Netflix Changing Pricing Structure

[The Squirrel]

So is my streaming charge staying at $7.99 or going back up?

 

[marvelman2006]

Qwikster is handling physical discs and games. Netflix will be streaming only.

Thanks and with that note Im officially dropping netflix, Im tired of the dicking around. I now have to go to another site to do my blurays and more running around. I might just do the blockbuster thing I was telling ya about, it also includes a deal where I can swap out a movie instead of game.

 

[Teelie]

To make it simple and clear. If you pay $16.00 now for one dvd and streaming ($8.00 each), you'll still be paying $16.00 if you continue to get 1 DVD and streaming. The only difference is DVD's will be billed as Qwikster, streaming will be Netflix. So, same price, only the bill will be "halved" into two different names on the statement. If you drop one or the other, it's still the same $8.00 for the service you keep.

 

[wiegeabo]

If most of their money comes from DVD's, why would Netflix alienate their customers by changing their name (the split essentially amounts to a name change for DVD customers).

If anything, Qwikster should be handling the streaming. Unless streaming is where they're making their money now.

 

[StrainedEyes]

Editorial: Reed Hastings' Netflix spinoff isn't about DVD success, it's about hedging the stream.

If you've just casually glanced over the mass reactions to Reed Hastings' decision to split the DVD-by-mail business of Netflix into its own brand and company, you've probably been duped into thinking that it's the second questionable move that the world's most famed movie delivery service has made this year. But is it? Is a man who turned a red envelope into a symbol of near-immediate gratification really a moron? Did he really just bury the company he worked tirelessly to create? I highly, highly doubt it. Knee-jerk reactions are always fun to watch, but they're rarely on-point. As with most things in life, the truth usually resides somewhere in betwixt the extremes. And in the case of Qwikster -- the DVD-by-mail service that precisely no one asked for -- the truth is hiding in exactly the place that Reed said it'd be: the future.

Aside from apologizing for not being vocal enough during this year's sudden price hike, Netflix's CEO also made clear that his company was "evolving rapidly," and his goal from here on out is to move "too fast," if anything. So why, might you ask, did Reed just make a 180-degree turn, slam down the pedal and throw his entire DVD business in reverse? Because that's exactly what needs to be done. Creating a completely unmemorable web address with a totally unmotivated mantra reeks of idiocy -- and failing to grab the Qwikster Twitter handle from an apparent stoner just has to be intentional -- but it all seems to make a bit more sense when you're proactively ridding your company of a business that will do nothing but nosedive in the years to come.

Like it or not, physical DVD distribution isn't an area that most sane folks would categorize as "primed for growth," particularly not when bumped up against streaming. Netflix admitted in October of last year that it was now "primarily a streaming company," so the shrill sound of shock resonating around the tech universe today is a bit hard to grok. Did we all really forget the direction Netflix was already moving in? All that happened with the introduction of Qwikster was a scorching beeline towards the end result: a thriving business devoid of physical movie delivery options.

Of course, everyone's seemingly focused on how much of an annoyance this is for customers in the here and now, and I can't readily disagree. Having two separate movie queues, two separate charges and two separate rating libraries sounds like a heck of a lot more work. But that's exactly the point. Take a closer look at what Reed is aiming for here: if he's "moving quickly," there's at least a sliver of a chance that Netflix is proactively separating itself from a dying business (DVD-by-mail), while leaving the namesake on a business that has huge growth potential (global streaming). It also gives Netflix proper the ability to focus solely on hammering out better content deals for customers, pushing for earlier access to new releases and perhaps even landing deals that would've been impossible with the DVD business still along for the ride.

