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Why Netflix Had To Raise Its Prices 574

sperlingreich writes "Last week, after movie streaming service Netflix raised its prices by 60%, the company's customers took to blogs and social networks in revolt, threatening to cancel their subscriptions. However, between the cost of mailing DVDs and paying increased licensing fees for content, a Netflix rate hike was inevitable. Is it still a great movie bargain? What alternative services are there?"
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Why Netflix Had To Raise Its Prices

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  • Whiners... (Score:4, Insightful)

    by msauve ( 701917 ) on Thursday July 21, 2011 @05:33PM (#36839198)
    My cable company wants much more than $16/mo to get the various premium channels (HBO, Showtime, etc.). $16/mo is a good deal to be able to watch what you want, when you want.
    • I also think it's funny that people complain about Netflix's streaming selection being too limited, and then complain about a price hike. How do you think they're going to get licensing for more movies (especially new releases) without raising more money to pay increased licensing fees?
      • Re:Whiners... (Score:5, Insightful)

        by LordNimon ( 85072 ) on Thursday July 21, 2011 @05:42PM (#36839322)

        Every time a new DVD becomes available on streaming, Netflix has to pay a higher licensing fee. When does it stop? What good does it do me if Netflix has 1,000,000 movies on instant streaming, but because of all the licensing fees, the service costs $100/month?

        • Re:Whiners... (Score:5, Insightful)

          by FreonTrip ( 694097 ) <> on Thursday July 21, 2011 @06:23PM (#36839992)
          Compared to digital cable that would still be a cost savings. How warped is that?
          • Re:Whiners... (Score:5, Insightful)

            by EdIII ( 1114411 ) on Thursday July 21, 2011 @08:32PM (#36841316)

            I know people paying much more for much less.

            Take any major cable provider. They charge per digital box, which is why you can't just hook up any TV anymore and get the premium channels, and then each box has its own charge for the premium packages.

            So you get:

            1) Advertisements. Way too many, way too frequent, and even channel surfing exposes you to the infection that is advertisements.
            2) In-media Advertisements. Saw The Matrix for about 5 minutes on AMC a few days ago at a friends place. Was absolutely fascinated that people put up with that shit. There was an upper left advertisement for something. Breaking Bad logo and next play time in the lower right. AMC logo prominently displayed in the lower left. At least 10% of the entire movie taken up with NOT THE MOVIE.
            3) High charges for channel packages including shit you don't ever want to watch.
            4) Per box charges.
            5) Hidden regulatory fees.
            6) Pay per view and movie rentals where I get the * privileged* status of paying over $5 to rent a movie for the next 24 hours.



            1) Still only $20.
            2) Unlimited 2 DVDs as many times as I can get it.
            3) Streaming options that are fairly good and getting better.
            4) NO ADVERTISEMENTS.
            5) NO ADVERTISEMENTS.
            6) They just added Star Trek TNG, Voyager, and Enterprise. Check again. They are adding a ton of TV shows.
            7) Starz play. That gets you access to some interesting movies streaming only available via shipping otherwise.

            On the whole, Netflix is a great deal. Even if it goes to $40 bucks a month, you still have to pay far more than that for all the aforementioned bullshit in addition to the Internet charges from your ISP.


            Blockbuster. BWAHAHAHAHAHAHHAAHAHAHAHAHAHHAHAHAH!!!!!!!!!!!!!!!!!!!

            Anybody even look at it yet? Those executives must be on crack. They are still trying to charge $3 and over for streaming movies and will "sell" you protected movie content that you "own". Seriously? Who is left that is still falling for that bullshit? If you have a DRMd file on some device it is only owned by you as long as the authentication servers stay up in their data centers and are still operating. How many have gone down and fucked all the customers?

            Redbox is not out with its service yet.

            Websites for the actual content producers are full of advertisements and bullshit too. Not much better.

            The Big Media ISP cooperatives? They are trying to offer streaming and purchase services, but again, at $5 per movie.

            Look at Dish Network. Sure, I can see a movie still in theaters, but they all cost more than $5 for 24 hours.

