Netflix Price Increase: Netflix To Charge More For Some Plans

(THE ASSOCIATED PRESS) LOS GATOS, Calif. — Netflix introduced a new plan Monday that, for the first time, relies solely on video streamed over the Internet rather than the DVDs that it has mailed to customers since the company was founded more than a decade ago.

The shift demonstrates how quickly consumers have transitioned from physical media players to digital entertainment that can be browsed, watched again, or discarded without ever having handled a disk.

The company has already said that its members are watching more content streamed over the Internet than on DVDs. To keep customers happy, the company said it will spend more to license streaming content this quarter than it will on buying DVDs.

"We are now primarily a streaming video company," co-founder and CEO Reed Hastings.

And Netflix said it will also raise prices on plans that include physical DVDs.

That sent shares of Netflix up 9 percent to an all-time high Monday.

Under a plan that allows for one DVD rental at a time, along with unlimited movies and TV shows streamed over the Internet, the cost will be $9.99 per month, a $1 increase.

Current members will see the change in their monthly bill in January, while new members will see the price immediately.

The streaming-only plan will cost $7.99 a month. Netflix already has a streaming service in Canada for a monthly fee of 7.99 Canadian dollars ($7.86).

Netflix ended October with 16.9 million members in the U.S. and Canada and predicted it would gain another 2.1 million to 2.9 million customers by year's end. That means Netflix could enter 2011 with more than 19 million subscribers, doubling the service's size in two years.

Netflix, based in Los Gatos, Calif., is spending heavily to obtain the streaming rights to more movies and TV shows to help lure more customers and shift more of its existing subscribers away from DVDs.

In the third quarter, Netflix spent $115 million on video streaming rights, up from just $10 million at the same time last year. Spending on DVDs dropped 35 percent from a year ago to just under $30 million in the third quarter.

Shares of Netflix Inc. jumped $14.97 to $188.04 after reaching as high as $188.18.

Comments

[Rafael Li]

01:48 AM on 12/21/2010

The real reason the rates went up is because Comcast has increased what they charge Level 3 (the company that Netflix uses to distribute content online) to deliver streaming content to Comcast subscribers. This is obviously a desperate measure to control the growth of Internet TV and shift the control to cable again. Comcast also has a 250 GB usage limit. They say 99% of their subscribers use significantly less than that per month. With the new HD streaming sites I think that limit is going to be reached by many people very quickly (since each movie can be up tp 8-10 GB). It all fits in their little evil plan. There will be a vote at the FCC tomorrow to decide on Net Neutrality, but it seems lobbyists have done their job and the FCC leaders are favoring Comcast and AT&T. If it gets approved it will be challenged with a lawsuit. But of course, we are the ones who lose. On the other hand, if internet ends up being more expensive, the bright side is that we will start paying more attention to real people, our families and friends, instead of our phones and HD TVs. Maybe it is the greatest thing that could ever happen to mankind...well...just maybe. :)

[PantherDJ]

03:41 PM on 12/13/2010

I can honestly say that I am not complaining about the $1 price increase. If you can't afford $1, then why are you with Netflix in the first place? It's a great deal already and I am happy to pay the extra $1. Any company must earn some sort of profit. They won't get rid of DVDs completely, they are just gaining the streaming rights for these movies so it is more of a convenience for us to view them at home. Notice how some are not available to stream right away? So, for all those who are complaining about not having the actual DVDs, hush. The 1-Disc is only a $1 because it's only one DVD. So, naturally, 3-Disc plans will increase $3 ($1 per DVD).

Also, if you really think about it, you have access to all of these movies whenever you want (although some are unavailable because of their popularity). Would you rather pay $10/month for DVDs and TV shows (many of which are streamed) or pay $20 for movies and $40 for TV on DVD at the store? Pretty sure Netflix is STILL the better deal.

Netflix is a genius idea and I am glad I signed up for it. I am happy to pay a little extra to such a great company.

[PantherDJ]

03:57 PM on 12/13/2010

One more thing, if you think RedBox is such a great deal, think of it this way: you are spending $1 PER DAY PER MOVIE for each movie you rent (they don't even have TV shows). If Netflix is only charging the $9.99 PER MONTH for their service...that is only approximately $0.33 PER DAY including the UNLIMITED STREAMING. How is this not a great deal with only the $1 increase? I don't see why you people complain. Is it just for something to do to occupy your time because you have nothing better to do? If so, then get a new hobby.

[Species5618]

07:02 PM on 11/27/2010

The Blockbuster kiosks are adding newly released titles that Redbox and Netflix don't have. If all works out well for them, they should see an increase in service.

[Jamal Dash Burgess]

04:03 PM on 01/08/2011

Gotta leave your house for that....no ones going to a damn kiosk. A few people but nothing significant. I'm on my couch right now with my Wii controller flipping through thousands of movies. It gets even better when you give movies you've never heard of in the theatres a chance and they're good.

[Species5618]

06:55 PM on 11/27/2010

Well, they raised their prices which immediately prompted me to change my service to a lower priced plan. Netflix is dominating the rental market and to show their gratitude to their customers who have been loyal for a while now, they raise our rates. I dropped cable subscriptions to go strictly Netflix. I'll drop Netflix and keep my television watching to a minimum and spend more time on my hobbies or other new and interesting things if they raise their prices again anytime soon.

