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Netflix Plans To Raise Prices By "$1 or $2 a Month" 202

Posted by timothy
from the testing-testing dept.
New submitter Burphytez (3625571) writes with this excerpt of a Reuters story, as carried by the Chicago Tribune: "Video streaming service Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company buy more movies and TV shows and improve service for its 48 million global subscribers. Investors welcomed the announcement by Netflix, which had suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011. The company's shares jumped 6.7 percent in after-hours trading to $371.97, after the company released plans for a price hike and posted a rise in first-quarter profit that beat Wall Street expectations."
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Netflix Plans To Raise Prices By "$1 or $2 a Month"

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  • Milk that cow! (Score:5, Insightful)

    by B33rNinj4 (666756) on Tuesday April 22, 2014 @09:33AM (#46814313) Homepage Journal
    I guess they found a way to cover the costs of their deal with Comcast.
    • Re:Milk that cow! (Score:5, Insightful)

      by Mashiki (184564) <mashiki&gmail,com> on Tuesday April 22, 2014 @09:56AM (#46814495) Homepage

      Doesn't really matter anyway, even at raising the rates for new customers by $1-2, it's still got more value than cable or sattelite TV by leaps and bounds. That's pretty scary isn't it? Especially with all of the crap programming and reality TV garbage that they have on these days. I sadly remember when things like History, NatGO, Discovery and TLC had something worthwhile on them. The last time I watched them when I was in the US(last year) it was wall-to-wall reality TV programming. Good riddance to them.

      • Re:Milk that cow! (Score:5, Insightful)

        by SJHillman (1966756) on Tuesday April 22, 2014 @10:05AM (#46814587)

        The really curious part is the fact that Netflix is so much cheaper than cable *in spite of not having commercials*. The fact that you pay for cable TV only to be bombarded with commercials is a slap in the face that most people are too willing to accept.

        • by Dcnjoe60 (682885)

          The really curious part is the fact that Netflix is so much cheaper than cable *in spite of not having commercials*. The fact that you pay for cable TV only to be bombarded with commercials is a slap in the face that most people are too willing to accept.

          Netflix doesn't have infrastructure costs like cable or satellite. However, you do need to have internet access to get netflix, so the true cost isn't the $7.99 bot $7.99 plus the cost of your internet service. Most likely, it is still cheaper than cable, but again, there is the infrastructure cost.

          • That only explains why cable costs more. It doesn't explain why cable costs more and yet still has as much ads as content.

            Also, for most people, the ISP bill is a sunk cost. They would still pay it even if Netflix didn't exist, and therefore it should not be included in the total cost of Netflix (again, for most people, there will be exceptions).

            • by Dcnjoe60 (682885)

              That only explains why cable costs more. It doesn't explain why cable costs more and yet still has as much ads as content.

              Also, for most people, the ISP bill is a sunk cost. They would still pay it even if Netflix didn't exist, and therefore it should not be included in the total cost of Netflix (again, for most people, there will be exceptions).

              It doesn't matter if the ISP is a sunk cost or not, it is still a cost of receiving netflix. As for the commercials, isn't the cable company just transmitting what the channel is sending? As such, the fault should be for the networks, not the cable company. OTOH, they might as well broadcast 60 minutes an hour of commercials if all they offer are those crappy reality shows.

              What netflix and hula plus and some others are doing is providing an on-demand content service. That's something that people have been

              • by awyeah (70462) *

                As for the commercials, isn't the cable company just transmitting what the channel is sending?

                Yes, but the commercials you see are a combination of the national commercials and commercials that are overlaid by your cable provider.

                • by Dcnjoe60 (682885)

                  As for the commercials, isn't the cable company just transmitting what the channel is sending?

                  Yes, but the commercials you see are a combination of the national commercials and commercials that are overlaid by your cable provider.

                  Yes and no. The cable provider isn't gapping the show to add commercials. The slots are already there. If there aren't local commercials, primarily for local businesses to advertise on national shows, then another national commercial will be displayed. Basically, network determines there are X minutes of commercials in a show and they are allocated between national and local markets.

