Netflix's new ludicrous pricing plan

[shattered dreams]

Not sure I understand. Are you really trying to tell me mailing costs less now than before because some people MIGHT not have used the streaming? That's silly.

I am saying that people that only can, or want, to use mailing now get the same service for cheaper. Sure it is a minority but probably more significant than some might realize.

Regardless of what you used, you paid for streaming + DVD. Even if you didn't use one or the other, the fact is you were paying for that service. As such, if you split the costs evenly, it was $5 for each service.

True but different usage patterns reflect different areas of cost on Netflix's end as well.

You're trying to claim they're going to make less money, and then question how much more money they really need?

When did I claim they were going to make less money overall?

I'm not the one complaining.

Complaining about people complaining is still complaining.

As you can see, adding subscribers, doesn't automatically add profit.

Of course it does not guarantee it but there is ample reason to believe that it currently will be adding additional profit considering they are doing quite well even with the current pricing. As we go to the future who knows.

I've never understood that mentality. Why should we be frustrated with someone trying to make money. America is a country in which profits are the driving motivation for any business. Any adult that does not understand that probably doesn't do well in society.

So if I steal your wallet you salute my capitalist spirit?

My comment was predicated upon the idea that Netflix is being charged more to carry content because the cable providers are increasing their license feeds. At that point, they're not carrying the price of doing business on to consumers, it doesn't cost them anything to license content to Netflix.

Are cable providers even the ones that own the content? It doesn't seem like that is the case, especially when it comes to movies. Maybe by providers you mean networks or something I am missing. Regardless, there is an opportunity cost of providing the content to netflix for sure (decreased DVD sales etc.) and it did cost something to make that content after all. Why are you allowed to question the "greed" of these people who after all are just trying to make money. It seems you may have never understood your own mentality in this case.

Which is likely offset by the fact they don't have to order as many copies of physical media, they don't have to pay for envelopes, they don't have to pay for postage, etc.

Probably but it should be interesting to see how it plays out anyway. Investing in the future is a smart thing but now Netflix has the pressures of stockholders and increased competition in the streaming market. Even if 75 percent of the people cancel one then they still break even. Seems like they will be fine from a business perspective.

 

[Slyfox696]

I am saying that people that only can, or want, to use mailing now get the same service for cheaper. Sure it is a minority but probably more significant than some might realize.

And those costs are going straight to paying for what it costs Netflix to provide that service.

No matter how you look at it, Netflix raised the price on DVD mailing.

Complaining about people complaining is still complaining.

I'm not complaining about people complaining. Not once did I do so. Look at my first post, not once did I condemn the OP for his "outrage" at the Netflix price raises, I just tried to get him to see there are plenty of factors which likely go into it.

Thus, I'm still not complaining.

Of course it does not guarantee it but there is ample reason to believe that it currently will be adding additional profit considering they are doing quite well even with the current pricing.

Which has nothing to do with your question of how adding subscribers doesn't automatically equal profit.

You can't ask a question, and then pretend the scope of that question was different than what you asked once you get the answer. You asked how does adding subscribers not make profit, and I told you.

So if I steal your wallet you salute my capitalist spirit?

Are you providing me with a good or service in return for my money? No? Then it's not even close to the same thing.

You're smarter than this.

Are cable providers even the ones that own the content?

Many times yes. For example, Comcast owns a majority share of NBC Universal.

It doesn't seem like that is the case, especially when it comes to movies. Maybe by providers you mean networks or something I am missing.

Content providers. Whomever they may be.

Regardless, there is an opportunity cost of providing the content to netflix for sure (decreased DVD sales etc.) and it did cost something to make that content after all. Why are you allowed to question the "greed" of these people who after all are just trying to make money. It seems you may have never understood your own mentality in this case.

Again, you're missing the point.

I presented a hypothetical (which you agreed is a probability). This hypothetical said that the content providers (of which I previously called cable companies) are now charging Netflix more money to provide content to the Netflix subscribers. Netflix has to then charge its subscribers more money, to offset the increased cost of the license for the content. Licensing for content already created is a near 100% margin profit, and so, when they charge more for the license, that makes them greedy, if you are to assume ANY entity in this whole thing is "greedy".

