Netflix subscription base about to shrink

Via Twitter we see that NetFlix is doing away with its combined DVD rental and unlimited streaming plans. Here is what is now offered in its place via the Netflix blog:

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.

or both for $15.98 (no discount)

Although not listed on the blog there are other options that you can discover by logging into your account

Plan 3: Unlimited DVDs, 2 out at-a-time (no streaming), for $19.98 a month.
Plan 4: Unlimited DVDs, 3 out at-a-time (no streaming), for $23.98 a month.
Plan 5: Unlimited DVDs, 4 out at-a-time (no streaming), for $29.98 a month.
Or you can add a DVD out to these plans for an additional $6 per month up to a max of 8 DVD

My own current netflix plan is 3 DVD’s out at a time and unlimited streaming. it was $17 bucks a month until Jan 1st at which time it went up to $20 a month, to keep that same plan I will now have to pay $23.98.

That’s a 20% increase in Sept over Aug and an increase of over 40% since the start of the year. About $84 a year

This leaves me with several choices:

1…I can pay the new price increase and adjust my monthly budget accordingly

2…I can avoid that new price increase by dropping down to two DVD’s a month (25% less access for the same price)

3…I can bypass the price increase from the start of the year by dropping down to one movie (a 50% drop in service for the old price)

OR

For less than the cost of that price difference I can drop the free streaming from Netflix get Amazon Prime’s free streaming service AND two-day shipping on all orders.

So can anyone explain to me why I would accept the price increase when I can do better by going to Amazon? And without the streaming as a value added, can anyone explain why I shouldn’t just go to cheaper sources of movies and drop Netfilx altogether?

Of course it could be that Netflix WANTS to dump a portion of the streaming or DVD audience as the costs might have become prohibitive.

They made the same mistake Newspapers did. When they introduced streaming they should have offered it at a nominal charge instead of giving it away. Once people get used to getting something for free you’re going to have a hard time convincing them to pay for it, particularly when there are lower cost alternatives available.

Past mistakes not withstanding, from the comments I’m seeing at the NetFlix blog this is a PR disaster in the making. I’ve got a call into their corporate office requesting an interview with Steve Swazey the corporate communications man, I’ll let you know what he has to say.