Did Netflix Shoot Itself in the Foot by Raising Prices?

Did Netflix Shoot Itself in the Foot by Raising Prices?Just two weeks after Netflix raised its subscription rates by a whopping 60%, many Netflix subscribers are being forced to make some hard decisions. As a loyal Netflix subscriber since August of 2006, I have enjoyed its DVD mailing service, but when Netflix added unlimited streaming to its $9.99 DVD package, I thought that was a great added feature. That meant that subscribers would not only be able to receive new releases on DVD one a time, but would also be able to stream some older movies and TV programs from the past.

However, I quickly learned that it was not Netflix’s intention to simply enhance the package that I already had, but that it was rather going to force me to make a decision on whether to keep my current package or to choose which of these services I wished to receive. My first knee-jerk reaction was to simply cancel my subscription, however, after a cooldown period of about a week, I decided to cancel the DVD delivery to my home and go with the streaming only service. Unfortunately for me, that meant that by canceling the DVD delivery I would not be able to receive the newer movie releases and would be subject to a reduced library of movie and TV offerings.

So while I lost that advantage, Netflix also lost as its streaming only plan is $7.99 a month, which means I am actually paying $2.00 less a month to Netflix. However, this reduction in revenue may be only the beginning of losses for Netflix, as in the back of my mind, I am still considering canceling my account with it entirely if it doesn’t keep its promise to increase its offering of streaming movies and TV programming within the next six months.

I believe that many Netflix users, especially those of us in the fixed income bracket, are facing similar choices on how they will deal with the price increase. These decisions will be based not only on the increase of $6 more a month to continue receiving both DVD and streaming services, or whether to chose a single package with only DVD or streaming at $7.99 a month, but on all the other rising costs to which they are being subjected. I believe that these decisions all depend on how much you depend on any of the services for entertainment and how much you use the services.

Currently, for me, Netflix has the best streaming service, but this could change in the near future as other companies begin to offer their own video streaming services.

Comments welcome.

Article Written by

I have been writing for LockerGnome since relocating to Missouri seven years ago, where I continue to be a technology enthusiast who enjoys playing with the newest and latest gadgets.

  • http://twitter.com/vichoff vichoff

    No…their prices are still better than others….nobody else even offers DVD and still charge the same….or on demand rental which is still more expensive than netflix

  • http://twitter.com/vichoff vichoff

    No…their prices are still better than others….nobody else even offers DVD and still charge the same….or on demand rental which is still more expensive than netflix

  • Brian Dane

    I am now a streaming only customer, there is no way I pay for their Disc plans, I can rent almost 16 RedBox DVD’s for the fee of the 3 out at a time plan, and I do not rent 18 DVDs per month, so it would be severely stupid to pay that price.

  • Brian Dane

    I am now a streaming only customer, there is no way I pay for their Disc plans, I can rent almost 16 RedBox DVD’s for the fee of the 3 out at a time plan, and I do not rent 18 DVDs per month, so it would be severely stupid to pay that price.

  • simplify2

    I’ve looked at other services and Netflix is still the cheapest, but I started to reconsider my need for Netflix at all. The offerings on streaming haven’t improved. In fact, they’ve decreased. You never know when something on streaming is going to disappear back to DVD only. So, watch it while you can (League of Ordinary Gentlemen comes to mind).
    I didn’t really need a number of the DVDs I’ve ordered. Plus, many were the wrong ones or unwatchable. I would be better off paying $1.50 for new movies out of one of the vending boxes instead. I’d watch less and even at a movie a week (though I’d probably rent less) I’d spend $6 and not have the frustration of sending back damaged disks using up the time I have for unlimited disks with no credit to my account- and they wait for the damaged disk to show before they will send another. Also, I’ve noticed that when I get a wrong disk it’s always something not in demand like a silent movie not a movie in great demand at the time.
    In fact, DirecTV had the last 4 movies I ordered and they were pretty new. Very annoying. I could have just watched them on DTV. So, I looked ahead in the schedule and set to record half a dozen movies that I was then able to remove from my Netflix queue.
    I like Netflix, but a 60% increase? I had been considering whether to continue with them, but I liked the streaming along with the DVDs. I’ll see how their streaming offerings improve, but I don’t really see the value at this time, for me anyway.

  • Anonymous

    I’ve looked at other services and Netflix is still the cheapest, but I started to reconsider my need for Netflix at all. The offerings on streaming haven’t improved. In fact, they’ve decreased. You never know when something on streaming is going to disappear back to DVD only. So, watch it while you can (League of Ordinary Gentlemen comes to mind).
    I didn’t really need a number of the DVDs I’ve ordered. Plus, many were the wrong ones or unwatchable. I would be better off paying $1.50 for new movies out of one of the vending boxes instead. I’d watch less and even at a movie a week (though I’d probably rent less) I’d spend $6 and not have the frustration of sending back damaged disks using up the time I have for unlimited disks with no credit to my account- and they wait for the damaged disk to show before they will send another. Also, I’ve noticed that when I get a wrong disk it’s always something not in demand like a silent movie not a movie in great demand at the time.
    In fact, DirecTV had the last 4 movies I ordered and they were pretty new. Very annoying. I could have just watched them on DTV. So, I looked ahead in the schedule and set to record half a dozen movies that I was then able to remove from my Netflix queue.
    I like Netflix, but a 60% increase? I had been considering whether to continue with them, but I liked the streaming along with the DVDs. I’ll see how their streaming offerings improve, but I don’t really see the value at this time, for me anyway.

