Netflix to Change Plans and Up Prices This Week

By Ivana Kvesic, Christian Post Reporter Tuesday, August 30, 2011

Netflix announced last month that it would be restructuring its pricing model. The new pricing model, that will impact its tremendously popular monthly plan, is set to come into implementation this Thursday.

The popular entertainment service will no longer offer the hybrid plan that entitles customers to online streams of movies plus one DVD by mail at a time for $9.99 a month.

Now, customers can either chose to opt with a plan that solely gives them DVDs or streaming, or may pay an extra $5.99 to have both.

If customers chose to separate their plans as opposed to paying more for the combination plan, each individual plan will cost $7.99 per month.

The company is advertising their 60 percent hike in prices as a “new choice” for customers.

In a July press release by the company, Netflix Chief Service and Operations Officer, Andy Rendich said, “By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members.”

With the change in plans imminent, if customers make no changes to their plans by Thursday, Netflix will assume that customers will opt for both plans and will charge accordingly.

Now the question arises as to whether customers will decide to stick with the service despite the price hike, or if they will take their business elsewhere.

Since Netflix announced their price hike this past July, reporters are arguing that Walmart’s Vudu service has been reaping the benefits.

In 2010 Vudu controlled less than one percent of the online U.S. movie market but the number has climbed in the first half of 2011 to 5.3 percent, according to HIS Screen Digest Media Research.

Some are arguing that the hike in Vudu users is a result of a combination of Walmart’s extensive advertising of the service and increased prices for Netflix customers.

With over 24 million Netflix users in the United States alone, time will only tell if the Vudu service will become a true competitor to Netflix.

How the changes in Netflix plans and service will impact both current subscribers and future subscribers remains to be seen. Thus far, Netflix users are not happy. According to a Huffington Post quick poll, 84.59% of people that weighed in on the Netflix debate "hate" the company’s planned change up.