            There is NO competition to Netflix at all and they know it.

            $20 bucks? Wow. There are some really entitled and bitchy people out there that cannot see the big picture.

            • $20 bucks? Wow. There are some really entitled and bitchy people out there that cannot see the big picture.

              So, if a person complains about paying the "$20 bucks" (sic) that Netflix says it has to have, then the customer is the one acting entitled? It seems like the definition of "entitled" in this case means "having the temerity to decide what a product is worth to oneself".

              So someone like me, who doesn't get cable TV, Netflix, etc. because I think they're all too expensive . . . I guess I'm the most entitled, bitchy person on earth. (No, I'm not Area Man. I've got an antenna and a TV so the wife can watch her s

      • by jfengel ( 409917 )

        Yeah, that's the way I saw it. Their streaming content is vastly better than when I first started using it. (In the early days it was just shy of useless.) I dropped my plan from 4 discs at a time to 3 because there is enough on streaming to fill in the times when I run out of discs. (Which isn't quite as often, since they started working Saturdays, another thing they didn't always do. That meant a disc watched Thursday night didn't get to them until Monday, and the next disc didn't arrive until Tuesda

      • Re:Whiners... (Score:4, Insightful)

        by Hatta ( 162192 ) on Thursday July 21, 2011 @05:46PM (#36839398) Journal

        How do you think they're going to get licensing for more movies (especially new releases) without raising more money to pay increased licensing fees?

        By paying license fees per view, and not per program. If netflix expands their selection, I'm not watching any more than I ever did. What sense does it make for me to pay more to have access to programs I don't watch?

        • by msauve ( 701917 )
          If they get a better selection of streaming movies, presumably they will get watched more often. IOW, if you stream X per month now, with a limited selection, you're likely to stream X+Y per month with a better selection. So, if the price went up 60%, just watch 60% more streams, and you're even based on your desired "per view" pricing model.
      • Re: (Score:3, Interesting)

        by Cigarra ( 652458 )

        ... How do you think they're going to get licensing for more movies (especially new releases) without raising more money to pay increased licensing fees?

        How about FIRST improving their offering, and THEN raising the price? You know, good old 'investing'.

        • by geekoid ( 135745 )

          I would pay 15 dollars JUST fro streaming if there content didn't disappear and was greatly expanded.

          I hope the new deal comes with a larger selection of titles.

      • Re:Whiners... (Score:5, Insightful)

        by darkwing_bmf ( 178021 ) on Thursday July 21, 2011 @06:01PM (#36839660)

        If what is currently "dvd only" content was made available for streaming at the same time the price was hiked, then I believe most people would have been okay with it.

      • by geekoid ( 135745 )


        Seriously t'ho, expanded titles means expanded customer base.

      • Except that they haven't increased the selection, the money isn't going to pay licensing fees and there's been no promises of increased selection either.

        Personally, I wouldn't have minded the hike so much had they promised something for it, but they're basically just raising their rates without giving the customer any reason to stick with them.

        Were I an attorney for Blockbuster or Redbox, I'd be seriously contemplating filing an antitrust suit against Netflix. This looks an awful lot like a text book case o

      • I didn't complain about the price hike, I thought it was fair. I complained about Netflix calling a 60% hike a price cut. THAT was the bullshit move to me.

        Said better: []

    • Re:Whiners... (Score:5, Informative)

      by oGMo ( 379 ) on Thursday July 21, 2011 @05:48PM (#36839446)

      My "cable" company (if you consider AT&T U-verse cable; it's close enough) wanted $120+ a month to watch what I wanted and DVR it. Corrupt video? Schedule get screwed up? Local network happen to be out? I'd be screwed. This was on top of $50-$60/mo just for internet. So now it's $50-60/mo on internet plus $16/mo for Netflix, $8/mo for Hulu Plus, and I can still buy $96 worth of TV off Amazon or iTMS and still break even!

      Of course I'm sure the internet providers (who also provide TV) will start getting bitchy when people start dropping their service for cheaper options over their existing network connection. But their service is crappy and their prices are outrageous.