See how that works, as a hypothetical? I don't know how to make it any clearer than that.

 

[Pepe Silvia]

You're looking at it wrong. First of all, mailing DVDs, at this point, is probably much more expensive than streaming (envelopes, postage rates, people to handle product, etc.), now that they have their streaming service setup. Cable content providers are pulling their content from Netflix because they see the threat Netflix represents, or like in the case of HBO, requiring astronomical fees for the content. I'm guessing the MPAA is requiring greater license fees now they see Netflix is popular, and people would rather use Netflix than buy a DVD.

You can get upset with Netflix all you want, but you're likely getting upset with the wrong people. Netflix is still a business, not a charity. And when their fees go up, they don't want to lose money, so they have to pass the costs on to the users.

Like I said, getting mad at Netflix is probably being shortsighted in this instance. Most likely, it's due to factors beyond their control.


No matter how you look at it, this is not "ludicrous". It's quite reasonable, just more than before. Don't believe me? Try to find something better, that doesn't have advertisements assaulting you at every turn.

The full price was $7.99 for a good while, and it only increased to $9.99 when they introduced the Streaming Only plan. While you might see it as a $6 increase, I see it as +$8 because I was just paying $8 total for unlimited on both services.

Now I'm not complaining about that unlimited DVDs + Unlinited streaming is $16, it's that I only want a DVD every now and then (and even then i usually keep mine for over a week.) The fact that I can only choose between unlimited DVDs or no DVDs is pretty crap if my only choices are go without or pay $8 more a month. If they're going to make this big of a price hike for the service I have now, I'd like a good medium between unlimited and zero. I could probably go with only 2 or 3 DVDs a month, as I only really get good new stand-ups and older movies I can't seem to find on HBO/Showtime.

Although with the gap now closed a good deal, 2 DVDs at a time sounds kind of appealing (It's only going to be +$4, $19.99)

 

[shattered dreams]

And those costs are going straight to paying for what it costs Netflix to provide that service.

No matter how you look at it, Netflix raised the price on DVD mailing.

In a general sense, yes, from the perspective of some individual consumers, no, but that wasn't the issue we were discussing. We were discussing the idea that it cost more to mail than stream, which you attempted to justify based on the prices they used.

Thus, I'm still not complaining.

Educating, complaining, sometimes the difference may be in the eye of the beholder.

Which has nothing to do with your question of how adding subscribers doesn't automatically equal profit.

It actually has quite a bit to do with the line of thought we were following on that topic seeing as your point was contingent on them needing the money. You have claimed a few times that they need to change because no business should have to operate at a loss. Reasonable opinion, but potentially not applicable in this situation which is what I commented on, not the general case.

Are you providing me with a good or service in return for my money? No? Then it's not even close to the same thing.

If I lived in Nigeria it would be pretty similar.

In ideal capitalist theory it doesn't matter but you are smart enough to know that was hyperbole. There are plenty of legal ways to borderline steal someones money. I would not blame anyone for being frustrated when that happens. A sliding scale certainly exists but it is true that this issue is on the lower side of it and that there certainly is a personal decision aspect to it all.

I presented a hypothetical (which you agreed is a probability). This hypothetical said that the content providers (of which I previously called cable companies) are now charging Netflix more money to provide content to the Netflix subscribers. Netflix has to then charge its subscribers more money, to offset the increased cost of the license for the content. Licensing for content already created is a near 100% margin profit, and so, when they charge more for the license, that makes them greedy, if you are to assume ANY entity in this whole thing is "greedy".

So what then is the justification for raising DVD by mail programs prices? My only real issue with Netflix on this thing is that I do not think one exists, especially to the extent they did.

This here is kind of a silly juxtaposition of what constitutes profit because creating a good for plenty of products is the bulk of the cost. Furthermore, one show doesn't constitute an entire business. I am no expert but it used to be that most shows did not make a profit but the ones that did made a killing. This may have changed some with reality tv but I suspect it still applies. How do you know that you may not be forcing the company that makes the show to operate at a loss by not selling at market value? You pretty clearly already did more than talk about a hypothetical assumption. I mean you even wrote true in all caps.

