Netflix Raises Rates (Dave Cancels)

Dave Zatz —  July 12, 2011 — 37 Comments

No surprise here. Netflix is to become a victim of their own success… and they’re gearing up to pay the content industry piper. Not to mention dealing in physical media (and the postal service) adds up. With that in mind, Netflix is introducing new rates today – plans that break out unlimited streaming from unlimited DVDs. New customers are subjected to the new (higher) rates as of today, whereas existing customers will be grandfathered at their current rates. But only until “your next billing period on or after Sep 01, 2011.”

My current plan runs $10 a month for unlimited streaming with a single DVD out at a time. I’ve been meaning to upgrade to Blu-ray, for another $2/month. And, so come September, my new rate would be $18/mo. But the truth is, I don’t watch much Netflix instant streaming these days. I prefer the Hulu Plus content, UI, and reliability with Amazon or Apple sufficiently satisfying my new release HD VOD needs. Plus, oodles upon oodles of cable channels to browse amongst and Redboxes all over the place.

So, given the imminent price hike and my limited usage, I’ve taken this opportunity to cancel Netflix. And it appears I’m not alone. Yet I imagine for heavy users of the service and/or those with interest in online streaming only ($7.99/mo), Netflix will remain valuable.

(via Hacking Netflix)

37 responses to Netflix Raises Rates (Dave Cancels)

  1. “But the truth is, I don’t watch much Netflix instant streaming these days. I prefer the Hulu Plus content”

    you cant be serious? really? stop.

    for a guy that pays Verizon 100+ a month for tv service, has tivos and a fios DVR, your telling me that you prefer hulu+ content?

    instead of DVR’ing ALL of hulu’s catalog with the paid verizon service, you rather watch a add riddled, crappy quality version on hulu+?

    at least with netflix, you can get most of what hulu offers (except new stuff, but in your situation, who cares since you already pay a huge amount to verizon for that new stuff) and better movie and tv selection.

    but, thats your opinion. i dont understand it, but it is what it is.

  2. We still watch a fair amount of Netflix streaming, but hardly any DVDs since we got the Roku. I’ll probably go to streaming only.

  3. Al, I travel with an iPhone, iPad, and Roku device. So my entertainment options aren’t limited to my physical address. Streaming via Hulu is much more efficient than offloading content from TiVo or even Slingbox and they also offer Criterion and Miramax films. The ads, shown during television content, are minimal and don’t bug me. I’ve also found Hulu Plus more reliable, which was quite surprising at first since they were new to this game. Also, a lot of the better Netflix content I’ve already seen. Crackle (Sony) is free and Amazon Prime also offers video now. I never hurt for content, but a price hike is a chance to reevaluate. And for the time being, I’ll take a pass on Netflix.

  4. Netflix streaming was interesting for a few months, and then I ran out of stuff to watch on it. Most of the selection was like browsing the supermarket checkout aisle. So separating out streaming is fine with me.

    Unlimited 2 DVDs for $12, or 3 for $16 even without the streaming still seems reasonable.

  5. Seems like Hulu is going to increase the amount of commercials as soon as they can find advertisers willing to pay (right now there are an awful lot of public service ads).

    We’ve been on a Netflix streaming-only plan for the past few months and I’m finding we use it far more than Hulu. As long as you don’t care that much about getting *current* TV episodes, it offers a great service for the value.

    I’d been thinking of adding a DVD option to the plan for $2 per month to catch up on shows that aren’t available online such as The Wire… but at $8 per month I’ll probably just skip it. Sure, I’ve heard great things, but there are plenty of other excellent TV shows and movies to catch up on.

  6. I am really curious what Netflix will tell me. I was given a one year subscription of 1 DVD out and streaming at the $9.99 price back in Decembet. I am obviously in the middle of it and since it is prepaid and non-refundable I don’t see how they can change the terms of what has already been bought and paid for.