      • No sports on Netflix (Score:4, Informative)

        by tepples ( 727027 ) <> on Thursday July 21, 2011 @05:58PM (#36839614) Homepage Journal

        So now it's $50-60/mo on internet plus $16/mo for Netflix, $8/mo for Hulu Plus

        I've recommended this to a couple families, and both told me they'd rather go back to dial-up than give up ESPN.

        • by h4rr4r ( 612664 ) on Thursday July 21, 2011 @06:04PM (#36839704)

          I have had the opposite experience. Our anecdotes therefore cancel out.
          Hell, when I had cable I would have given up ESPN if it saved me $0.25/month.

          Simple fact; I and many like me will not pay for entertainment and watch advertising. One or the other.

          • by geekoid ( 135745 )

            Many like you, but all of you are a time and insignificant fraction of people.

            By the way, paying for cable is paying for the service of having channels piped to your home, NOT for the shows; which is how it has always been with general cable.

            You're premise fails on that point.

            Do you not buy food because you also have to see advertising while shopping?

            By your logic you shouldn't even be on the internet.

          • by Malc ( 1751 )

            And to think so many Americans have criticised in this forum countries like the UK for it's license fee. I pay less in a year than the parent pays every two months. I get most of the good stuff, whether live via free DTV or free satellite, or over the internet via free catch-up TV. There's no advertising on the BBC channels, and you appreciate how bad that must be for Americans when American "hour long" shows only last 43 minutes on British TV. The only thing I dislike is the Murdoch empire taking away

        • Yeah, I know the feeling. I live in a very small town with fewer than 800 bars, so getting to see ESPN if not at my house could require walking upwards of 50 feet.

      • by hedwards ( 940851 ) on Thursday July 21, 2011 @06:22PM (#36839960)

        If you're paying $16 a month for Netflix, go over to Blockbuster, similar size of catalog plus PS3, Wii and XBox games included for the same price. Plus if you happen to live near one of the few remaining Blockbuster locations you can trade in store if you need a new disc.

      • are data caps that will essentially kill Netflix streaming by adding a massive 'overage' fee by exceeding the limits. And of course, the nut-less FCC will do absolutely nothing in response.
    • Re:Whiners... (Score:5, Insightful)

      by sqrt(2) ( 786011 ) on Thursday July 21, 2011 @05:53PM (#36839512) Journal

      $16/mo would be fair for being able to watch what you want, when you want...but that's not what you get with Netflix streaming. You get to watch what the studios approve of, for as long as they think you should be allowed to. Content trickles into the streaming library at a snails pace, and movies are frequently pulled after a few weeks. It's not all HD either, even newer movies which should be. Just because other options are also similarly overpriced does not make it right. The studios need to adjust to the new normal where they make less profit, have to deliver a higher quality of service, and give consumers the choices they want. The alternative is to keep taking massive hits from Bittorrent and non-sanctioned streaming sites. Until they realize that their stranglehold on content has ended and they need to compete with free (and that's possible, it really is), they're going to keep making mistakes like this.

      Instead of raising prices and locking down selections and distribution channels they should be lowering prices, making things more reasonable, enticing people who haven't been paying to go back to legitimate channels. Release movies on Netflix and DVD at the same time, open up their entire back catalogue, make it available wherever and whenever the user wants.

      But of course they won't do that. Some executive thinks their bottom line is better served by giving people less choices, charging more, suing people, and generally making the legal services the worst option.

      • by h4rr4r ( 612664 )

        Still a better deal than cable.
        At this point Netflix only has to worry about amazon. If that improves selection anymore, they just added 2000 more titles, I will keep netflix only for DVDs and cancel their streaming. I have Prime anyway so amazon streaming is free to me, for now anyway.

        • In the streaming space they're competing with Amazon, Hulu and Crackle. Crackle is interesting because it's owned by Sony and is completely free to the viewer. I think the commercials are pretty minimal as well.

          In the disc space they're competing with Blockbuster that's pretty competitive with them right now. Especially after the price hikes. Previously the streaming and pricing gave Netflix a significant advantage.