 

[Slyfox696]

The full price was $7.99 for a good while, and it only increased to $9.99 when they introduced the Streaming Only plan. While you might see it as a $6 increase, I see it as +$8 because I was just paying $8 total for unlimited on both services.

So you just expected that, despite inflation, you would always pay the same price for more/better goods and services?

That's your problem, not Netflix. The price used to be $8.99 before they raised it to $9.99 for Streaming+1. That's a $1 raise last November. So, it is a $6 increase, but at the worst, it's only $7 and not $8.

http://www.msnbc.msn.com/id/4031753...aises-prices-offers-unlimited-streaming-plan/

Now I'm not complaining about that unlimited DVDs + Unlinited streaming is $16, it's that I only want a DVD every now and then (and even then i usually keep mine for over a week.) The fact that I can only choose between unlimited DVDs or no DVDs is pretty crap if my only choices are go without or pay $8 more a month.

You mean $7.

And it's not crap. Let's say you rent 4 DVDs a month (1 a week). Stamps (for regular mail, not the increased postage Netflix probably has to pay) cost $.44 a piece, so there's $1.76. Let's say the mailing envelope cost $.24 (why? because I don't have any idea what it costs and it makes round numbers). So now we're up to $2. If you go out and buy a DVD, it's going to cost you a minimum of five dollars. So, now we're up to $7.

Tell me again, how much does the mail service charge? $7.99? Throw in increased postage (as I said, I included basic stamp price), people to handle the discs, storage facilities to house the discs, etc., and I think it's pretty easy to see where the value is way over $8.

Now, I realize discs aren't exclusive to an individual, but they do need to be replaced from time to time as well. So, I think it's safe to say that, in order for Netflix to how justify the cost of running the mail business, a price increase is fair.

By the way, apparently (I haven't looked it up, just going by what I've read), Netflix pays over $600 million each year on postage for DVDs. That apparently comes from their public records. You're telling me a $6 increase to continue receiving this service is too much?

If they're going to make this big of a price hike for the service I have now, I'd like a good medium between unlimited and zero.

Yes, Netflix should incur more work, and thus, more costs, just because people are too cheap to pay an extra $6 a month.

There's nothing wrong with not wanting Netflix service. Don't renew your membership, not a big deal. But to get mad about it is just silly, especially when you consider what a great service they've provided over the years.

 

[shattered dreams]

By the way, apparently (I haven't looked it up, just going by what I've read), Netflix pays over $600 million each year on postage for DVDs. That apparently comes from their public records. You're telling me a $6 increase to continue receiving this service is too much?

So they pay 600 million and have I think I read around 24 million subscribers. That comes out to 2 dollars per month per person (looks like your estimate was solid on postage but I have my doubts on the actual discs). What has changed about DVDs and mailing that means they need to increase this price? Economy is down, demand is at best slightly up, competition is way up.

 

[Slyfox696]

So they pay 600 million and have I think I read around 24 million subscribers. That comes out to 2 dollars per month per person (looks like your estimate was solid). What has changed about DVDs and mailing that means they need to increase this price?

Licensing, replacing old media, purchasing more media, more storage facilities, more workers to process the mailing distribution, inflation, more phone/tech support to handle growing subscriber base, etc.?

They are still a for-profit company, you know. Their goal is not to come out even, but ahead each month.

 

[Pepe Silvia]

There's nothing wrong with not wanting Netflix service. Don't renew your membership, not a big deal. But to get mad about it is just silly, especially when you consider what a great service they've provided over the years.

I don't see how it's more work, they already have a 2 DVDs a month plan out for $4.99, just combining that with unlimited streaming would add no extra effort on their part. I'd be incredibly satisfied with that, as I usually only get one DVD a month anyway, and stream a ******ed amount of media on my 360/Laptop. I'll probably stop caring about it in a week or two and just keep the $16 plan, as I have a problem with doing "well, it's only $3 more."

Also for what it's worth, acquaintance of mine used to work at Netflix as a sorter, and he got laid off when they replaced all the sorters with robots, so I don't know if they even use people for that job anymore. He's a massive stoner with no real values though, so maybe they just fucking lied to him.