    Regardless after this I will either drop them completely or switch to DVD only. $9.99 is the max I will pay for a service that doesn’t offer everything.

  7. I don’t mind that they broke things out like this so much, but what I do mind is the huge jump in pricing. I will go from $15 to $20 for 2 at a time with streaming. I think this could easily be remedied by giving a $2 discount for “bundling” the two different services. I wouldn’t be ecstatic about paying $18, but I would be a heck of a lot less temped to dump the service. I’ll have to analyze my usage, but I think I might be moving to rentals from Amazon (probably not b/c $4 is pretty steep…). We’ll see though.

  8. I’ve been trying to whittle my DVD queue down so I can cancel DVDs, this will just push me to do it sooner than I planned. To tell the truth, I’ve been having issues with Netflix stating most of the DVDs I want to watch have a “very long wait”, even for some released last year. I never used to have this problem so I don’t think Netflix buys as many DVDs as they used to.

    For the items left in my queue, I’ll just use Redbox.

    I have Amazon Prime which pretty much duplicates everything that’s available via Netflix streaming (excluding the Starz Play movies and shows). If Amazon had an iPad app, I wouldn’t hesitate to cancel Netflix entirely.

    As for Hulu Plus, if I had to choose between Netflix streaming and Hulu Plus streaming, I’d pick Netflix since Hulu Plus has ads and the vast majority of the Hulu library is not available for streaming.

    I also have a Slingbox, and while their iPad app is good, controlling a DVR via the app is frustrating at best.

  9. I find it funny people’s reaction to the price hike given that only a few years ago Netflix streaming wasn’t an option. At that time, I was paying $15 for 3 DVD’s at a time. Then, something magical happened. Netflix threw in streaming for FREE! I dropped to 1 DVD at a time for $8. I’ve been saving $7/month for the last 3 years while watching streaming Netflix more and more. I’m so glad I cut the cord then.

    You gotsta chill, people.

  10. And I find it funny when people suggest how I should feel or act in regards to spending my hard earned income. ;) My existing plan, without the Blu-ray upgrade, would increase about 60%. But honestly, it’s not the money… as I’ll drop $5 or $6 a title on HD VOD and have been known or overspend on all sorts of things. Rather, it’s the perceived value – which is now diminished. Also a few years ago, as you mention, the landscape was much different.

  11. In Canada we only have the streaming option. I find myself streaming movies more recently because of netflix. For new rentals i either go on PlayStation network rental or Xbox 360.
    I don’t know in the US if you guys go for option DVDs versus option streaming. I find its a good idea for those who don’t care about the DVD part of the package.

  12. Geoffrey Sperl July 12, 2011 at 3:39 pm

    I think the main thing that makes this increase hard to swallow is there’s no attempt to show us where the added value is as the consumer. If they were going to announce a massive (and I mean by 200%, at least) increase in the streaming selection, then I could accept the argument that the service needs to be unhooked from the DVD rentals.

    But, as it stands, Netflix hasn’t attempted to show us any value for us paying around 60% more (in many cases). I will probably seriously evaluate the Netflix spending with my wife in the next month or so.

    Maybe it’s time to check out the video selection at the local library…

  13. @Geoffrey. I totall agree. Aside from catching up on the occasional TV series, streaming options are awful. Red Box and the library have treated me very well lately.

  14. Netflix’s blog post (linked from Dave’s post above) explains some of their logic.

    I suspect Netflix is expecting a lot of existing and new customers to be streaming-only or DVD-only. Lower the a la carte price and make it up on volume.

  15. Yeah, if they could tell us a large percentage of the movies were going to be re-encoded with 5.1 surround sound, I’d be happy. Or throw existing customers a bone and give us a discount of a dollar or two to combine disc and streaming services.

    I just signed up for Netflix 36 days ago. I just bought an Apple TV (primarily because the Netflix streaming experience is better than on my TiVo HD). I suppose because of that I’ll stick with steaming, but much of the quality (audio and video) of their programs feels similar to VCR. Certainly not as good as DVD, not to mention Blu-ray.