              • by Darinbob (1142669)

                It's not just on-demand, it's an alternative to lousy cable companies. I'm moving that way soon, but it's not because I want anything on-demand (I was happy with time shifting with dvr). It's just that streaming is the only alternative, I'd prefer to have a DVR like system using the internet (and be legal). But the costs keep creeping up and even though my satellite is still much cheaper than cable alternatives there's just so little on at times that it seems like a waste of money, plus my equipment is g

            • by Darinbob (1142669)

              ISP costs are quite varied though. On average in the US I suspect that cable access is considered far more important than high speed internet. Even boring old DSL is far more than enough internet for basic web browsing even if it won't support netflix very well, and that runs maybe $20-$30. Many people still use dialup for internet as well. Internet good enough for streaming is usually $50 or more, which is still more expensive than my satellite was a decade ago.

              When I do cut the cord for satellite some

          • You can't count the full cost of your Internet service unless you ONLY use your Internet service for Netflix. A normal Netflix household will use their Internet connection for a few things including Netflix. So the true cost of Netflix is $7.99 a month plus some fraction of your monthly Internet service fees (the latter of which will vary from house to house).

            Still a better deal than cable TV.

        • by jfengel (409917)

          It's cheaper because it's giving you second-run content. If you want to talk about the ending of last night's Mad Men or bet with your coworkers about who's going to win whatever reality TV is most popular, you need cable. News and sports are available for free OTA, but your selection is very limited.

          Cable gets to charge a premium price, even with commercials, because the traffic will bear it to have that content right now.

          If you're willing to wait to know how Lost turned out until a year after everybody el

          • You're correct, except for one point. Cable TV expects life to revolve around the 7-10PM slot, when I happen to be busy with "life". And, I often don't have time to watch for several weeks in a row. And DVRs are stupid with On Demand Viewing like Netflix available. All said and done, unless you HAVE to be that annoying person who "spoiler alerts" every freaking conversation, then please spare me the "second run content". That is so 20th Century.

            • by jfengel (409917)

              I'm just saying there ARE a lot of people who really want that. I'm not one of them; I actually kind of prefer things "spoiled". (Hell, if I'd waited until Lost had finished completely, I might have skipped it altogether and had a few dozen hours of my life back.)

              I do think it's a real part of culture to discuss TV that's on Right Now. Not my thing, but I can see why a lot of other people are into it. Perhaps fewer than they think; maybe a lot of people would be happier ditching the cable and getting Netfli

          • by Darinbob (1142669)

            There are enough people who use DVRs or video recorders to time shift stuff that there hasn't been any must-see-now TV for ages. No one talks about Mad Men at the office because too many people in the office haven't seen that episode yet. They'll see it on the weekend maybe, or when the spouse gets back from a trip, so no spoilers allowed at work. Hollywood hates this time shifting though. Advertisers hate that people will fast forward through the ads.

            As for waiting, there are a lot more people willing

        • by antdude (79039)

          I wished Netflix had the latest episodes and on demand payments (no subscriptions) like Amazon, iTunes, etc.

          • by Kalriath (849904)

            The problem is that if they did, 3 episodes would be more than the cost of a subscription.

      • Correct. I was paying about $100/mo for DirecTV many years ago. NetFlix could raise their rate to $40/mo, and it would still be worthwhile to me. I use the service almost every day, so it'll still be a bargain at $10.
        • Agreed - I was paying a $200 cable/internet/phone/HBO bill a few months ago and my wife and I decided to cut costs. We got rid of cable, the whole-house DVR, and the phone and now just have the internet and Hulu and Netflix. Add in 3 chromecasts and converting my NAS to a plex server, and that dropped our monthly bill to $75, and we still get all of our shows except my wife's Bravo and my sports, which I've found various shady ways of watching on my own with no problem. It's been great, and I'd gladly pa

      • by sycodon (149926)

        I really look forward to more Grade B movies that they always describe as "Not to be confused with the Blockbuster..."

        Maybe the new arrivals list will turn over more than once every six months now too!

      • by J-1000 (869558)

        I wonder now if we aren't gradually trading one bad situation for another. With each service getting more and more exclusive content, I hope we don't end up needing ten different $15 subscriptions just to see the shows we want.

        Don't get me wrong, it would still beat the pants off cable. You could always subscribe for a month, binge watch your show, then cancel until they release something else you're interested in.

    • Re:Milk that cow! (Score:5, Informative)

      by alen (225700) on Tuesday April 22, 2014 @10:03AM (#46814573)

      more like the content costs

      if you look at their financials 3/4 of revenues goes to pay for content. networking costs are maybe 1/10 of revenues

    • Re:Milk that cow! (Score:5, Interesting)

      by Jeff Flanagan (2981883) on Tuesday April 22, 2014 @10:32AM (#46814859)
      The media reports on the deal with Comcast turned out to be complete bullshit.
      A friend did some research on this:


      There are three companies involved:
      Netflix (Content provider)
      Cogent (Transit provider)
      Comcast (Internet service provider)


      It was Cogent, not Comcast that was the bottle neck.