 

[shattered dreams]

Licensing, replacing old media, purchasing more media, more storage facilities, more workers to process the mailing distribution, inflation, more phone/tech support to handle growing subscriber base, etc.?

They are still a for-profit company, you know. Their goal is not to come out even, but ahead each month.

The thing is that the competition has pretty clearly established that the value of a DVD to watch independent of mailing costs is significantly less than what they are charging.

 

[shattered dreams]

For Netflix, he said, the separation of the plans was a consumer-focused decision that "provides a simpler, easier Netflix experience. Some people don't want streaming, some only want DVDs."

This is what I am referring to when I talk about intelligence insulting stuff.

 

[Slyfox696]

The thing is that the competition has pretty clearly established that the value of a DVD to watch independent of mailing costs is significantly less than what they are charging.

Not sure I follow what you're saying.

 

[shattered dreams]

4 movies from netflix 8 dollars, 4 movies from redbox or other sources 4 dollars. Is the selection really worth double? Not sure why you keep suggesting things get more expensive for a business the more of them there are. Generally, from a ratio perspective they get cheaper.

 

[Pepe Silvia]

Netflix's selection is fucking ridiculous compared to redbox, I think that is definitely well worth it if you watch that many DVDs

 

[Slyfox696]

This is what I am referring to when I talk about intelligence insulting stuff.

He's right though. You even mentioned the people who only watch DVD and no streaming.

Seriously, you keep going back and forth on your positions here.

4 movies from netflix 8 dollars, 4 movies from redbox or other sources 4 dollars. Is the selection really worth double?

Redbox doesn't have the selection, nor do they deliver to you. Where I live, the nearest Redbox is 10 miles away, meaning 20 miles roundtrip. My car gets something like 22 or 23 MPG on the highway (which this driving would be). Gas is currently $3.50 a gallon. You'll have to make that trip twice (once to get the movie, and once to return the movie), so you're looking at roughly $7 in gas cost (in addition to the $4 you spent on the movies themselves, not to mention hassle), as opposed to free delivery.

Factor in Redbox being $1 per day and Netflix being unlimited rental, I dare say the answer to that is, "Yes, the selection is really worth double". And if you rent more DVDs than just 4 in a month, then your savings keep going up.

 

[ABMorales787]

What? No more video stores over there? Ha!

 

[shattered dreams]

He's right though. You even mentioned the people who only watch DVD and no streaming.

How many times have you said in this thread that the change was business/profit focused? I am sure that minority is happy with the change, although according to you they paid ten dollars for 5 dollars worth of service for a long time so maybe it is about time they caught a break.

Redbox doesn't have the selection, nor do they deliver to you. Where I live, the nearest Redbox is 10 miles away, meaning 20 miles roundtrip. My car gets something like 22 or 23 MPG on the highway (which this driving would be). Gas is currently $3.50 a gallon. You'll have to make that trip twice (once to get the movie, and once to return the movie), so you're looking at roughly $7 in gas cost (in addition to the $4 you spent on the movies themselves, not to mention hassle), as opposed to free delivery.

Factor in Redbox being $1 per day and Netflix being unlimited rental, I dare say the answer to that is, "Yes, the selection is really worth double". And if you rent more DVDs than just 4 in a month, then your savings keep going up.

I can walk to a redbox if I wanted to but I am not arguing that what redbox provides is inherently better than netflix in any way independent of cost. The savings also keep going down if you rent less. Netflix just made themselves lacking in flexibility, which is a strength of the redbox approach. The average consumer is not a high volume customer. Should we start dividing out items in the mail from the Christmas tip you give your mail deliverer next?

We really do not differ that much on the actual issue minus a few semantics, we did manage to make a somewhat interesting discussion out of it though. I enjoyed my time with netflix and will likely end up keeping the streaming for a while but they lost me as a by mail customer over this once the change takes place. Instead of angry, let's call it disappointment. IMO the strength of netflix's service was the combination. The problem is independently they may be worth that but together they are not because you end up not using either to its fullest extent and there is no flexibility to use one in moderation as a supplement under this change.