The truth of the matter is that Netflix could continue to run a profitable by-mail movie business for years. Maybe even a decade. And they'll certainly give GameFly a run for its money in the game-by-mail segment -- a segment that isn't nearly as ready to be dominated by streams just yet. But in a way, Netflix is was competing with itself as well as Redbox, and it's undoubtedly spending gobs of money on fuel, distribution centers, postage, ruined discs and leftover coasters -- spend that'll be increasingly harder to justify as broadband becomes more ubiquitous, more content is primed for streaming and more of these things hit the bargain bin at Walmart. Think of it this way: if Reed's forecasting a future where it no longer makes sense to continue the pursuit of a by-mail DVD business, how would he rather say goodbye? Flushing half of Netflix away and dealing with the backlash? Or quietly shuttering an awkwardly named website no one was particularly enthralled about from the get-go?

And then there's the stuff we simply can't know about. I'm surmising that Netflix is on the precipice of locking down a few streaming deals that'll have everyone smiling. Reed knows good and well what you want -- you want more new content available for Watch Instantly, and you want more television shows to appear in a more timely manner. I'd wager that he's working on it. Hard. And by getting the laggard of the bunch off of his mind (and onto that of Andy Rendich), he's in a much better position to accelerate the service that everyone actually cares about. Fast forward five years, and I'll bet that hardly anyone's clamoring over Qwikster at all.

And what of Netflix's relatively quiet investments in content discovery? There's a better-than-average chance that Reed's algorithm makers are betting that they can figure out what you'll be into before you can, and from there, it can offer up material you would've never have thought to look for -- regardless of the source. And then there's the assumption that Reed loathes listing a DVD on his site that isn't available for instant streaming; split the sites, and the problem vanishes... depending on perspective, of course. What really happened here is quite simple: Reed Hastings just put a gun to the side of his DVD-by-mail business and pulled the trigger. Given that he aimed for the ankle, though, it'll probably take a while for it to completely bleed out. But hey -- proactively putting a fading business out of its misery sure beats bleeding for it on the balance sheet.

http://www.engadget.com/2011/09/19/...snt-about-dvd-succes/?a_dgi=aolshare_facebook

 

[KALEL114]

If most of their money comes from DVD's, why would Netflix alienate their customers by changing their name (the split essentially amounts to a name change for DVD customers).

If anything, Qwikster should be handling the streaming. Unless streaming is where they're making their money now.

Going by this, I would suspect there Streaming is where the money is.

The company, which unveiled new prices in July, will have 2.2 million domestic DVD-only subscribers at the end of this quarter, compared with its previous projection of 3 million, according to its statement published today. The Los Gatos, California-based company also said it will have 9.8 million streaming-only users after previously predicting 10 million.

http://news.businessweek.com/article.asp?documentKey=1376-LRK9PE6K50XS01-4P5LPS78JC2HBTTFA4IOU5DHD0

 

[wiegeabo]

Going by this, I would suspect there Streaming is where the money is.

http://news.businessweek.com/article.asp?documentKey=1376-LRK9PE6K50XS01-4P5LPS78JC2HBTTFA4IOU5DHD0

Exactly. Why change the name on the customers where the bulk of your money is coming from?

 

[KALEL114]

Netflix is the streaming only site. Qwikster will be DVD/Blu Ray/Videogames only site.

 

[wiegeabo]

Which means that streaming is where the money is at. They don't want to confuse those customers.

 

[KALEL114]

Right.

I bet they will lose more DVD only users and eventually reach a point where they drop it all together. Maybe they go VG's only to compete with GF.

 

[wiegeabo]

Which is what I've been saying

 

[KALEL114]

Same here.

 

[marvelman2006]

If most of their money comes from DVD's, why would Netflix alienate their customers by changing their name (the split essentially amounts to a name change for DVD customers).

If anything, Qwikster should be handling the streaming. Unless streaming is where they're making their money now.

The only thing I can think of is there trying to semi rebrand there name in a positive light. I can bet you though if this qwikster takes off then they'll try to run that like netflix was pre rate hike. If it fails then I dont know where they go from there.

 

[StrainedEyes]

The only thing I can think of is there trying to semi rebrand there name in a positive light. I can bet you though if this qwikster takes off then they'll try to run that like netflix was pre rate hike. If it fails then I dont know where they go from there.

They sell it to someone else; save all that money on delivery costs, warehouses, and employees and use it to boost their streaming service further.

