution charges. Thanks to Netflix, she’s gone legit.

According to this interesting article I found on Yahoo, we now know why Netflix decided to separate Dvd-only and Instant Streaming services and then combine them for a price increase that stinks more than the foulest cow pattie.  For $16/month, you can now enjoy 1 dvd out at a time along with unlimited instant movies on your computer/game console (and now DS), up 60% from $10/month for the same service.  So with Netflix finally announcing why they decided to up the pricing on all its deals, I’m here to present their reasons and raise a few questions of my own.  I’m sure many of you have wondered the same thing.

In the aforementioned article, “This, as you can imagine, is not a popular decision. This isn’t a cost-of-living increase. This isn’t inflation. It’s a 60 percent overnight price increase – that gives you nothing new in return.”  I know that last bit is what has many customers griping and has them nipping at Netflix’s heels to provide more incentives to the package/price change such as more new releases becoming available through instant streaming.  The Fighter (starring Mark Wahlberg, Christian Bale) was just made available to me last night on instant streaming and I plan on watching it as soon as possible but what about other new releases such as Rango, Sucker Punch or The Eagle?  All are fairly new releases and available on dvd rental, but are not accessible to watch instantly.  How about other anticipated films such as X-Men: First Class, Source Code, Bride’s Maids and other movies that have yet to be released on dvd?  I don’t exactly find it fair to pay the same price as someone else who can get movies on dvd and I can’t.  Or maybe I can if I had $6 extra every month which doesn’t seem like much, but it is.  In a year, I’ll have spent $72 extra;  money that could have bought me a new game, or a few packs of white tee’s (addicted) or a few co-payments for when my kid is sick or needs a check-up.  I can think of any number of things to do with that money other than spending it on Netflix.

So if added content wasn’t part of the plan for the price hike, then what was?  The original pricing plan for Unlimited streaming and one dvd was $10, which was created about 8 months ago and had a long future ahead of it.  So did the sudden change come from contract renewals from movie studio’s, who signed on with Netflix to license movies for unlimited streaming but didn’t anticipate the program to be such a huge hit, now wanting a bigger payout?  Netflix says, “…it’s wrong. The new studio contracts have nothing to do with the price change.”  Hmm… Oh I know!

Netflix is a greedy bastard!  It’s that or this has been just one huge scheme to kill off  the stubborn dvd market once and for all.  I was having this argument the other day with a buddy of mine.  He argued that dvd’s were going the way of video tapes and cassette’s.  I argued the Vinyl Defense.  The Music Industry still utilizes vinyl as a promotional device and are still highly desirable among hardcore turntablists, dj’s and record collecting aficionado’s.  There are specialty stores that specifically carry vinyl records not to mention that vinyl turntables are still competing with highly advanced mp3, cd and eventually blu-ray compatible turntables that can carry thousands of songs on a convenient, handheld device.  My point being that cd’s are still highly desirable and are still compatible with any technology out there and aren’t drastically different from the more expensive blu-rays.  Blu-rays carry more information at a higher definition of quality, but that won’t stop me from enjoying Dirty Harry or Toy Story anymore than if it was on dvd.

Netflix said,“…the unexpected success of the streaming service shifted the balance of power between it and the DVD business. Originally, it was “pay $10 for one DVD-streaming free!” Almost overnight, though, people began thinking of it as, “pay $8 for unlimited streaming-and get one DVD for $2 more!”  Yes, it was originally $10/month for one dvd…back in 2005 when Netflix first started and was all they had to offer, which

was cheaper than paying a rental from Blockbuster or Hollywood Video for 3.99 per video(late fees pending).  Thinking about it, if you’re smart on time and return a rental everyday you receive it, you either get the movie the next day or the day after.  At the very least, you get 15 movies a month and maybe one a day if you’re that quick to the post office, all for $10/month.  Netflix also goes on to say, “Four years ago, it was $9. Today, it’s $8.  So if you’re interested in DVDs only, Netflix’s new price is actually the lowest it’s ever been.”  But why, when Instant Streaming is readily available to me, would I want to pay that much for one measly dvd a day?  Especially when I’ll feel less compelled to return the dvd I just watched when I use the instant streaming more often than I utilize my cable provider?  Not only that, but what pro’s does Dvd-Only have over instant streaming other than you can get new releases once Netflix receives it.  In one day, i can watch the whole first season of Sons of Anarchy online.  That’s about 4-6 dvd box set.  In the same day, i can watch Angry Beavers and then some Gone With The Wind if I’m feeling nostalgic.  Or let me watch some Lost…all six seasons.  I’ve watched my whole fill in one or two days that would have taken me a whole month (and then some) to complete had I subscribed to dvd.  Then there stems another potential problem.  If I use Netflix more often than I utilize Time Warner’s services, will I

Sure, Liar Liar is on Instant Stream, but what are the chances that Truman Show is available online before Mr. Poppers’ Penguins?

then have to pay $40 a month once Netflix catches on that they’re being used more than a local cable provider for a fraction of the cost?  Or, because of my argument, will Netflix feel justified to hike the price for Instant Streaming to $16 on its own, because you get more bang than the buck you’re paying?  Because, who knows what kind of content or services Netflix will be providing in the next few years.

So, by now you get the jist that Netflix hiked prices because they felt they undersold their dvd-only service and here’s what Netflix had to add, “Almost overnight, though, people began thinking of it as, “pay $8 for unlimited streaming-and get one DVD for $2 more!…. That’s not sustainable for the longer life of DVD’s…We need more revenue. It’s a business concern we have to address. We want two separate business units, each side of the service. We were not able to fulfill the requests for DVDs at that cost.”  So, just maybe, Netflix is upping the cost of their dvd-only plan to make instant streaming more attractive.  I can say it’s working because most people I know, myself included, are opting to pay for Instant Streaming only.  I know of two people who are gonna take the $72 hit/year for both services and for one of them, it’s still a bit in the air.  Mind you, they both burn discs they receive and are willing to burn them for friends provided they are given dvd-r’s so they don’t dry up their own supply.  That could be another reason Netflix may be making the dvd-only plan unattractive.  More and more companies are jumping on the HDMI-only bandwagon and will slowly stop providing component cable compatibility for blu-rays.  With devices like Hauppage’s HD/PVR you can burn and rip high quality blu-rays and dvds

Jack knows all about that Catholic Guilt

and stack up your own personal library.  We have yet to hear any mention of Blu-Ray sales being affected at all, which I would take to mean blu-rays are more than justified for the extra $2/month.  Making Blu-ray add-on’s a more attractive sell along with HDMI-only compatibility with Blu-ray players and instant streaming as a viable alternative, Netflix could be looking to extinguish their vast dvd library while cracking down on illegal dvd burning.

Maybe it’s a dick move.  Maybe it’s that Catholic guilt that’s compelling them to right an unintentional wrong.  Who knows, but it’s happening and the only thing we can do is vote with our dollar.  I was told that Netflix accounts for 40% of all internet usage across the U.S. on any given day due to instant streaming.  That’s enough reason alone to just drop the outdated dvd-only plan and focus on Blu-Ray and digital downloads.  What do you think?


In case you didn’t read all this, I’ll save you the trollble.

I think Cartman read Enemy Pie as well.

J. Agamemnon

About the author

Amuro Jay has been writing and editing content for over 6 years. His interests include Gundam, anime, Battlefield, action movies, Gundam, K-Drama, , RPG's, and Gunpla.