On Tuesday, Netflix announced that they were changing the pricing structure to split Streaming and Mailed DVDs into two different plans. If subscribers wish to have both plans, prices will increase by over 60%. This change is geared to shift subscribers to their streaming platform in an effort to keep up with the high cost of mailing actual DVDs.
I understand the need to account for rising “snail mail” costs in an increasingly digital world but this hits me in a few different ways:
- As a subscriber, my current plan will almost double. For one disc at a time, I would have been better off driving to Blockbuster twice a month.
- As a marketer, I see this change as an unplanned disaster. In the past few years, Netflix has taken on and destroyed Blockbuster Video (their leading competition and a household name for decades) with their low prices, lack of late fees and fast delivery. In the wake of their much increased market share, their customer base now has to pay more to keep the same service. I think their only disc-providing-competitor will be reaping in the benefits. Congrats to Redbox on their unexpected windfall!
Netflix: Your new strategy is leading the way towards a digital age with tons of video on demand but at what cost?
As I try to better understand the new Netflix strategy, I see tons of posts by Facebookers, Tweeters and Bloggers complaining about the new prices and I have to wonder about how much business Netflix is about to lose. Will the money it saves on postage outweigh the money it will spend on streaming licenses, even with tons of angry customers flocking to Redbox locations?
The technophile in me says that VOD is the direction the industry is heading but paradigm shifts of this magnitude need to be done gradually, not overnight. I’m excited to see where the technology goes that brings us more video at a faster speed. But in the meantime, I’m going to start reserving DVDs from my local Redbox before I’m out of luck.
Jon Brown
Manager Data & Platform Development
Marketsmith