      • Re:Whiners... (Score:4, Insightful)

        by msauve ( 701917 ) on Thursday July 21, 2011 @06:09PM (#36839784)
        "that's not what you get with Netflix streaming. You get to watch what the studios approve of, for as long as they think you should be allowed to. "

        And that differs from how movies are released to premium cable channels and network TV in exactly what way?
        • by sqrt(2) ( 786011 )

          It doesn't, which is why neither are good deals. Like I said, just because other options are also overpriced doesn't make it right.

      • Ultimately what they need to do is cut the crap. Look at the successful paid for music services and copy them. I can go onto amazon pay money and get unencrypted zero-bullshit music files in return and the whole thing works brilliantly. If I want to do the same but buy a film... I don't even know who will take my money off me, amazon certainly won't. Streaming is an option but I try to avoid subscriptions where possible (my finances may go wobbly in the near future), as is having discs shipped out and rippi
    • My cable company wants much more than $16/mo to get the various premium channels (HBO, Showtime, etc.).

      My cable company won't even let me add HBO or Showtime unless I upgrade to a higher "tier" with dozens of channels I won't watch. Right now my family is on the $60/mo Digital Starter tier because that's the cheapest with ESPN; Comcast wants us on the $80/mo tier before it'll let us add premium channels.

  • by Anonymous Coward on Thursday July 21, 2011 @05:33PM (#36839200)
    The Pirate Bay.
    • by tloh ( 451585 )

      Years ago, I began using hulu to catch up on Joss Whedon's "Dollhouse" before I started using Netflix to watch other shows. They have a smaller selection of titles, but for what they do have, new episodes of current series are available usually the day after they air on the regular networks. the annoying thing with Netflix is that it seems they wait for the DVDs to be available (regardless of anything else) before they make the streams available.

      • by Deagol ( 323173 )

        Hulu's increase of commercials has severely turned me off of their offerings. I once watched a ton of stuff on Hulu, but now I stick to NetFlix or just do without.

        It's quite jarring to be in the middle of an intense show and then breaking to an HPV commercial.

  • by mallyn ( 136041 ) on Thursday July 21, 2011 @05:35PM (#36839224) Homepage
    I have not been to a first run movie theatre for about 3 1/2 to 4 years; I've lost count.

    I find plenty to do without going to first run movies or event renting movies.

    To be brutally frank with you, much of what comes out of 'the industry' these days have very little to keep me engaged.

    So, I take the money I save by not subscribing to movies and tv and engage in hobbies that keep me engaged and creative, such as these at []

    • by SethJohnson ( 112166 ) on Thursday July 21, 2011 @05:49PM (#36839458) Homepage Journal
      Since you're being frank with me, I'll be frank right back. You are completely out of touch with contemporary cinema. There have been plenty of excellent movies released by 'the industry' and screened in Portland theaters over the past 4 years. You just aren't connected with what is going on in film these days.

      • Winnebago Man
      • Tree of Life
      • Exit Through the Gift Shop
      • Inside Job
      • Black Swan
      • True Grit
      • Hangover
      • King's Speech
      • Milk


      • Some are documentaries, not "industry films".

        While they are great, GP is correct that the general industry has taken a nosedive in terms of quality. That is how many movies out of how many movies in those same number of years, in which these particular movies actually been well executed? How many movies over the past many years were actually good and not explicit emotional manipulation in a generally shitty movie via music tied to a scene or obvious/long drawn out plot? etc.

        I used to go to 10, 20 movies a y

      • by blair1q ( 305137 )

        Exit Through the Gift Shop

        This is a brilliant film, if it's a real documentary.

        But it's total crap if it's a mockumentary.

      • by Archangel Michael ( 180766 ) on Thursday July 21, 2011 @11:16PM (#36842320) Journal

        Of that list, I think the only one I'd consider watching is True Grit, and perhaps Black Swan. In fact, they should combine the two movies, for a perfect /. Meme movie .. "Natalie Portman in Hot (True) Grits.

