Did Netflix Shoot Itself in the Foot by Raising Prices?

Did Netflix Shoot Itself in the Foot by Raising Prices?Just two weeks after Netflix raised its subscription rates by a whopping 60%, many Netflix subscribers are being forced to make some hard decisions. As a loyal Netflix subscriber since August of 2006, I have enjoyed its DVD mailing service, but when Netflix added unlimited streaming to its $9.99 DVD package, I thought that was a great added feature. That meant that subscribers would not only be able to receive new releases on DVD one a time, but would also be able to stream some older movies and TV programs from the past.

However, I quickly learned that it was not Netflix’s intention to simply enhance the package that I already had, but that it was rather going to force me to make a decision on whether to keep my current package or to choose which of these services I wished to receive. My first knee-jerk reaction was to simply cancel my subscription, however, after a cooldown period of about a week, I decided to cancel the DVD delivery to my home and go with the streaming only service. Unfortunately for me, that meant that by canceling the DVD delivery I would not be able to receive the newer movie releases and would be subject to a reduced library of movie and TV offerings.

So while I lost that advantage, Netflix also lost as its streaming only plan is $7.99 a month, which means I am actually paying $2.00 less a month to Netflix. However, this reduction in revenue may be only the beginning of losses for Netflix, as in the back of my mind, I am still considering canceling my account with it entirely if it doesn’t keep its promise to increase its offering of streaming movies and TV programming within the next six months.

I believe that many Netflix users, especially those of us in the fixed income bracket, are facing similar choices on how they will deal with the price increase. These decisions will be based not only on the increase of $6 more a month to continue receiving both DVD and streaming services, or whether to chose a single package with only DVD or streaming at $7.99 a month, but on all the other rising costs to which they are being subjected. I believe that these decisions all depend on how much you depend on any of the services for entertainment and how much you use the services.

Currently, for me, Netflix has the best streaming service, but this could change in the near future as other companies begin to offer their own video streaming services.

Comments welcome.