Netflix on Tuesday announced that it’s splitting its DVD and streaming service into two, and that subscribers will effectively have to pay more for their movies if they want both services.
Jessie Becker, vice president of marketing, said on Netflix’s blog that the company realized that its current unlimited streaming plan for $7.99 and $2 add on charge for DVDs made no financial sense after it realized that there was still a substantial market for DVDs.
So the new plan is going to be $7.99 for unlimited streaming or unlimited DVDs every month, (or $11.99 for two DVDs rented at a time) every month. If subscribers want both, they’re going to just have to pay double.
Some subscribers reacted angrily to the change in the blogs’ comments section, while Ryan Lawler over at GigaOm noted that the change would help the company break out its financials more easily for investors to see how it really makes money.
Given that there’s only a limited selection of movies available for streaming, it’s not surprising that there’s a continued demand for DVDs.
As many of the commenters noted on Netflix’s blog, the change alters the value of the service — which is convenience.
It was convenient to have an unlimited streaming account with the option of occasionally ordering a DVD for a title couldn’t otherwise be accessed.
Netflix has been widely hailed as an innovator for creating a new way to watch movies, and for being willing to work with Hollywood to respect its windowing system of releasing movies through theaters and then to DVDs.
But on Tuesday, BNet‘s columnist Erik Sherman argued that Hollywood wants to hold onto its business model, and that Netflix might be the casualty after all, as the movie studios demand more in licensing fees at the same time as users find Netflix less convenient.
What do you think, is Netflix doomed? Share your thoughts in the comments section below.
Have a story idea or tip for Idea lab? Please send thoughts to Idealab@talkingpointsmemo.com.