    • by dxprog ( 898953 )
      You should take up the basics of web design as one of those hobbies...
    • This is all perfectly fine, for you. But why do you assume that everyone else is like you or think like you? I myself love watching movies. Not all movies, I do have my preferences. And it doesn't exclude having other hobbies as well.
  • So in Canada we've only ever had streaming for $8 a month. So what's the big deal? "Basic" cable is around $60 a month now. HBO is another $12 a month. etc.
  • by markdavis ( 642305 ) on Thursday July 21, 2011 @05:47PM (#36839426)

    I don't really care *why* the price is almost doubling for my plan from what I was paying last year, only that it is. And like TONS of customers, I am going to drop half of the plan. The half I am choosing to drop will be the streaming. In my case, I am not worse off than before. My pricing will be about $1 less per month than when they added streaming in the first place.

    Anyway, I can understand why many people are very unhappy about it. I can also understand why it makes sense to separate the plans and have customers pay for what they use (I am not a fan of "bundling" in the first place). However, I see that for many customers, this really is a HUGE and unreasonable price jump.

  • Why don't these same people complain about the federal budget as much as they have with Netflix?

    • by geekoid ( 135745 )

      Because the federal budget isn't as bad as the screaming nonsense panic mongers in the news would have you believe.

      There are 'News reporters' going after economic experts and calling them wrong. Just because the exerts experience and data driven statement is different then the news persons opinion.

  • 1) There PR guy was a jackasss and talked down to people.
    2) They didn't tells us why.
    3) we still don't know what their increased costs where. I think. My cost to mail something didn't go up 60%.

  • Off the top of my head? Hulu Plus. On my Sony TV and blurrydisk player there's Qriocity and three or four others.

    I have no idea what the selection is like on Qriocity or the others. I don't really watch that much TV to begin with and I'm just not curious enough about it to (pay money) to find out.

  • 60%? Try 7% (Score:5, Interesting)

    by adenied ( 120700 ) on Thursday July 21, 2011 @05:54PM (#36839546)

    It's misleading to say that they raised their rates by 60%. They did I suppose if you only have the unlimited 1 DVD plan + streaming. Going by the outcry I suppose there's a lot of people who have it. However, my family has the 4 DVDs + streaming plan and the price will be going from $27.99 to $29.98 a month. That's less than a small latte from Starbucks.

    Instead of screaming at Netflix and throwing tantrums comparing the price increases to rape (google it, it's really sad) I wish these people would start screaming at the media companies to get some sort of reasonable pricing and access to streaming media. This whole sending me physical pieces of plastic through the mail is getting old! It's 2011 for crying out loud! Not only is there a terribly small amount of things I can stream through Netflix, but things disappear, almost always with little warning. My streaming queue has over 200 titles that are in the saved section because they were available once but are now not.

    I understand what's going on behind the scenes, but that doesn't mean I have to like it.

    • There are far more people with 1 DVD + unlimited than your plan of 4 DVD's. Although still a good deal. We dropped Netflix because they broke the interface, and we could no navigate it in a manner that allowed us to find a movie to watch.
      • by adenied ( 120700 )

        I figure there are plenty of people with 1 DVD + unlimited. And while on the one hand a 60% price increase is pretty bad, it's also only $6/month more. For some people that may be too much. But I'm curious how Netflix's subscriber numbers will fare after all this. Probably won't have much of an impact.

        As far as the new interface, I think it's horrible. But OTOH, I have about 450 movies I know I want to see. So I figure I'll wait it out until the next UI update.

  • I have relatives who will never use the streaming (they are still getting used to DVDs). For them, it is now cheaper. I am moving strictly to streaming, but the selection is thinner than their DVD collection. So, I will take a hit. Since I dropped cable in favor of Netflix and free OTA HDTV (50+ channels), I am still ahead.
  • How many of these 'Why Netflix raised their rates' articles will Netflix PR department spawn?

  • So the blurb here was all the information that was actually published in that article. Does a brief comment that adds no information actually need to be posted as a story? I thought they were going to put out some numbers. The article headline seems to be misleading in that there doesn't seem to be any actual content, unless I'm missing something.

