Between the Lines

Larry Dignan, Andrew Nusca and Rachel King

Netflix has pricing power as streaming overtakes DVD rentals

By Larry Dignan | November 22, 2010, 6:12am PST

Netflix revamped its subscription rates and introduced a $7.99 a month streaming-only plan. In addition, the company raised its base DVD rental services to $9.99 a month, up $1.

The move highlights a few key points (statement, blog):

Netflix has pricing power to raise DVD rates.
Netflix is “primarily a streaming video company.”
The company is betting that most customers will go streaming only and that will save some serious costs on all sides of the equation.

Here’s the breakdown of pricing:

The pricing starts in January for existing members. Netflix has done a masterful job of managing the physical DVD rental to streaming transition.

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Topics

NetFlix Inc., Pricing Strategy, Pricing, Marketing Research, DVD, Consumer Electronics, Marketing, Personal Technology, Home Entertainment, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

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RE: Netflix has pricing power as streaming overtakes DVD rentals

birumut Updated - 20th Jun

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RE: Netflix has pricing power as streaming overtakes DVD rentals

oschmid14@... 22nd Nov 2010

and now it would be great if I could use my US account to stream videos while on business in Canada. Right now I am asked to setup a Canadian account and pay additionally for it.

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RE: Netflix has pricing power as streaming overtakes DVD rentals

Loverock Davidson 22nd Nov 2010

Now their pricing is right on par with Blockbuster. Lets see if Netflix catches the same flack.

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Their choice, here in Canada, is so poor...

michaelmombourquette 22nd Nov 2010

for downloads that I don't think they are a threat to the actuall DVD rentals people yet. I have a membership and there simply are almost no movies that I actually want to waste my time watching. I will likely give up the membership.

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RE: Netflix has pricing power as streaming overtakes DVD rentals

superkeith Updated - 22nd Nov 2010

We've had Netflix for about six months now, and unfortunately, we've watched about everything of interest that's available on their limited INSTANT VIEW service. Since their INSTANT VIEW is so limited, we're back to ordering the physical disks again for home delivery. If Netflix wants to continue to grow and dominate the market, they need to make their entire DVD library available on INSTANT VIEW and totally eliminate their home delivery. Obviously, they had to increase the cost of DVD home delivery to cover the costs of their short-sightedness, and the public demand for better DVD viewing selections.

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It's not that they don't want to

Michael Kelly 22nd Nov 2010

@superkeith

The issue is getting the film copyright owners on board. They are glad to come on board when it comes to movies that hardly anybody rents because it guarantees a revenue source where there was none, but the more popular movies earn them plenty of extra royalties via exclusive deals (like with Comcast On Demand), and the studios will not be willing to give that up for the mere sake of their customers.

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re: Michael Kelly

superkeith 22nd Nov 2010

@Michael Kelly.
That in itself speak volumes about Netflix!

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RE: Netflix has pricing power as streaming overtakes DVD rentals

larryvanyoung 22nd Nov 2010

It's the same here in Vancouver, there are no new releases onm Netflix, and the ones they do have are either not worth watching or plain too old. I am thinking of not renewing my subscription come the end of the month too.

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RE: Netflix has pricing power as streaming overtakes DVD rentals

james347 22nd Nov 2010

Don't use it.

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RE: Netflix has pricing power as streaming overtakes DVD rentals

superkeith 22nd Nov 2010

@james347
Are you saying that you don't use it, or are you recommending others not to use it?

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RE: Netflix has pricing power as streaming overtakes DVD rentals

RodNichols5 22nd Nov 2010

@superkeith, do you mean this speaks volumes about the copyright owners and the studios ? Or maybe you mean this speaks volumes about how influential NetFlix really is ?

IMHO, Netfilx would love to make all of their DVD's available online, but the situation is as Michael Kelly stated, NetFlix only rents out these titles, they do not own them. So putting their entire library of Dvds online is out of their control.

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RE: Netflix has pricing power as streaming overtakes DVD rentals

specialspaam 23rd Nov 2010

Would that they'd finally get closed captioning to work on streaming video on blu ray and tv devices. Inexcusable that this has taken so long.

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RE: Netflix has pricing power as streaming overtakes DVD rentals

Quebec99 24th Nov 2010

I will not waste my time streaming in the USA either. I have tried it, and fought to get it running too many times already. I will give up my membership this coming month when they say the increase takes effect. I dropped my Blockbuster account this past May or June.