A couple weeks ago, I dropped our $20/month 3-discs-at-a-time-plus-unlimited-streaming plan to the $10/month 1-disc-at-a-time-plus-unlimited-streaming plan. I just got email from Netflix telling me that the cost for that plan will skyrocket by 60%, to $16/month, as of 1 September.
Our old plan will jump from $20/month to $24/month, a 20% price increase. For $20/month, we can now get streaming plus 2-discs-at-a-time, which may be what we change to. Or I may go back to the original 3-at-a-time plan.
Obviously, Netflix has decided that they really, really don’t want to be in the disc business. I just wish they had a $24/month plan for unlimited streaming of everything in their streaming and disc catalog. I’d go for that in a heartbeat.
I think the real issue is that the cost of providing streaming has grown, while the cost of running the disks-in-the-mail business has continued and even increased. Streaming has shown that it can stand on its own – they have offered a streaming-only option for months and that price is the same. Now it is time for each side to pay its own way. I am a bit surprised that there is no discount at all for taking both.
I’m not. Basically, the 1-disc plan was a no-brainer over streaming only. For $2 a month, I’ll get about 8 discs/month, or $0.25 each. Given that it costs Netflix almost $1 each to send and receive those discs, they were losing $6/month on me with that plan, not counting the cost of the DVDs themselves and overhead. By boosting that to $8/month extra, Netflix might at least break even on me and probably make money on most subscribers. At $2/month extra, they lose money on any subscriber who gets even two discs a month.
On the 2-disc plan, I’d pay $12/month extra for probably 16 discs/month, which still loses money for Netflix. On the 3-disc plan, that’s 24 discs/month for an extra $16, which loses even more money for them. Of course, that’s assuming that I turn around discs as fast as possible, which I might not do since at this point there’s not a whole lot in my disc queue that I actually care about.
Interesting coincidence – received an email today from Amazon offering to renew my Amazon Prime student account for $39/year (first year, ending soon, was free) and once a paid Prime member will be entitled to access to Amazon’s streaming service at no additional charge.
My family must be the exception to the rule. My wife and I have a streaming only NetFlix account, so our price will remain unchanged. My inlaws are one disk at a time, no streaming, so they’ll actually get a 25% cut in their monthly fee.
Yeah, some people do get a break, or at least no price increase, but the vast majority of Netflix customers were on streaming plus one, two, or three discs at a time. When Netflix introduced the $10/month plan, I suspect a huge number of their customers cut back from the 3-at-a-time $20/month plan to the $10/month plan. That’s what we did, and I’ll stick with the $10 plan until my renewal date in late August. At that point, I’ll switch to their new $20/month plan, which gives me only two discs at a time instead of the former three, but is still a great deal. Much better than paying $16/month for only one disc at a time.