Netflix is raising their prices. Again. A lot.
It doesn’t seem that long ago that they last raised their prices, when the first started offering a Watch Instantly plan with no DVD shipments. I’m going to look up the actual pricing history, but first, here is what I recall: Originally, the best value was pretty clearly the 3-at-a-time plan for $17. This compared to $14 for 2 and $9 for 1, I think. (Beyond 3, it was $6 per additional slot.) All of these plans included unlimited Watch Instantly. (There was, and still is, a cheaper but more limited plan that I’m not discussing.) Sometime last year (possibly the year before, I’ll verify), Netflix introduced a Watch Instantly without any DVDs for $8. At the same time they raised the other prices: $10 for 1, $15 for 2 and $20 for 3. These plans still included Watch Instantly as well.
This first price increase shifted the value proposition from 3 discs to 1 disc, presupposing that you considered Watch Instantly to be worth the $8. $2 extra to have 1-at-a-time unlimited DVD rental is pretty much a no-brainer, assuming you actually use it more than once or twice a month. At the time, I actually thought this was odd pricing. For years Netflix had seemed to push people toward the 3-at-a-time plan and suddenly they seemed to be pushing toward the 1-at-a-time plan. Offhand, I’d have thought $8, $12, $16 and $20 would have made more sense, or even $8, $13, $17 and $20 if they still wanted to push the 3-at-a-time plan. I wonder: What would I have done with those prices? As things went, I switched from 3-at-a-time to 1-at-a-time, saving $7 per month, which I figured more than covered going to Redbox for a few $1 rentals to fill the gap. With my suggested pricing, I think I may have switched to 2-at-a-time. I’d often felt 2-at-a-time made the most sense for us, but the pricing had always led me to the 3-at-a-time plan.
A small aside to mention Netflix’s Blu-ray pricing. When they first made Blu-ray discs available, you had to pay an extra $1 per month to be able to get any, no matter how many you actually got or which plan you were on. Later, they added an additional $1 per disc slot, so $2 for 1-at-a-time and $4 for 3-at-a-time. I don’t think I’ve had Blu-ray on my plan since that change.
The last straw?
Today, Netflix announced new pricing. They key point is that they’ve decided to separate Watch Instantly entirely, though they still offer “combined” plans, though with no discount for the combination. The Watch Instantly price is staying the same: $8. The DVD plans are changing to $8 for 1-at-a-time, $12 for 2 and $16 for 3. Doesn’t seems so bad if you happen to miss the part where those DVD plans no longer include Watch Instantly. To get the same benefit as before, you have to pay $16 for 1-at-a-time with Watch Instantly, $20 for 2 and $24 for 3. If you were already on the 3-at-a-time plan, the $4 increase from $20 to $24 is steep, but not crazy. From $15 to $20 for 2-at-a-time is more severe. From $10 to $16 seems ludicrous.
Netflix correctly points out that these are the lowest unlimited DVD rental prices they’ve ever offered. Things would probably be perfectly fine if they hadn’t already trained a large number of their customers to expect Watch Instantly as a perk. In fact, if I step back and consider the options individually, I don’t think I have any problem paying $12 for 2-at-a-time rentals, nor am I bothered paying $8 for Watch Instantly. Additionally, as I observed above, the previous 1-at-a-time price was likely too low, resulting in the obscene increase at that level (300% if you consider it going from $2 to $8).
When I started this post, it was really as an excuse for the pricing research I wanted to do and a way to vent a bit. Instead, I feel like I’ve talked myself into defending Netflix’s new pricing. I’m certain they will lose customers over this change, but I think the real culprit is the previous change. If the previous prices had been my second suggestion above ($8, $13, $17 and $20, notably a fairly steep $4 increase for the 1-at-a-time plan), I don’t think the complaining at the time would have been much different. That would have resulted in the change to the current combo prices ($8, $16, $20 and $24) seeming a bit more reasonable.
I have no idea how many people switched to the 1-at-a-time plan on the previous pricing change, but certainly anybody that paid enough attention to the choices and was at all price sensitive was likely to have done so. Now, it is exactly that same group of people that are hit the hardest by the current increases.
While Redbox offers a great alternative for renting DVDs of recent movies at arguably a better price than Netflix, I’m just as likely to get older content and new TV shows from Netflix. At present, unless this content is available online (via Netflix or otherwise), there is really no good alternative. I had hoped that iTunes would solve this problem when they started offering TV show rentals, but they just don’t seem to be offering rentals for the shows I want to watch. Even if they did, their prices are just a bit too steep unless the rentals are available much earlier than the DVDs. Or, as I mentioned in that same post, I’d be thrilled to subscribe to streaming of select channels (HBO, Showtime, TNT, etc.) as long as I didn’t have to have cable or satellite service.
Grumble. Grumble. I can already tell that I’ll very likely be changing my Netflix plan from $10 to $20. Grumble. Grumble.