 

[Teelie]

I can see where Engadget is going but I also question the supremacy of streaming with ISP's becoming ever-increasingly happy to cap not only bandwidth usage but bandwidth consumption.

Streaming also is limited to machines connected to the internet. Most televisions are not in any way connected to the internet. Despite the myriad of machines capable (Blu-Ray, game consoles, internet boxes) they're still a drop in the bucket to the number of televisions owned without them.

In the future if the internet is not so capped and controlled by ISP's looking to capitalize on streaming themselves (particularly Comcast) then it's a bright future ahead. If, however there is a tightening and controlling squeeze on bandwidth, then streaming is going to become a dead end or an expensive alternative. Mailing DVD's might be a surprise Dark Horse keeping them afloat.

At the same time with the seemingly imminent demise of the postal service in the U.S. mailing DVD's is not looking to be profitable either. Not unless an alternative or viable solution can be hammered out soon.

What I see is Hastings hedging his bets. One or the other (possibly both) is going to suffer from the greed of corporations and advancement of technology making the current system obsolete. If one goes under he still has the other instead of both crashing. If the ISP's win and end net neutrality and force customers and rivals to pay exorbitant fees to use more bandwidth or pay for alternative streaming that's going to crush them. If the USPS falters and is not replaced in a timely manner, that too will fall and the end of DVD mailings with it.

 

[wiegeabo]

I can see where Engadget is going but I also question the supremacy of streaming with ISP's becoming ever-increasingly happy to cap not only bandwidth usage but bandwidth consumption.

Streaming also is limited to machines connected to the internet. Most televisions are not in any way connected to the internet. Despite the myriad of machines capable (Blu-Ray, game consoles, internet boxes) they're still a drop in the bucket to the number of televisions owned without them.

In the future if the internet is not so capped and controlled by ISP's looking to capitalize on streaming themselves (particularly Comcast) then it's a bright future ahead. If, however there is a tightening and controlling squeeze on bandwidth, then streaming is going to become a dead end or an expensive alternative. Mailing DVD's might be a surprise Dark Horse keeping them afloat.

At the same time with the seemingly imminent demise of the postal service in the U.S. mailing DVD's is not looking to be profitable either. Not unless an alternative or viable solution can be hammered out soon.

What I see is Hastings hedging his bets. One or the other (possibly both) is going to suffer from the greed of corporations and advancement of technology making the current system obsolete. If one goes under he still has the other instead of both crashing. If the ISP's win and end net neutrality and force customers and rivals to pay exorbitant fees to use more bandwidth or pay for alternative streaming that's going to crush them. If the USPS falters and is not replaced in a timely manner, that too will fall and the end of DVD mailings with it.

ISPs like Comcast are capping bandwidth because they don't want to lose their old business model. They don't want people to go to streaming because they'll lose all that tv advertising revenue.

But customers are demanding streaming and offline viewing, and they're moving that way despite the ISPs efforts. Since customers have the money, the advertisers will follow that move and move to streaming as well. And then, the ISPs will finally, reluctantly, follow as well.

Look at Sprint who is now advertising unlimited data packages for their phones, whereas AT&T and Verizon no longer do. And when Sprint gets the iPhone next month...

 

[hippie_hunter]

When Sprint gets the iPhone next month, they will eventually stop offering their unlimited data packages. Verizon dropped their unlimited data plan because it wasn't affordable to handle the amount of data that their customers were using.

Cable ISPs like Time Warner Cable and Comcast though are in a different predicament. Customers have already shown that they refuse to go along with the caps, hence why Time Warner Cable dropped their plans to cap usage. But the reason why they want caps is that the ISPs want to fix congestion due to limited infrastructure. Cable customers share what are known as local loops, and the more that your neighbors use their connection, the less bandwidth is available to you, a situation that becomes painfully clear in the evening, when cable users see their throughput fall.

