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Netflix splits DVD, streaming offers in 60% price hike

Think of it as a discount on a thing you never use!

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Netflix has announced that they're no longer offering a streaming-plus-DVD service. Instead, you can have either streaming or DVD, but if you want both, you'll have to pay for both.

The old monthly plan was $9.99 per month, which allowed unlimited streaming of movies plus the ability to rent any one DVD at a time. Such DVDs were supplied through the mail system and returned that way once watched.

The streaming-plus-DVD plan has now been scotched entirely, and there are two separate plans available: unlimited streaming for $7.99 a month or the ability to get DVDs through the mail (still one at at a time) for $7.99 a month. Customers can purchase both of course, but there is no discount associated with doing so.

This applies only in the US: the company's Canadian and newly announced Latin American offerings are streaming only.

The announcement included the usual corporatespeak of more choice and the intention to satisfy those who only wanted DVDs.

Interesting commentary from Felix Salmon at Reuters, who points out that this undermines the company's famous "long tail" strategy. At least, for anyone purchasing the streaming-only service.

For while streaming might be just the bees' knees, it does suffer from the number of offerings being so much lower. In the long run, everything will be available purely online, but it just ain't at present, and a significant percentage of Netflix's business is in that long tail of movies which are only available on DVD.

There have been quick and dirty attempts to ask people if they'll leave as a result of a 60 per cent price rise and some such – including a straw poll on Business Insider – indicate that one-third will. Which sounds like a very large number given the more usual consumer lethargy about things that they're signed up to.

New subscribers will have to pay the new prices immediately. Netflix's current customers will have to start coughing up in September.

Anecdotal evidence (otherwise known as reading comments sections) show that perhaps the largest effect immediately is to make people dig out and check what they have actually signed up for. Some of these users are changing providers as a result. This is always one of the problems that come with changing an offering that people have signed up to.

If you keep quiet, and just leave everyone believing they are still on the offering they originally took out, then you can keep on collecting the money without most noticing. As soon as you start changing this, making everyone look at what they're getting for what they're paying, there is inevitably a reconsideration of whether to continue to pay. Which might be why the 60 per cent price rise: smaller than that might not be worth it for Netflix, given the potentially lost subscribers. ®

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