Wednesday, July 13, 2011

Netflix is beginning to test my patience

As Netflix has become a more and more dominant player in the home movie arena, they have not been shy about trying to squeeze more profits out of their customers.  Or are they simply barely covering their costs?  The latter is what their latest account update e-mail would lead you to believe:

Dear Obinna,

We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.

Your current $23.99 a month membership for unlimited streaming and unlimited DVDs (including Blu-ray access) will be split into 2 distinct plans:

   Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
   Plan 2: Unlimited DVDs (including Blu-ray), 3 out at-a-time (no streaming)
              for $19.99 a month

Your price for getting both of these plans will be $27.98 a month ($7.99 + $19.99). You don't need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.

These prices will start for charges on or after September 1, 2011.

You can easily change or cancel your unlimited streaming plan, unlimited DVD plan, or both, by going to the Plan Change page in Your Account.

We realize you have many choices for home entertainment, and we thank you for your business. As always, if you have questions, please feel free to call us at 1-888-357-1516.

–The Netflix Team

Fair enough, at first glance.  But lately it seems that I can expect this type of e-mail every few months from these guys.  I've had their "unlimited" 3-discs-at-a-time plan with unlimited streaming (since they've offered it) for what seems like forever.  Here's a summary of all the price adjustments that they have made for this plan in that time (these prices do not include tax, which is typically about $2):

  • November 2004 - $17.99
    • Cost when I started
  • August 2007 - $16.99
    • $1 decrease due to competition from Blockbuster
  • October 2008 -  $17.99
    • $1 increase for customers who rent Blu-Ray discs
  • May 2009 - $20.99
    • $3 increase for Blu-Ray option
  • January 2011 - $23.99
    • Plan price adjustment to account for rise in streaming demand
  • September 2011 - $27.98
    • Separation of disc and streaming plans
As you can see, the price increases have been especially sharp as of late.  This is supposedly due to the shift towards acquiring and providing more streaming content.  It's somewhat understandable, but a 55% increase in 3 years seems a bit harsh.  Too bad they're pretty much the only viable game left in town.  Plus I can't say that I'm disappointed with their services.

3 comments:

  1. They had to decouple the streaming and DVDs because they are trying to phase out the DVDs. As you can imagine, the profit margin on the DVD side of the house is razor thin compared to the streaming side. I think you can expect future emails to continue raising the price of the DVD service until there is no one left willing to pay for it.

    ReplyDelete
  2. I get that. I just wish that their streaming catalog matched their disc catalog - if that was the case, I would be off the discs in a heartbeat.

    ReplyDelete
  3. This might help you feel better about your relationship with netflix.

    http://www.usinflationcalculator.com/

    these guys say $3.50 of the total increase is inflation. I think the total changes you've experienced since 2004 are:

    $ 6.50 extra per month
    +
    unlimited streaming. (unless there was already streaming in 2004??)

    plus I would say an improved overall product and selection.

    ReplyDelete