Netflix Splits DVD Rental and Streaming Options, Prices Go Up for Bundle

By Lucian Parfeni on July 13th, 2011 09:11 GMT

Netflix is full of surprises these days, but the latest isn't sitting well with its customers. The company is splitting the DVD-by-mail rental and online streaming options, essentially hiking the price by 60 percent for those that want both.

"We are launching new DVD only plans. These plans offer our lowest prices ever for unlimited DVDs – only $7.99 a month for our 1 DVD out at-a-time plan and $11.99 a month for our 2 DVDs out at-a-time plan," Netflix explained.

"Our current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans," the company mentioned in a blog post.

"Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month. Plan 2: Unlimited DVDs, 1 out at-a-time (no streaming), for $7.99 a month. The price for getting both of these plans will be $15.98 a month," it added.

Currently, Netflix offers unlimited streaming for $7.99. This will be true in the future as well. However, streaming customers also have the option to rent unlimited DVDs for just $2 more. This will no longer be the case.

Granted, most people subscribe to Netflix for the streaming part, the DVDs were seen as an added bonus. At $2 more, the feature was priced as such.

Netflix is separating its streaming and its DVD units, with different management and so on, to make costs clearer. With the new subscription prices, it's a lot easier to see how much money the DVD unit and the streaming unit are making.

People who really want DVDs will probably spring for the $16 bundle. But most people will likely just stick to their streaming option, meaning that revenues may actually go down after this move.

The costs will go down as well though, so the move probably makes financial sense. With the rising cost of licensing, for streaming, Netflix probably needs the money.

And, in the end, it's just $6 more, while many people are threatening to cancel their subscriptions, the price hike is not going to put a dent into anyone's budget.
Netflix is splitting its DVD rental and its streaming businesses
   Netflix is splitting its DVD rental and its streaming businesses
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