 

[Slyfox696]

How many times have you said in this thread that the change was business/profit focused?

My #1 point in this entire thread is that there are many reason why this change could have happened. One of those reasons I mentioned, one of the first in fact, was that mailing business is likely more expensive.

I enjoyed my time with netflix and will likely end up keeping the streaming for a while but they lost me as a by mail customer over this once the change takes place. Instead of angry, let's call it disappointment.

Understandable. And because of that, you're not giving them your business.

Free market economy 101.

 

[shattered dreams]

Hopefully free market prevails and they add some flexibility in alternate price points at some point. Then again I could easily be wrong about the market. I do fear the streaming is going to keep climbing in price pretty significantly over the licensing fees though. The first group to build a solid system and get some contracts related to streaming a variety of live sports for fees is going to make a serious splash in the market.

 

[Kenny Powers]

A lot of people are frustrated over this. Almost to the point of cancelling their subscription. It doesn't really matter to me sense I only do streaming now. It was nice in the past when you could pay $16 a month for 3 DVDs via mail and get streaming. I guess Netflix wants to ween people off of DVDs or make options available for only DVDS and only streaming instead of both.

I just hope Netflix can come to some sort of agreement with companies to eventually have a wider selection of movies on streaming. I'm not a fan of a lot of new releases they have via stream like old westerns and D horror movies, but you really aren't going to find a better selection of movies and television shows to stream or rent on DVD for $8 bucks a month. Unless you only want to watch new releases then the best bet would be Redbox for $1.

Blockbuster Express is charging up to $2.99 for new releases and $3.99 for Blu Ray. $1 for older releases.

 

[TheOneBigWill]

Holy shit, people. Stop being cheap and move on.

I've worked for the Video Store Industry for 5 collective years. In the beginning, video rentals were once $1.99 for 5 night rentals. Now it's hard to walk into any video store, anywhere - and find that type of deal on a regular basis (not counting specific deals, specials, or daily sales).

In the long run, yes Redbox offers less movies for $1.00 for a one night rental that you will instantly be charged for in late fees if it is not returned - regardless the circumstance - by the next night before a timed deadline.

Netflix is still offering a service to you, for 1 DVD out at a time and unlimited streaming (which their streaming archieves are huge) - with no late fees - for one solid monthly payment of under $20.00. ($16.00 if I understand this new pricing) Unless you live in the middle of no where; typically anyone can watch, return, and get back, up to 10 movies in that time span (one month) - and that's even assuming you don't watch the movie you get, the day you get it.

Now I don't know about other video rental locations - but the one I've worked for, charges $3.17 (w/ tax included) for a one night rental, or $4.23 (w/ tax included) for a two/five night rental. I'm sure most of you can add up 10 rentals at even the $3.00 pricing and determine that Netflix is still cheaper than most of it's competition, and offers the best deal out of everyone in general.

 

[Shocky]

Someone needs to give this thread a giant tampon. My oh my the amount of estrogen is overwhelming.

 

[TheOneBigWill]

It's like the people complaining about this situation haven't lived life long enough to understand prices go up.

I seriously question if anyone bitching about this price increase even owns a car and knows the pain of real horrible increases in pricing. Gas was under a $1.00 once upon a time, for fuck sakes.

 

[Shocky]

Most of the people bitching are probably people that burn the DVDs and cause the price to go up in the first place.

 

[Pepe Silvia]

...I never even thought to do that, and I'm pretty sure the DVDs are protected somehow

Don't see the purpose though, it's not difficult to memorize 90% of a movie after seeing it twice

 

[Via Armbar]

Someone please tell me that at least one person already came in here and said something along the lines of ''16 bucks a months isn't really that much...'' because it's really not. Unlimited movies via mail or stream for that amount is still a good deal especially for people that don't pay for cable or and pretty much just do Netflix. If you have a massive cable plan then rethink some shit and figure it out.

I've got a pretty good internet/cable package for a good deal. I got the DVR now and a damn good amount of channels but no Netflix. I'll happily trade in a lot of my movie channel packages for the $16 Netflix deal and it will probably end up saving me money.