      Here’s how the industry works. These companies negotiate with each other to use each other’s services.

      So, Netflix agrees to pay A for Cogent to provide B amount of bandwidth. Cogent agrees to pay C to Comcast for D amount of bandwidth.

      What happened is that Cogent ran out of bandwidth. Under normal industry standards, Cogent is expected to pay E for F additional bandwidth. In what appears to be some pretty underhanded and sneaky business practices, Cogent demanded that Comcast provide the additional bandwidth for free and tried to make it look like it was Comcast’s fault.

      Basically, Cogent was getting money from Netflix to provide a service that it couldn’t provide.

      The Comcast-Netflix deal is basically, that Netflix decided to replace Cogent and hire a new vendor. Comcast is a large company and offers multiple services. Netflix could have gone with any vendor they wanted. They choose to go with Comcast apparently because Comcast was offering them a better deal than anyone else. I don’t know if that means they are charging less than Cogent or perhaps there’s some technical advantage (such as better performance or more reliability) with hiring the same vendor for two different services.

      So, the reason why Netflix is paying Comcast is because Comcast is now providing a new service (transit provider).

      Also, this money is not a brand new fee that Netflix has to pay someone. This is the money (A) that they were going to give to Cogent.

      Again, Netflix could have used any transit provider they wanted. They choose Comcast because apparently, they offered the best deal.
      • by jchawk (127686)

        You're close but there is some additional details you missed.

        Normally large providers of bandwidth will peer with one another. Meaning I'll give you 1 gigabit of bandwidth and you do the same for me. The assumption is that traffic will be flowing at a near equal rate between both providers. As usage goes up you continue to increase the peer.

        The problem is Cogent is notorious for being a low cost bandwidth provider so they end up being a bigger sender then receiver of data. Cogent tried to throw a hissy

        • There's no reason that the flow of traffic has to be symmetrical. Netflix wants this to happen, and so do Comcast's customers. If Comcast was really upset about that, they would give their customers symmetrical connections.
        • by guises (2423402)
          ... Comcast is an consumer ISP, of course the transfer is lopsided - Netflix and the rest of Cogent's customers pay Cogent to upload, Comcast's customers pay Comcast to download. Data is supposed to go in one direction, that's how it's set up.

          What you're describing is the typical arrangement between networks in the middle of the process. Let's say that you have a server on network A, and someone on network D requests something from you. Any packet that you send is going to have to traverse networks B and
  • by sortius_nod (1080919) on Tuesday April 22, 2014 @09:34AM (#46814323) Homepage

    While as a consumer I'll bemoan paying more, the reality is, to deliver quality content they need to find the price sweet spot. It's still way below the cost of cable TV, so I don't think it will hurt them in the long run.

    Yes, it seems like it will mainly benefit shareholders, but with the lack of ads and low price, even after the increase, who can really complain?

    • Re: (Score:3, Informative)

      While as a consumer I'll bemoan paying more, the reality is, to deliver quality content they need to find the price sweet spot. It's still way below the cost of cable TV, so I don't think it will hurt them in the long run.

      Yes, it seems like it will mainly benefit shareholders, but with the lack of ads and low price, even after the increase, who can really complain?

      From TFS, "Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month..."

      Unless my reading comprehension is on the blink, as a current customer, you shouldn't see a rate increase. Yet.

      • by Talderas (1212466) on Tuesday April 22, 2014 @10:30AM (#46814833)

        Yep. Their goal is to encourage long term subscriptions and not binge subscribing. They have a "problem" where people will subscribe for one to two month, binge watch content, and then unsubscribe for about six to eight months.

        • by nblender (741424)

          I don't subscribe to Netflix. However, It's true that I watch more TV in the winter than in the summer. I don't generally have a lot of free time in the summer. So if I were a netflix subscriber, I could see myself being 'one of those'.

    • by CastrTroy (595695)
      However, for most people Netflix is not something you get instead of cable. It's something you get in addition to cable. If the extra $1 or $2 brings us stuff that just aired last night, and live sports, then it will be a replacement for cable.

