Why Netflix Raised Its Prices

Pogue at NYT has this piece on Netflix: Why Netflix Raised Its Prices

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Excerpt from article: I kept saying to him: “O.K., look. In November, $10 a month for one-DVD-plus-streaming seemed like a viable offering. Now, eight months later, you need to charge $16 for the same exact offering. You say your costs haven’t changed that much. You say the new studio contracts aren’t to blame. The only other possibility I can think of is that your initial $10 pricing was a mistake.”

He wouldn’t agree. He sort of came close, though, when he said that the unexpected success of the streaming service shifted the balance of power between it and the DVD business. Originally, it was “pay $10 for one DVD—streaming free!” Almost overnight, though, people began thinking of it as, “pay $8 for unlimited streaming—and get one DVD for $2 more!”

“That’s not sustainable for the longer life of DVD’s,” Mr. Swasey said. “We need more revenue. It’s a business concern we have to address. We want two separate business units, each side of the service. We were not able to fulfill the requests for DVDs at that cost.”

The bold was put in by me. Look at what he says. Nothing caused the price to change from Netflix end and they set the price. Look at the words that are used - "people began thinking of it". How does how people are "thinking of it" change anything?

So nobody at Netflix will say flat-out "we screwed up." Big surprise.

What ya' gotta love about Pogue: where he claims that it's now just an "average deal" because there are other services that are more-or-less in the same price range, if you really want both streaming and DVDs...assigning no value whatsoever to Netflix' selections, recommendations, and everything else that kept people loyal when it was DVD-only and Blockbuster was beating its prices.

If the service was called iNetflix and came out of a certain Cupertino firm, Pogue would be all over how it's So Much Better and easily worth, say, a 50% premium over any competing service. But since it's not, the quality of the service doesn't matter--only the price.

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