Netflix Changes, What Will You Do?

Netflix announced changes to its pricing structure.  Some of the changes are minor, but they primarily focus on separating out the DVD-by-mail option from the streaming option.  When most of us think of Netflix, we think of the red envelopes, where you choose movies to add to your queue and each time you return a DVD via the US mail the next movie on your queue is sent.  Streaming is a newer option that allows Netflix subscribers to login via their computers, game console, TiVo, AppleTV, Roku or other device and watch the movies via the internet.

The DVD-by-mail part of Netflix's business has changed the way many of us watch movies.  Weekly runs to the local video store hoping to find something in stock that would please everyone was replaced by nearly limitless access to an incredibly wide range of movies.  No late fees, no standing in lines.  Films are recommended based on how we liked movies that we returned.  Foreign films, documentaries, new releases, TV shows, kids movies, guilty pleasures, the classics--they are all available in a selection that no physical video store could hope to match.  The only problem was that you couldn't decide that very day that you wanted to watch a particular film.

That changed when Netflix began to offer streaming.  Now, more and more films are available as 'Watch Instantly'.  More people started to question why they were paying for cable TV when for just $2 more than their regular Netflix DVD-by-mail subscription you could also watch movies on a whim.  It competes with cable and satellite video-on-demand.  The growth of Netflix streaming has been so significant that it now accounts for 20 percent of peak-time internet download traffic. 

Of course, there have been bumps in the road with all of this success.  Movie studios have delayed releases for both Netflix services, and the constant negotiations between Netflix and the studios will result in whole studio catalogs of films becoming available and then not available.  The streaming option does not offer any where near the breadth of titles that the DVD-by-mail option does.  Many subscribers use both services to cover their desire to a wide selection and to provide instant access.  Netflix reported last fall that 66 percent of their subscribers streamed, and it has probably grown past that.

With the price increase, if you want unlimited DVD-by-mail and unlimited streaming you will pay either $7.99 (for 1 DVD at a time) or $11.99 (for 2 DVDS at a time) for the DVD-by-mail portion and $7.99 for unlimited streaming.  Of course, you could choose to have either mail or streaming.  This is a significant increase from the previous price which was just $2 to add streaming to your DVD-by-mail plan. 

There has been significant negative reaction to these changes.  In this economy people are watching their monthly budgets and are reluctant to pay more.  The economic reasons behind Netflix's decision to raise prices are that they need to more accurately reflect the cost of maintaining the infrastructure for handling the DVD-by-mail division, the network architecture for providing the digital streams, and the demands of the movie studios for adequate payment for the streamed movies.  Think of how many more movies you can watch if you use the streaming option versus the built-in brakes of having to wait for the US mail to deliver your next movie.

So you will have to make a decision.  What services do you use?  Do you want to pay for both types of delivery if you primarily use one?  Are there cheaper options?  Maybe keep the streaming and use Redbox for a bestseller now and then?  The movie rentals available through your game console, like Xbox's Marketplace? Amazon's movie rentals? Or download from your cable or satellite provider?

Of course, there is always the free option by going to the library.  Looks like the Prince William County has four copies of Gone With the Wind.  You can browse online to find out if copies are available before you go, or just browse the selection to find a hidden gem.