Netflix: same great service. NEW higher cost!

“Jessie Becker, here to share two significant changes at Netflix with you.” – sounds like something cool might possibly be coming your way, right? So wrong… Unless your idea of Awesome is paying more for a service you used to get for free. then you’re stylin… the rest of the world reacted differently though…

First, we are launching new DVD only plans. These plans offer our lowest prices ever for unlimited DVDs – only $7.99 a month for our 1 DVD out at-a-time plan and $11.99 a month for our 2 DVDs out at-a-time plan. By offering our lowest prices ever, we hope to provide great value to our current and future DVDs by mail members. New members can sign up for these plans by going to DVD.netflix.com.

Second, we are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both. With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail.

So for instance, our current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
Plan 2: Unlimited DVDs, 1 out at-a-time (no streaming), for $7.99 a month.

The price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). For new members, these changes are effective immediately; for existing members, the new pricing will start for charges on or after September 1, 2011.

Why the changes?

Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan. At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs. Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering. Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix.

Now we offer a choice: Unlimited Streaming for $7.99 a month, Unlimited DVDs for $7.99 a month, or both for $15.98 a month ($7.99 + $7.99). We think $7.99 is a terrific value for our unlimited streaming plan and $7.99 a terrific value for our unlimited DVD plan. We hope one, or both, of these plans makes sense for our members and their entertainment needs.

I use amazon prime. it includes free 2 day shipping on anything you buy from amazon – which was why i had it in the first place. one day they just added free streaming movies as a perk to my membership. HINT: that is how you do it, Netflix… surprise users with free new features, not with old features that now cost double what you were paying…

But this dude says it even better:

Willie Williams
Dear Netflix,

Individually your DVD and steaming services do not offer enough to justify their expense. As a bundled service they supplement each other and provide the value that made Netflix wonderful. DVDs allowed you to view newer releases in a fairly timely manner. Streaming allowed for viewing of the older catalog of movies that come up when you think of it but might not be worth waiting for to arrive in the mail.

I average 5 DVDs a month. I can replace these rentals with RedBox for $5 and save $3 based on your subscription prices. This replacement would also remove the 28 day wait that comes with most new releases available through Netflix. Likewise, I can replace your streaming service with Amazon Prime and save an additional $2 a month. Again, this would eliminate the unnecessary delay in availability of newer releases.

By separating these services I fear you are weakening Netflix as a service and subsequently the brand. Together these services made Netflix a success, separated you lack the availability and pricing of your competitors.

I sincerely hope you will reconsider, I will be saddened when I am forced to cancel my subscription.

An even more thorough breakdown:

Still confused? Here is the difference between a turtle and a tortoise: