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kelley
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This move by netflix is really stupid on their part. This is the 2nd price increased in less then a year. You can walk over to red box (there are now 4 within a block of my job) and rent a movie for .99, and get more movies a month, then what you can get from them for that price.

So then if people find that to be a viable alternative, Netflix will lose subscribers and when all of those quarterly profit numbers start to fall and they are faced with massive cost increases in the near future as they renegotiate their streaming contracts (which they were lucky to get cheap early on when streaming wasn't all the rage) - they will be forced to adjust their business model and pricing.

 

A companies greed only exists if you feed it and we've all fed plenty at one company or another being gamers:). I moved down to the streaming option for 8 bucks and I'm fine with that since I don't use the disc option much at all (outside of a few Scooby Doo movies for my daughter) and if they lose streaming contracts moving forward, I'll dump them all together and move my business to the next company with a solid offering.

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I'm assuming they have a better reason for doing this other than to make $100 bills that Reed Hastings can use to light his cigar with.

I'm far from an expert on Netflix but money is a core issue and the why...

 

they are faced with massive cost increases in the near future as they renegotiate their streaming contracts (which they were lucky to get cheap early on when streaming wasn't all the rage)

 

...is my guess. Article worth reading on the topic:

 

http://money.cnn.com/2011/07/08/technology/netflix_starz_contract/index.htm?hpt=te_t1

 

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

 

When streaming video was new, Netflix was able to secure contracts with the likes of Warner Bros. Studios and MTV to license big TV and film catalogues for about $5 million to $10 million per year. This time around, Pachter says, those costs could increase more than tenfold.

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Streaming for me. Considering most discs are not available until a month after release, I have used the streaming far more. Hopefully with those increased costs, the movies you will be able to stream will be more timely.

 

Has anyone been to a Blockbuster lately? I see signs that movies are now .99 a day. Is it just that simple? And what is the selection like?

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they are faced with massive cost increases in the near future as they renegotiate their streaming contracts (which they were lucky to get cheap early on when streaming wasn't all the rage)

 

...

 

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

 

When streaming video was new, Netflix was able to secure contracts with the likes of Warner Bros. Studios and MTV to license big TV and film catalogues for about $5 million to $10 million per year. This time around, Pachter says, those costs could increase more than tenfold.

Then why is it only the price of their disc plans that are increasing, while the streaming-only plan remains $7.99? If the alleged skyrocketing costs of streaming are the issue, then it's that service they should be charging more for.

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Then why is it only the price of their disc plans that are increasing, while the streaming-only plan remains $7.99? If the alleged skyrocketing costs of streaming are the issue, then it's that service they should be charging more for.

To save that particular price hike for when it's needed and more palatable to people who have great desire for that service? You don't seriously think that streaming will remain at $7.99 and any eventual costly contract negotiations won't lead to further costs being passed down to consumers do you? Again, I'm no Netflix CEO but I can tell you where my thinking would be here...

 

I'm already running an exceptionally profitable business but it's obvious that my costs will be rising in a major way moving forward. With this announcement I have effectively separated my service offerings. In the process I have automatically grandfathered in my existing customers to the full $16 plan unless they manually opt out and choose to downgrade to a specific plan. So realistically speaking I foresee a few things happening - either customers will continue to pay for both because they want and use both services, customers will choose between a straight disc swap service or go full streaming, or some customers are completely uninformed and didn't pay attention to my pricing announcement and keep using the service completely oblivious to the fact that things have changed and costs have gone up. No matter what direction they go, I'm counting on capturing a certain percentage of those customers in that $16 full service plan. Even if my projections are conservative I'm hoping to generate an even larger revenue stream from that consolidated plan. More money that I can use to broker those big ticket streaming deals I have coming up down the line. If I'm successful in brokering those deals and maintaining the quantity and quality of the content on my service to the level where I still have my competitors at a disadvantage, I can now adjust pricing points SPECIFICALLY on the streaming plans that I offer since I have for all intents and purposes decoupled that particular service from the disc rental side of my business. Mind you if you want it all you can keep paying that $16 bucks, but no one said streaming was going to remain at $7.99 moving forward. Do I run the risk of losing customers if I push prices to high? Certainly but I'm banking on having the content that my competitors simply can't offer...

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It's probably the capitalist in me, but I hate when people use "greed" in cases like this. They are running a business, not a public service. If too many people drop subscriptions, they'll realize their mistake and adjust.

 

Not really, if people dropped their subscriptions say a year or two ago yeah but with pretty much all of Netflix's competition dead they can raise prices and get away with it.

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Oh come on. We'll look back and laugh at the time we were whining about our $16/month plans. I'd pay $20 easily for what I get now for $10. $16 is a sweet deal. Of course I don't look forward to the inevitable $50+ a month plan (yeah, it is coming, mark my words). It costs like $6 to rent one HD movie for 24 hours or something like that. Whose screwing who here? My wife says we get 10+ discs a month from Netflix AND we get unlimited streaming. For fucking $10 now and $16 in the fall. When they start restricting streaming to one device or shit like that, then I'll be pissed.

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A longer post coming later, but I always knew this day would come and I'm okay with it. It just always seemed way too cheap to me. The value of Netflix is absolutely ridculous...the fact that we pay about the same as ONE MONTH of fully loaded cable/dish for a full year of content and have more than we can watch anyway...well, that's pretty awesome since it's made it more than palatable to not have dish/cable.

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Not really, if people dropped their subscriptions say a year or two ago yeah but with pretty much all of Netflix's competition dead they can raise prices and get away with it.

 

If all competition was dead, which is certainly not the case with Netflix even in the near future, they can only raise it so high before people would drop off regardless while opening the door to new competition at the same time.

 

You could also argue that expecting unlimited Netflix streaming for $7.99 for the foreseeable future is greed. It's just a balance. How much are we willing to pay?

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Not really, if people dropped their subscriptions say a year or two ago yeah but with pretty much all of Netflix's competition dead they can raise prices and get away with it.

Seriously? Hulu Plus, Amazon Video, iTunes, PSN, Xbox Live, old school cable/dish, etc. If the market can't bear it, they will turn to another alternative. Not to mention, Netflix is month-to-month with no contract, people can change services on a whim.

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To save that particular price hike for when it's needed and more palatable to people who have great desire for that service? You don't seriously think that streaming will remain at $7.99 and any eventual costly contract negotiations won't lead to further costs being passed down to consumers do you?

 

Nope. Why jack up the price of plans that include DVDs, but leave the streaming-only plan unchanged, if it's streaming that's going to account for their increased future expenses? Why spare that? Why wait? Why jack up the price of DVD plans at all? Unleashing another price hike after having just dramatically raised the price of most plans would cause a shit storm.

 

The answer is it's been clear for some time that Netflix has wanted to go all-streaming, while de-emphasizing DVDs. There are tons of new discs they just don't bother carrying over the last couple of years. The rate hike on the DVD plans is meant to further discourage people from using those plans, and to nudge them into the streaming-only plan.

 

http://www.freep.com/article/20110713/NEWS09/110713035/Mark-W-Smith-Netflix-price-hike-angers-customers?odyssey=tab|topnews|text|FRONTPAGE

 

Netflix, growing increasingly tired of being in the "red envelope" business, delivered a big blow to its customers Tuesday in raising its prices for those who prefer movie rentals in the form of DVDs.

 

...

 

Now, it's clear that Netflix sees itself as a streaming firm, saddled by an expensive legacy business in the form of postmarked red envelopes.

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The answer is it's been clear for some time that Netflix has wanted to go all-streaming, while de-emphasizing DVDs.

Um, yeah...

 

With this announcement I have effectively separated my service offerings.

That's the primary goal. In the process they'll no doubt keep a percentage of folks who'll pay that $16 fee (like Keith) and make some extra cash out of it. Or did you just read the first paragraph and stop? It's utterly obvious streaming is going to be their primary focus moving forward. Duh. Phasing out DVD services isn't going to be something that happens overnight though.

 

Once they've gotten people on the (untouched) streaming plan, do you seriously think the streaming service will remain at $7.99? If so, ok. We'll agree to disagree on that one. I'll see you back here after the next price hike is announced.:)

 

Unleashing another price hike after having just dramatically raised the price of most plans would cause a shit storm.

News flash: people make a shit storm about everything on the internet. Call me when it affects subscriber rates and profitability which is what Netflix cares about. Sign petitions, call your congressman or commit internet suicide. No one at Netflix gives a shit if you're still subscribed to one of their plans. I'm willing to bet most of the people "shit storming" (if that could even be used as a verb) will happily login in to their Netflix account and sign up for that $7.99 streaming plan and like it.

 

The answer is it's been clear for some time that Netflix has wanted to go all-streaming, while de-emphasizing DVDs.

So let me ask: Does that not seem like a sensible business strategy moving forward? Avoid competing with the Red Boxes of the world and focus on your bread and butter service offering? Just curious where your thoughts are on that. Instead of pricing folks out, would you or other pissed off folks have preferred they just announce:

 

"Ok guys, here's the deal - we're done with the DVD/BD shipping business. We're a full on streaming company now and we've converted all accounts to an introductory 6 month plan at $7.99/mnth. After that time, the price for the streaming service will be on the regular pricing of $x.xx (speculate price point now). Thanks!"

 

Rip the bandaid off so to speak. Would that have been preferable? I'm genuinely curious.

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What's to stop individual studios from coming up with their own streaming service, maintaining control of their own librsries? It can't be too difficult because tv networks are already doing it. Is this why Netflix is getting the license fee jacked up higher and higher?

 

I want bluray media in AAA movies for audio and video quality. I only "settle" for streaming on lesser titles, oldies, and documentaries.

 

I think I'll go down to one movie plus streaming, and get redbox when i just can't wait.

 

Carlos.

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What's to stop individual studios from coming up with their own streaming service, maintaining control of their own librsries? It can't be too difficult because tv networks are already doing it.

 

I keep thinking we'll see more of this. Like HBO Go. Netflix has supposedly been trying to court HBO for a long time, even saying they tried to just get the old stuff, but havent been able to cut a deal. I just with HBO would let me only subscribe to them without going through the cable company.

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I want bluray media in AAA movies for audio and video quality. I only "settle" for streaming on lesser titles, oldies, and documentaries.

I'm the same way but then I buy most of the titles I really want and rarely stream anything outside of TV shows. My wife, however lives on Netflix. Both for her and my daughter as she streams a ton of kids movies/shows for her.

 

What's to stop individual studios from coming up with their own streaming service, maintaining control of their own librsries? It can't be too difficult because tv networks are already doing it. Is this why Netflix is getting the license fee jacked up higher and higher?

I would imagine infrastructure costs to setup such services (i.e. server costs, customer service/support, billing etc.) if they aren't already there. However, as a direct answer: nothing once the license agreements end.

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Um, yeah...

 

 

That's the primary goal. In the process they'll no doubt keep a percentage of folks who'll pay that $16 fee (like Keith) and make some extra cash out of it. Or did you just read the first paragraph and stop? It's utterly obvious streaming is going to be their primary focus moving forward. Duh. Phasing out DVD services isn't going to be something that happens overnight though.

 

Once they've gotten people on the (untouched) streaming plan, do you seriously think the streaming service will remain at $7.99? If so, ok. We'll agree to disagree on that one. I'll see you back here after the next price hike is announced.:)

 

 

News flash: people make a shit storm about everything on the internet. Call me when it affects subscriber rates and profitability which is what Netflix cares about. Sign petitions, call your congressman or commit internet suicide. No one at Netflix gives a shit if you're still subscribed to one of their plans. I'm willing to bet most of the people "shit storming" (if that could even be used as a verb) will happily login in to their Netflix account and sign up for that $7.99 streaming plan and like it.

 

 

So let me ask: Does that not seem like a sensible business strategy moving forward? Avoid competing with the Red Boxes of the world and focus on your bread and butter service offering? Just curious where your thoughts are on that. Instead of pricing folks out, would you or other pissed off folks have preferred they just announce:

 

"Ok guys, here's the deal - we're done with the DVD/BD shipping business. We're a full on streaming company now and we've converted all accounts to an introductory 6 month plan at $7.99/mnth. After that time, the price for the streaming service will be on the regular pricing of $x.xx (speculate price point now). Thanks!"

 

Rip the bandaid off so to speak. Would that have been preferable? I'm genuinely curious.

Of course they're going to raise the price of the streaming plan at some point, it just isn't going to be soon, and the recent price hikes having nothing whatsoever to do with Netflix's costs to provide steaming, as you originally asserted. You've now switched to basically agreeing with me that this is about de-emphasizing the DVD service. It may be good business for Netflix, but it does nothing to help those of us who prefer to get discs. I don't give a fuck about Netflix making even more absurd profits than they already do, I want the good selection of discs at a reasonable price that I used to have. It isn't my job to sacrifice what I get in order to make some shareholders richer.

 

Yes, just canceling the DVD service altogether and being honest about their intentions would've been preferable. The way they're handling it is like putting a frog into a pot of water being slowly brought to a boil. I'd rather just have a bullet put in my head.

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I'm the same way but then I buy most of the titles I really want and rarely stream anything outside of TV shows. My wife, however lives on Netflix. Both for herself and my daughter as she streams a ton of kids movies/shows for her.

 

I've always thought of myself as being a stickler for quality, but one day the convienence of streaming won out. As long as it's 720p, Im usually happy.

 

Im sure only having a 720p monitor has something to do with it too :)

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What's to stop individual studios from coming up with their own streaming service, maintaining control of their own librsries?

 

They already do. Hulu is NBC, Fox and ABC. Those are all on Netflix. Why? Because why would they stick to one service, when they can get licensing fees from multiple services.

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and the recent price hikes having nothing whatsoever to do with Netflix's costs to provide steaming, as you originally asserted.

..and I disagree. I think additional money and important up and coming license talks DO play into the added price increase outside of your point of decoupling their services (which I agree with). I've not said otherwise or "switched" anything simply by addressing your specific point on the subject of physical disc rentals.

 

but it does nothing to help those of us who prefer to get discs.

I understand but just as you don't "give a fuck" about the profit Netflix is making, they don't "give a fuck" about your business as a primarily disc based customer. It sucks. I don't disagree that it's certainly painful if disc based services are why you subscribe and you're out a service you value. You're only recourse is to cancel when a service provider shows they don't value your business though, right? Have you? Thankfully there are alternatives.

 

Yes, just canceling the DVD service altogether and being honest about their intentions would've been preferable. The way they're handling it is like putting a frog into a pot of water being slowly brought to a boil. I'd rather just have a bullet put in my head.

Would you have remained a streaming only subscriber if that was the case?

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Hell no. I want discs for the better picture quality and for the extra features, which aren't streamed. Their selection of titles available for streaming doesn't impress me. It's clearly profitable to maintain the DVD service, or they would've chopped it. Their profit margins are part of the public record. They just want to go from absurdly profitable to insanely profitable, by gouging their customers to the tune of a 60% price hike.

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Personally, I'm fine with the $6 increase. I've always thought it was a bargain. I have access to Vudu/Amazon/Hulu/etc. but none of them offer anywhere near the content for such a low monthly rate. I do think Vudu is a good product, but it doesn't really compete directly with the unlimited plan of Netflix. I will continue to subscribe to the streaming+DVD+Blu-Ray until something better comes along.

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Seriously? Hulu Plus, Amazon Video, iTunes, PSN, Xbox Live, old school cable/dish, etc. If the market can't bear it, they will turn to another alternative. Not to mention, Netflix is month-to-month with no contract, people can change services on a whim.

 

How many people do you know actually use Hulu Plus, Amazon Video, iTunes, PSn, XBL, etc and not Netflix? I personally don't know anyone and oldschool cable/dish I don't think is a direct competitor nor is iTunes, PSN, or XBL.

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