 

[Donut]

When Sprint gets the iPhone next month, they will eventually stop offering their unlimited data packages. Verizon dropped their unlimited data plan because it wasn't affordable to handle the amount of data that their customers were using

Apple only went to Sprint because they are as of now pretty much the only Company offering Unlimited Data Packages. They stop that then they will more then likely not get the Iphone 6. It is also what sets Sprint apart from the other Companies. It is in their best interest to keep the Unlimited Data Packages

 

[Prison Mike]

This doesn't affect me since I only have the streaming plan but if this new business strategy means that Netflix will get better deals for streaming, then I'm all for it!

 

[Raiden]

But Verizon went to Sprint because they are as of now pretty much the only Company offering Unlimited Data Packages. They stop that then they will more then likely not get the Iphone 6. It is also what set Sprint apart from the other Companies. It is in their best interest to keep the Unlimited Data Packages

I agree. Sprint is still in third place, and if they drop their Unlimited Data Plan I think it will be a setback for their business, and may result in more subscribers flocking to other companies. Besides, we don't know if they can handle iPhone in their bandwidth yet, so it is too early to declare that Sprint will drop their plan for iPhone.

 

[wiegeabo]

Sprint can't afford to drop their unlimited data package. It's about the only thing that they can compete on against the others. Especially since their speeds aren't as good as AT&T or Verizon.

But those slower speeds may help them keep their unlimited plans because they don't have to push so much through their networks as fast. Or, they might just not offer unlimited plans to iPhone users (or at least only to the first round of users to sign up).

 

[MessiahDecoy123]

This is just facepalm-worthy.



I heard that Netflix was losing money (or claimed that they were losing money) with the old pricing plan. But is separating DVD and streaming services while hiking the rate up as much as 60% worth it for the 1 million+ lost subscribers and 18% drop in their stock value? I think they probably lose even more money with the changes that they imposed.

I heard their stock dropped over 40 percent.

The only thing I don't like about this is the name "quickster". Stupid name IMO. I can deal with two seperate sites for dvds and streaming since I'll probably only use streaming on my phone anyway.

 

[MessiahDecoy123]

Unless the CEO is the founder of netflix, he can expect to be fired soon.

He eff'd up so bad they lost almost half their stock price and had to divide the company.

 

[Raiden]

Unless the CEO is the founder of netflix, he can expect to be fired soon.

He eff'd up so bad they lost almost half their stock price and had to divide the company.

Yeah, he deserves to be fired (and probably their Board of Directors too, if they voted for those price hikes), but he'll most likely get a golden parachute of 10 million dollars after he is forced out for destroying Netflix with these outrageous changes, anyway.

 

[DaveMoral]

I'm pissed about it, and it looks like Blockbuster's by-mail service might be a better deal but with a bit less selection. At least you don't have to pay extra for Blu-Ray and games there, though. Sounds like Qwikster is going to maintain the access charge for Blu-Ray and tack one on for video game access as well. Which means for the price Qwikster would charge me, which I assume is a base of $7.99-8.99, plus $3 for Blu-Ray and probably another $3 for games all of which 1 disc at a time would end up being approximately the same price that Blockbuster charges for all of that plus an additional disc. So with Blockbuster you get DVD, you get Blu-Ray, you get games and 2 discs at a time for $14.99/mo.

I'm considering putting Netflix on hold, testing out Blockbuster and seeing what I'm getting with HuluPlus that I'm not getting with Netflix. Like a said when the price hike was announced, I will happily go streaming-only provided they get all the content I want and stop dropping things from my streaming queue without warning or explanation. As soon as the hike was announced 5 movies and a couple TV shows disappeared from my queue. Just the other day I noticed the "Saved" Queue under my streaming queue had disappeared with a bunch of the stuff that had previously fallen into streaming limbo in it. It looks like some other stuff will be going "poof" pretty soon too. So what am I getting? Where are my garauntees? If I'm getting the exact same thing I'm paying for now then it's not doing anything for me in the immediate future and frankly when they debut Qwikster I'd like Netflix to actually have a ton of new release, TV and old release content added. Hells Bells, I want them to enable me to fully surf their library from my Xbox 360 or my Blu-Ray player instead of having the limitations they currently have.