      Personally, I'd still keep the service, even if it cost $2 more. But they better start to get more content if they are going to raise prices.
      • Basic cable runs about $40-$50 a month with no extras Netflix $7.99 + $30-$40 Internet. Most people can say well I'm going to have Internet for work or cause I game, but it really depends on the situation {cable and Internet prices of course vary}.

        • I'm amused to see that in the US, having an internet access is still optional :-). Are the US considered an under-developed country ?

          That said, I'm sure your comment only makes sense to a very small portion of the population ; which will make cable companies useless in the short term.

          • which will make cable companies useless in the short term.

            Where I live cutting the cord isn't really cutting the cord. I canceled my tv subscription but if I want reliable Internet at a good price and speed I have to keep cable Internet. Satellite Internet is a joke {I can't get on the Internet to check the weather because of the weather}, the dsl is expensive {$3.49/mbps vs cable $1.33/mbps for their mid-tier accounts} and the dsl service in the area isn't that great either.

          • He may as well have included the $100/month for electricity, although I suppose you need that for cable TV too. The problem I have is that the TV and internet are bundled in such a way that it would actually cost more to just have internet. I very rarely use the TV, but as it's not costing anything I keep it around just in case.

        • You don't get anything with basic cable these days. Most sports channels and the decent cable channels require a premium subscription. I looked at DirectTV, Dish, and Verizon before cutting the cord completely. There was no way I could keep my wife and my favorite channels like ESPN 2, NBC Sports, Bravo, etc. without spending a minimum of $70 just for the cable alone, not including boxes and remotes which they charge extra for.

          • I already moved away from cable TV, long before I actually canceled the subscription. I have netflix, hulu, plex media server to store all my DVDs {plex also has channels for cbs, spike, history, nat geo} I have either a roku or game console on each tv.

            We're not a sports family so no one really noticed, the shows my wife likes are on hulu mine are on cbs through plex the kids {teen agers} like netflix and hulu a lot of cartoons. We can browse the dvd collection on any tv, laptop, or tablet.

        • by Darinbob (1142669)

          Where do you get cable for that? Comcast seems to be $70ish for new customers for the first year (probably with 2 year commitment?). I haven't seen anything for $40 for many years. Basic cable though is almost too basic. You really only get your local channels (that you could get with a good antenna much of the time), shopping channels, a few sports, some news, and maybe one or two "interesting" channels. Trouble is most of those "favorite" channels people have aren't on basic service but it's too expe

    • I've had Netflix for three or four years now and it's definitely worth the price. I don't think I'd seriously consider cancelling it until it reached at least $20/mo. However, if it gets much higher, they might want to consider having multiple tiers of streaming. My parents stream less than 12 hours a month, so some kind of time-limited lower tier would be needed to keep them as happy customers. Implementation would be a little tricky, but I think if you did something like allowing them to finish whatever m

    • It's called sustainable business. They have increasing costs as they try to search for quality; they're not at a point where they have the value to lobby down the content cost, which is complex and requires having so much content rolling through that they can argue that they're a major income source for new content (i.e. they have so much new content that if your new content is not on Netflix then you are going to miss out on profit opportunities). As the services fragment (Hulu, Amazon Prime,etc.), it w

  • Fine logic (Score:4, Insightful)

    by LookIntoTheFuture (3480731) on Tuesday April 22, 2014 @09:37AM (#46814343)

    Investors welcomed the announcement by Netflix, which had suffered from a consumer exodus and stock plunge after it announced an unpopular price increase in July 2011.

    Well, the first price increase cost us customers so the stock plunged. What will make the stock soar? A price increase!

    • In other news, Netflix's accounting department has been outsourced to the MPAA.

    • by dunezone (899268)

      Well, the first price increase cost us customers so the stock plunged. What will make the stock soar? A price increase!

      The company has outgrown its current monthly fee. The only way for Netflix to continue growing and offer a better experience is to increase its monthly fee. Its one thing to bring in new members but they need to protect their retention rate. Netflix lately has been suffering from a quality issue where they lack new content and to a lot of us older members are starting to get annoyed by it. The good thing for Netflix is that a decent alternative doesn't exist yet but the bad thing is if the service starts to suffer and an alternative comes around people can easily jump ship.

    • by Richy_T (111409)

      The price plunged to around $90 (and lower) but has since played well above $400. The previous change was a dumb move but the low price was well undervalued (and I was lucky enough to take advantage of that). I think they've immunized themselves against such a fairly small increase causing them any problems this time.