    Sigh. I’ll probably stick with the 1 out at a time plan too, to get my quality fix. I just looked at Redbox, but very few things in my Queue are at Redbox.

  16. Believe it, Al. Dave isn’t the only one that prefers Hulu Plus to Netflix. As Dave noted, I believe they have a superior – far superior – UI, offer greater stability and greater access to current television content. As an individual that appreciates the Criterion Collection, likes having access to four or five shows I follow on a regular basis (in essence I use Hulu Plus like a DVR) and doesn’t come unglued over a few commercials (like a lot folks), Hulu Plus works very well for me.

    Among other things, Netflix’ failure to significantly improve their HD offerings has soured me on their service. With that said, my understanding is that the price increases will not affect my plan, the streaming only plan ($7.99/month), so I have no plans to cancel right now simply because I can always find enough to watch to justify the cost. However, I am not so certain that what Netflix offers is worth substantially more per month for me; anything beyond $9.99/month and I would probably jump ship — unless the service improves.

  17. One thing I haven’t found the official answer to yet: How many simultaneous streams can I now have on the streaming-only plan? For example, streaming one show on the Roku in one room, and another show on the Wii in another room, at the same time.

    In the past, the number of simultaneous streams matched the number of DVDs in your plan. That’s one reason we had the 2 DVD plan.

    Now if we go streaming only, is it only one stream at a time? The Netflix FAQ hasn’t been updated for streaming-only, while the “change your plan” page doesn’t mention simultaneous streams.

  18. jon the heretic July 12, 2011 at 7:44 pm

    My rate goes up on 9/11… that is the day I will remove streaming. I have sold many people on the incredible value of Netflix—get 1 or more disks at a time and unlimited streaming. Frankly, I was late to Netflix–I jumped on the bandwagon the day streaming became a free add on. But a 60% increase is insane and ultimately self defeating… the value is simply not there now nor will I help them sell a single new subscription.

    For me, I will keep 1 unlimited blu ray at a time. When I found that even their Starz Play programming was going to be delayed by 90 days, instant watch already took a profound hit for me. So no Torchwood for me until Sept? Forget it. I liked it for the cool geek factor but honestly the content is not there. My 1.6% raise can’t keep up with 60%
    price hikes like this and I already have way too much unwatched content on my 2 TB Tivo Premiere.

    Netflix has just got off the deep end.

  19. Mike,

    The streaming only plan allows for only one stream at a time. There was a time, prior to the introduction of the streaming only plan, where you could have concurrent streams on the 1-DVD, unlimited streaming plan. In my personal experience, I was able to stream to two or three devices at the same time. However, my recent experience is that Netflix is actively limiting streaming only plans to one stream.

  20. Yeah, I failed to capture my “cancelled” screen shot but should have. Having been an early tester and customer for over a DECADE it saddens me that my decision is to cancel. I put up with the 1$, then 2$ increase for blu-ray which is really only what I rented for quality purposes, but the streaming was nice till I realized there just wasn’t too much interesting current content to keep me interested. This won’t get better either as studios continue to enforce at a minimum 30-60 day no streaming periods and even THEN most don’t allow streaming for many months after DVD release. Unless of course the movie sucked, and then well you can stream it. silly move from a customer standpoint, but from a revenue standpoint, even is they LOSE 25% of their base (which they won’t) they will still be in the black with this by at least 12% a month/quarter/year and THAT is some serious coin. bye bye netflix, you’ve forced me to move BACKWARDS in time and i’ll most like frequent the Blockbuster and redbox around the corner more than I have in about a decade.

  21. Thanks, jcm. I wonder if that policy will change with the new plans.

    Now that they’ve decoupled streaming from DVDs, it doesn’t make sense to require a 2-DVD plan to get dual simultaneous streams.