[kaspian808]

05:48 AM on 11/25/2010

Redbox

[hawhite2000]

06:31 PM on 11/23/2010

I don't understand the need to increase the price for existing plans, unless you are saying that they need more money for postage. I am a current Netflix customer and the streaming only plan isn't that great in my opinion. The newer movies that I would want to see aren't available to stream for quite a while; so I don't get the benefit. If all I was doing was watching seasons worth of Dexter episodes then it would be fine, but I am not.

[Beaucamper]

04:29 PM on 11/23/2010

I rent only Blu-Ray discs. I want to watch the actual movie, not a video copy. Even the best streaming cuts quality. Streaming movies? Not in my home theater, at least till they make them 1080p.

Streamers: Lets say you can now watch 30 movies a month. How many of those will you really care about or remember? And the 30 the month after that?

Overheard near a Cineplex: "Wanna go look at a movie?" --Snacks for the brain?

[philinmedford]

06:26 PM on 11/23/2010

As in everything, to each their own. I find 480p movies very watchable. I have a home theater but I don't expect everything to be blu-ray quality.I understand that some are video connoisseurs , just like there are wine connoisseurs . I find $25 (or less) bottles of wine very palatable. I find 4-5 stars movies enjoyable.

Answering as a streamer: I watch full seasons of a t.v. show that interests me, Dexter for example. I watch movies and shows that I enjoy. Here are some things that I watched recently streaming.

Great Migrations: Born to Move (4 episodes) National Geographic -about migration of animals
The Jewel of the Nile
JFK: Reckless Youth:
Coma
Invitation to a Gunfighter

Obviously a lot more but you catch my drift.
Remember them? Heck, as an old guy I can watch them tomorrow because I have CRS (just kidding!) but there are some great movies that I haven't watched in years that I can hardly remember.. I watched The Grapes of Wrath last night as one example. I hadn't watched that one since about 30 years ago.

The bottom line is this: When you stream things, you get thousands of more video content than the highest tier cable programming. ALL with ZERO commercials. I have a program called Play-on that has in just ONE section of it a source with over 25,000 movies. So I can pick through a VAST array of video content. Add to the fact that these sources, Netflix included, act like a DVR. I'm not at the whim of some programmer who decides to play a movie at 8p.m on Monday. If I want to watch something, I just access it.

[Lance Boone]

08:32 PM on 11/23/2010

Wow I wish I could hear normally like you guys, I'd stream lots of old movies. On the bright side I can watch the same streamed movie 50 times and still never figure out what's going on because they don't have subtitles. It's like why are they all laughing, how come she's crying Lol.

[Genders]

03:36 PM on 11/25/2010

I love the streaming video option for all the reasons you state, and Netflix does very well except for a major bug: any flash of light causes a horizontal line image shift for a couple frames, very annoying in shoots outs and explosions.

[plooger]

04:07 PM on 11/23/2010

Egads, that's horrible reporting, HuffPost; you missed most of the biggest price increases.

http://blog.netflix.com/2010/11/new-plan-for-watching-instantly-plus.html

[WaterCloset]

10:39 AM on 11/23/2010

I go to the library for my movies. It's free.

[SF TKF]

10:28 AM on 11/23/2010

Time to quit . . .

[Kamereon]

09:59 AM on 11/23/2010

Netflix if you're reading - two points:

raising my three disc plan by $3 is only going to force me to move to the 2 disc plan (a loss of $5 at the current price and $7 at the new price) - per month this doesn't seem to save $ for you.

second, if you are going to raise the price by telling me you have to charge more because you are going to provide more content...provide more content first.

Being charged $3 more a month for the same 1970's and 1980's movies, really irks me.

[longfeltwant]

12:27 PM on 11/23/2010

They've been providing more and more content over the last couple years. If it assuages your feelings, just think of the $3 as an increase for all of that new content, and the upcoming new content will just be gravy.

[CJ24]

02:27 PM on 11/23/2010

I've been with them for three years. I do not in any way see 'more' and 'more' content being added. In any genre. It's the same, like the poster above you states, 70's and 80's stuff. New movies take forever to get, I've been trying to get a new release for two months and I'm STILL on the waiting list. That $3 is about a 15% increase. This is the second increase in three years.

[Kamereon]

04:17 PM on 11/23/2010

I understand the profit motive behind it, but I'm not quite following the implementation. Netflix will charge dvd people more to offset postage costs. So my $20 plan will go to $23, but that will be too much for me, and so I will change my plan to the $16 (used to be $15). But now, my girlfriend and I will get better at sending the discs back, in order to see as many movies as before. And we'll still stream as much as before. That seems to me that they are losing $4 a month while not really reducing their postage cost.

[drmar35mm]

09:58 AM on 11/23/2010

With Netflix, broadcast, Hulu and my own large DVD collection, if get all the content I need at a fraction of the cost of rip-off cable and satellite programming. (Any time I've had access to the latter at motels and a rental house in FL, it never seems worth what it costs.) I don't mind paying an extra buck a month for 4-5 DVDs by mail.

[tsarchasmo]

09:45 AM on 11/23/2010

Oprah's fault.

[jtmoney]

09:33 AM on 11/23/2010

Aren't we already paying more than Canadians?

[lifeofthemind]

09:31 AM on 11/23/2010

Yeah I don't really see where the outrage is coming from. I used to pay a higher price for a physical disc only netflix before they even had a streaming catalogue--and I liked it even then. Netflix has been pushing towards more online and less mail. It makes sense to not make the online only customers subsidize the postage for those who receive discs.

If you insist on refusing that dollar a month out of principle, then try saving the dollar month to month until you can afford a dvd of your own, or else watch one redbox title a month.