  • Anonymous

    I’ve looked at other services and Netflix is still the cheapest, but I started to reconsider my need for Netflix at all. The offerings on streaming haven’t improved. In fact, they’ve decreased. You never know when something on streaming is going to disappear back to DVD only. So, watch it while you can (League of Ordinary Gentlemen comes to mind).
    I didn’t really need a number of the DVDs I’ve ordered. Plus, many were the wrong ones or unwatchable. I would be better off paying $1.50 for new movies out of one of the vending boxes instead. I’d watch less and even at a movie a week (though I’d probably rent less) I’d spend $6 and not have the frustration of sending back damaged disks using up the time I have for unlimited disks with no credit to my account- and they wait for the damaged disk to show before they will send another. Also, I’ve noticed that when I get a wrong disk it’s always something not in demand like a silent movie not a movie in great demand at the time.
    In fact, DirecTV had the last 4 movies I ordered and they were pretty new. Very annoying. I could have just watched them on DTV. So, I looked ahead in the schedule and set to record half a dozen movies that I was then able to remove from my Netflix queue.
    I like Netflix, but a 60% increase? I had been considering whether to continue with them, but I liked the streaming along with the DVDs. I’ll see how their streaming offerings improve, but I don’t really see the value at this time, for me anyway.

  • Anonymous

    I’ve looked at other services and Netflix is still the cheapest, but I started to reconsider my need for Netflix at all. The offerings on streaming haven’t improved. In fact, they’ve decreased. You never know when something on streaming is going to disappear back to DVD only. So, watch it while you can (League of Ordinary Gentlemen comes to mind).
    I didn’t really need a number of the DVDs I’ve ordered. Plus, many were the wrong ones or unwatchable. I would be better off paying $1.50 for new movies out of one of the vending boxes instead. I’d watch less and even at a movie a week (though I’d probably rent less) I’d spend $6 and not have the frustration of sending back damaged disks using up the time I have for unlimited disks with no credit to my account- and they wait for the damaged disk to show before they will send another. Also, I’ve noticed that when I get a wrong disk it’s always something not in demand like a silent movie not a movie in great demand at the time.
    In fact, DirecTV had the last 4 movies I ordered and they were pretty new. Very annoying. I could have just watched them on DTV. So, I looked ahead in the schedule and set to record half a dozen movies that I was then able to remove from my Netflix queue.
    I like Netflix, but a 60% increase? I had been considering whether to continue with them, but I liked the streaming along with the DVDs. I’ll see how their streaming offerings improve, but I don’t really see the value at this time, for me anyway.

  • http://Twitter.com/elisaknockout Elisa ✦ Knockout™

    I never used netflix but yeah they will lose business if they raise prices . It’s seem they are too cozy. Shame on nexflix.

  • Elisa ✦ Knockout™

    I never used netflix but yeah they will lose business if they raise prices . It’s seem they are too cozy. Shame on nexflix.

  • http://twitter.com/bob3160 Bob Gostischa

    I’ve dropped the DVD portion of my service and may soon drop the streaming part.
    At $9.95 I considered this a bargain and well worth having and using.
    Since the increase, I’ve taken another look as to whether I really need the service at all.
    Raising the price doesn’t always result in an increase in revenue.
    Sometimes it results in shooting yourself in the foot. This may be one of these situations.

  • http://twitter.com/bob3160 Bob Gostischa

    I’ve dropped the DVD portion of my service and may soon drop the streaming part.
    At $9.95 I considered this a bargain and well worth having and using.
    Since the increase, I’ve taken another look as to whether I really need the service at all.
    Raising the price doesn’t always result in an increase in revenue.
    Sometimes it results in shooting yourself in the foot. This may be one of these situations.

  • D Lowrey

    Something I haven’t seen mentioned much in the US…but in Canada…is with the streaming services and ISP quotas. It’s all ready happening in the US with data plans with cell phones and will eventually come to most of the home internet services as well. When you consider the added cost of the bandwidth the ISP will stick you with (and expected to go higher in cost and less and less bandwidth)…when will the 60% increase going to total over 100 or 500%?

    While not a Netflix subscriber…I use Redbox. I have a feeling the ever rising costs due to inflation and monopolistic behavior on the role of ISP’s…renting DVD’s (if you even can in the future) maybe the only way to go for those on fixed incomes.

  • D Lowrey

    Something I haven’t seen mentioned much in the US…but in Canada…is with the streaming services and ISP quotas. It’s all ready happening in the US with data plans with cell phones and will eventually come to most of the home internet services as well. When you consider the added cost of the bandwidth the ISP will stick you with (and expected to go higher in cost and less and less bandwidth)…when will the 60% increase going to total over 100 or 500%?

    While not a Netflix subscriber…I use Redbox. I have a feeling the ever rising costs due to inflation and monopolistic behavior on the role of ISP’s…renting DVD’s (if you even can in the future) maybe the only way to go for those on fixed incomes.