  22. I need to check out the Amazon prime offering.

    And I want a copy of my queues from Netflix.

  23. The wife brought up the other day about how we rarely watch a movie at home anymore and suggested we cancel too. Ehh, for $16 it’s still a pretty good deal.

    I also pointed out that we pay $40 a month for a gym membership she never uses. “Just tryin’ to save a couple of bucks hun” That didn’t go over as well as I thought it would.

  24. I’m a little dumbfounded that Netflix isn’t offering a streaming+DVD bundle plan for a token ($1-3) discount. There must be quite a few people like me who have the cheapest streaming+DVD plan but don’t use DVDs that often.

    And if Netflix doesn’t want to discount streaming + unlimited DVD plans, how about a streaming + limited DVD? They probably would get some takers who mostly stream but want a safety net of a few DVDs/BluRays. Price that plan at, say, $12 for 3-4 DVDs per month and they’d have more customers than those willing to deal with paying almost double.

    P.S. I’ll see how things go, but probably will cancel entire Netflix service. Don’t watch a lot and I do have Amazon Prime (wish Boxee or TiVo had it). Plus, have a whole lot of VUDU credits on my account.

  25. I’m sad. I understand the reasons Netflix has to raise prices. But I don’t understand why they have to split the service and not offer any kind of discount for getting both. As @Ivan mentioned, it’s good business to throw your customers a bone if they get a combo pack. Say $15 instead of $16 for the combo.

    If the content was the SAME both on DVD and streaming I’d understand–it would essentially be two different ways to get the same content, so twice the price makes sense. But while all content is on DVD and some on BD, most content is not streaming. Why is streaming then the same price as the DVD service?

    Anyway, it’s just entertainment so either we’ll keep it or we won’t. But the way Netflix is handling the communication is not very good, and after 12 years as a customer I finally am losing interest in their service offering.

  26. How come you can’t email support / customer service at netflix? I changed my plan and it really didn’t benefit me. Until reading this I didn’t know the plan was going to change until September. Replying to the email goes nowhere and the only way to reach them is via phone. Doesn’t that seem counter intuitive for a technology company?

  27. I just cancelled my service. Raising the rates nearly 60% is ridiculous. Let’s face it their streaming selection sucks and you have to wait 3 weeks from the time new releases come out to the time you are able to get them through Netflix. Cost versus the benefit just don’t match up. I’ll use Red Box or On Demand through the cable company if I want to see a movie that bad. It would be foolish for me to continue supporting a company that so blatantly takes advantage of its customers.

  28. I’ll be cancelling in August. At the current 1 out-at-a-time price and streaming I could keep it, even though we don’t use it much. At the new pricing, it just doesn’t make sense to keep it. I’ll probably sign up for Amazon Prime. We do a lot of shopping from there so the 2 day will be nice and the streaming will be a bonus. Redbox will fill in the gaps if needed.

    John

  29. I can’t understand why you all are whining. If you are going streaming-only, you are not affected. If you get DVD via mail, isn’t this close to what they were offering before they started streaming? Think about the costs 44 cents a DVD, 88 cents postage just for 1 DVD round trip. If you manage to watch 6 per month, it is $5.28 just in postage costs. $7.99 is not that far off. Those who are ditching Netflix won’t find a better value elsewhere.

    As for me, I would stick to streaming and would have paid even $10 or $12 just for streaming, if they promised a better library.

  30. I think this is a two birds thing. One it raises revenue to address rising content cost, but if the reports that Sony and soon Disney content provided by their Starz licensed content have streaming member caps, then getting subscribers to break themselves up by what the primarily use (dvd vs stream) would give them a little extra time before they hit those caps. And when they do, they would have revenue that matches the hiked content acquisition costs.

  31. Yes, price-wise it’s similar or better to the old pricing before they had streaming.

    Honestly, the pricing isn’t even the main point for me. The new pricing is still a decent deal and I know they have to pay for content because licensing costs are going up. I’m not happy with a 60% price hike but business is business.