  • Poor Posting (Score:4, Interesting)

    by guttentag ( 313541 ) on Thursday July 21, 2011 @06:03PM (#36839692) Journal
    The "Netflix rate hike was inevitable" link goes to a paragraph of text that really doesn't say anything more about the subject than what's posted in the summary. I suppose there's a link there to an audio monologue on the subject, but who wants to spend 30-60 minutes listening to the audio just to see if they have anything more to say there?

    So at this point all we have is a vague argument that Netflix had to raise its prices because of the cost of mailing DVDs and increased licensing fees for streaming content. Let's dissect this:

    Sending DVDs through the mail is what Netflix has always done. It is the core of its business. I haven't seen any news about a sudden hike in the cost of mail in the U.S. Yes, it's gone up over the last 20 years, but not since Netflix's last price increase about 7 months ago. Netflix is the postal service's life support. Without Netflix, the USPS isn't financially viable because so much written communication now takes place online, so the USPS is going to do whatever it takes to ensure Netflix doesn't send fewer DVDs through the mail. I consider this part of the argument debunked -- the cost of mailing DVDs did not force this price increase.

    Netflix has progressively tried to steer customers away from the mail service, presumably because they don't have to maintain distribution centers around the country to stream videos, and they're worried someone else will beat them to the on-demand streaming party first. They want to own that party before the space gets crowded, and the easiest way for them to do that is to "convert" their huge base of snail mail customers to streaming. They started out by bundling it for free with your subscription, then offering it by itself, then disabling the ability to manage your DVD queue through the Netflix mobile apps...

    The problem is that their streaming library is a fraction of the size of their DVD library. To fill in the gaps, they have to go back to the content owners and negotiate fees, and the content owners smell an opportunity to make a lot of money. Rather than use its size to convince the content owners that receiving a reasonable licensing fee for the content is better than receiving nothing at all and being left out, Netflix has decided it wants the content even if it has to overpay for it... Because it will just pass on the cost of its decision to the users. I'm sure someone at some high level meeting said, "wait, what if our customers realize this and flee?" and that's why they're providing the option to opt out of streaming altogether now. The customers who don't want to pay the increase can just opt out of streaming. The customers who are willing to pay the price for streaming will pad the pockets of the content owners.
  • I would seriously pay twice what I'm paying Netflix for now for unlimited streaming and if it helped provide a better selection.


    Netflix is by far the best value on the Internet today.

    That and they treat their employees with respect. Especially their customer service folks.

    My Hulu Plus subscription isn't giving me shit.

  • by superdude72 ( 322167 ) on Thursday July 21, 2011 @06:14PM (#36839842)

    Did you really think $9.99/mo for 1 DVD at a time + all the streaming content you can eat was going to last forever? Those are *startup* prices. They do that to grow the business, then they jack up the prices when they need to be profitable.

    And they're never going to include new releases in the all-you-can-eat streaming at that price.

    I do wish they would stop changing the streaming / not streaming status of movies, however. It's frustrating when a movie that has been out for ten years, and was streamable last week, suddenly is not streamable. Can't say I understand the reasoning behind that, other than that their licensing just makes no damn sense.

    • by timeOday ( 582209 ) on Thursday July 21, 2011 @06:47PM (#36840280)

      Did you really think $9.99/mo for 1 DVD at a time + all the streaming content you can eat was going to last forever? Those are *startup* prices. They do that to grow the business, then they jack up the prices when they need to be profitable.

      Bzzt, wrong. Netflix already was profitable. []

    • It's even worse when it's a TV series that you've just gotten hooked on, then suddenly it's gone when you're halfway through...
    • From what I understand it's time-limited licensing. If it's confusing, blame the studios for requiring closure dates for license agreements to ancient movies that are not going to see any dvd or theater re-release.

      Personally, though, Netflix could go a LONG way to improving its communication on this - show that "this movie will no longer stream after August 14, 2011" or whatever.

      FWIW, try to find a phone number to call Netflix, or even an email address to submit suggestions on There aren't an

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