Netflix Separates DVD, Streaming Plans
Say goodbye to that free, unlimited Netflix streaming with your DVD rental plan. The company on Tuesday announced new pricing plans that separate options for DVD rentals and Watch Instantly streaming.
Going forward, access to unlimited Netflix streaming will cost $7.99 per month, as will its unlimited, one DVD at a time plan. Together, one DVD and unlimited streaming will cost $15.98 per month.
For new members, these prices are effective immediately. Existing customers will see the price changes starting September 1.
The plans also apply to other DVD rental options. Unlimited streaming plus two DVDs at a time will cost $19.98 per month, three DVDs plus streaming will be $23.98, and four DVDs plus streaming will be $29.98 per month. With no streaming, two DVDs out at a time will be $11.99 per month.
Currently, the unlimited streaming plus one DVD at a time plan costs $9.99 per month. "With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail," Netflix said in a blog post.
Netflix has offered a $7.99 streaming-only option in the U.S. since November. The company has long said that streaming is its future, so switching to a DVD-only plan might seem like a step back. Netflix, however, said it "realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members."
The DVD rental business still has a "long life," Netflix said.
In fact, when it launched streaming-only in the U.S., DVDs by mail were treated as a $2 add-on, the company said. That, however, does not make "great financial sense nor satisfies people who just want DVDs," Netflix said.
"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," Netflix continued.
That's probably not the only reason, however. Building a streaming library is not cheap, and Netflix has signed a number of licensing deals with major movie and TV studios lately, not to mention its own original program set to debut in 2012. Essentially doubling the price of some of its plans will no doubt help fund those ventures.
There's also the bandwidth issue. Netflix streaming accounted for 20 percent of all downstream Internet traffic in North America during the peak usage hours of 8 to 10pm, according to an October report. In Canada, where users face data caps, Netflix offered users the option to lower their video quality to save bandwidth. That option also showed up on certain U.S. accounts, too, but Netflix said it was probably part of a test cell. In January, Netflix released its list of highest-performing U.S. ISPs in terms of streaming video performance, with Charter Communications, Comcast, and Time Warner topping the list.
Expect more details at Netflix's earnings call on July 25.
In other Netflix news, the company announced Monday that it will bring back sortable lists after removing them with a recent Web site overhaul.
For PCMag Editor-in-Chief Lance Ulanoff's take on the company's future, see Is Netflix Doomed?