    The issue is that at the moment the streaming catalog is severely limited, so you really need to get DVDs if you want access to more recent content. Having them together is great, as you get the full selection of DVDs along with the immediacy of streaming for some content. Splitting the service up now–before the streaming catalog is complete–feels like a cruel joke. They’re not ready to be two different services, no matter what Netflix claims.

    Netflix tricked us. They threw in free streaming for a few years, then upped the price by a lot before the streaming was truly a worthwhile service. A typical business move–first time’s free–but I think it’s premature.

  32. jon the heretic July 13, 2011 at 9:03 am

    For some of us — I started Netflix the same month streaming was added to the DVD plan — it is quite simply a giant increase. I was paying $8.99/month when I joined, which included blu ray and unlimited streaming. I felt it was a tremendous value despite raising the price on me several times, first for that ridiculous blu ray fee, esp since having BD is part of why I decided to join Netflix. When it took 60-90 days to get a new release that was available elsewhere, I took it in stride. Now Netflix wants $17.98 for the same tier. The price has doubled in just 3 years. (hint: my salary hasn’t!)

    The value is no longer there. The costs for the same service — well worse service in some ways, because of the long wait time for both DVDs and even for online content — is much higher than when I joined (double) when combined with the other increases during this period. Netflix has enjoyed unparalleled market success too, partly because of grass roots enthusiasts like myself spreading the word about what an unbeatable value this package is. The party is over on both fronts. I won’t help Netflix sell a single subscription now…it’d be frankly hard to! The unbeatable value is gone.

  33. The costs for Netflix are going up – specifically the cost of streaming liscense. I see this as an ominous move to be able to start getting the correct price on the unlimited streaming from NetFlix. I am not complaining in the least. Netflix made a business plan of getting folks on board with their streaming and executed it brilliantly. I benefitted greatly from that plan since my house watches a lot of Netflix streaming and I can still get a couple of DVDs at a time.
    My rate will go up 5$ overall and I will absorb that for now as I am mainly housebound in my media consumption and getting the latest shows is not a concern thanks to TiVo.
    Frankly it is still less cost than the value I receive from Netflix.

  34. Jon the Heretic July 13, 2011 at 11:47 am

    Too rich for my blood. Their costs are up? Hey, mine too. That is why I will limit my Netflix service once the price increase takes effect. I now have a new ritual — the day before renewal, I will decide if this is a Disc only month, a Stream only month, or a hiatus month. Netflix will make less money off of me, a LOT less.

    Something I considered indispensable just became disposable. Stupid move. And some vastly cheaper options like Red Box and even my public library just got real interesting. May record a lot more movies from Cable on my Tivo now. With Netflix, I didn’t even bother. I will make better use of these other resources and save money too.

    My food is way up; energy and gas are way up; medical costs are way up; my salary has not kept pace with inflation for years. WE are in a recession with nearly 10% unemployment. Frankly, I need to cut costs; there is no room to “absorb” this.

    At the old price point, I wouldn’t have dreamt of cancelling/limiting service. But at the new price point, it is clearly just a luxury. It makes me realize I really don’t need it.

  35. Ananth T Sarathy July 13, 2011 at 2:40 pm

    I think that this is going have the opposite effect than Netflix hopes. I currently have 3 dvds (bluray) but I can’t justify it at 27 a month. I am probably going to switch to a 2 disc w/o streaming as I feel streaming adds little value as it currently stands.

    I think VOD doesn’t really work for me. At 5 a pop, you only have to watch 3 newish releases to cost the same in a month, with the only advantage of not having to wait the 30 days. But if I have waited for it to come to video, 30 more days is not a big deal.

  36. @jontheherectic
    “the day before renewal, I will decide if this is a Disc only month, a Stream only month, or a hiatus month. Netflix will make less money off of me, a LOT less.”

    this is a VERY good idea.

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