    • This time, the price increase is less than 15%. The first time around, it was 100%. Big difference!

  • by NotDrWho (3543773) on Tuesday April 22, 2014 @09:41AM (#46814379)

    I don't mind paying and extra buck or two, if you can improve the content. I'm getting a little tired of movies dropping out of my queue, not to mention multiples seasons of TV shows (some of my TV shows have went from having every season available to just a few in the last year). I'm glad you got House and Cards and all, but what you really need to focus on is your meat-and-potatoes movie and TV show content.

    • by Richy_T (111409)

      Hemlock Grove was not too bad an effort either. I think they're probably going the right way in producing their own content.

      • by NotDrWho (3543773)

        I think they're probably going the right way in producing their own content.

        Not if it means cutting their existing content of shows and movies (that they didn't produce). I'm not paying $7-$9 a month just to watch Netflix series.

        • by Richy_T (111409)

          It can probable be seen as some kind of bargaining chip also. If Netflix is dependent on content from others, it makes them vulnerable.

  • I don't understand why everyone gets so upset when Netflix talks about raising its prices by a couple of dollars per month. I've been a subscriber for several years, and even with the limited selection available in Canada, the lack of advertising and unlimited on demand nature makes it worth way more than the equivalent cost of a few days of cable/satellite.

    Sometimes you have to vote with your wallet, even if that means overpaying a little bit for a product/service that you see the potential in and want to

  • by DoofusOfDeath (636671) on Tuesday April 22, 2014 @09:48AM (#46814431)

    I'm a Verizon customer, and Netflix streaming has become less useful to me since the whole monopoly shakedown business happend.

    I'm willing to pay a few dollars more per month to Netflix, if it returns streaming to its previous glory on Verizon.

    Bonus points if they use the money to buy a law that makes being a Verizon executive a capital offense.

    • I'd subscribe to Netflix if they could pull that off, and I'm not a Verizon customer.
  • FIFY (Score:5, Informative)

    by 140Mandak262Jamuna (970587) on Tuesday April 22, 2014 @09:58AM (#46814515) Journal

    "Video streaming service Netflix Inc said it intends to raise the monthly subscription price for new customers by $1 or $2 a month to help the company pay ransom to the ISP monopolies with stranglehold on the last mile of cable built by the rate payers over theyear on public rights of way, protected by the public utilities commissions, who wantonly flout truth-in-labeling laws by selling X Mbps service and balk at providing it.

    FIFY

    • by danlip (737336)

      who wantonly flout truth-in-labeling laws by selling X Mbps service and balk at providing it.

      Actually Comcast promises me "up to" 20 Mbps, and true to their word they've never given me more than that.

  • Well, they gotta pay for that deal with Comcast to stop throttling their streaming service somehow.

    • by Richy_T (111409)

      Given that I moved to Comcast to improve my Netflix experience, they are in serious danger of losing me as a customer unless they sort this shit out themselves.

  • Many posters seem to have missed the part of the story that said the rate increase applies to new customers only. I suppose that some existing Netflix subscribers may quit as a result of this based on general principles or a feeling that existing subscribers will eventually feel the bite, but this is not the same sort of general price increase that caused people to drop the service in droves last time around. Personally, I don't much care either way; I like the service, and $2.00 a month is 'way below the

  • Wow! there's a surprising number of comments along the lines of: "eh, i'd pay a couple more bucks a month.." I expected a more negative response from this cynical audience. (even though, that's pretty much echoing my sentiments)

    They aren't even saying they are going to raise the cost for existing subscribers, but now they know that we would probably just go ahead and pay it. I'm thinking this is mostly just to get a feel for what consumers would be willing to pay without freaking out.
  • I regard journalists, even those at Fox News, as higher than actors and hollywood middle-men, like netflix.
    At least journalists are trying to tell *real* stories, twisted or not.

    The sooner they render themselves obsolete the better.

  • I guess I'm grandfathered in at the current rate - for now. If the increase for new customers is not met with much resistance I suspect it will be rolled out to everyone at some point. But for me, it's worth the cost. When I flip on cable I don't see a whole lot worth watching. Outside of sports and maybe the evening news they don't have much to offer me.

    With Netflix I can almost always find something good. I love that I can watch an entire TV series whenever I want without commercials. I can pause it if so

  • 10% a year increases pretty common in cable
  • It ranks up there with 2 for 1 sale on sponges at HEB.

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