Netflix recently changed its pricing scheme so that those who want both streaming and disk delivery will be charged up to 60% more per month. The accountants at Netflix saw streaming usage and content acquisition costs going up and needed to offset those costs with higher revenues. In what surely could not have been unforeseen consequences a loss of distribution deals at the same time as a price hike has caused some customers to reevaluate their options.
Some facts for your perusal:
- Netflix will end September 2011 with 600,000 fewer U.S. customers than it had in June.
- Netflix’s stock price was $169.25 at the close on September 15, almost half of the stock’s 52-week high price, which was $304 per share. Some analysts expect the stock to reach a low of $110 per share before year’s end.
- Starz did not renew its licensing agreement with Netflix, so in March 2012, all Starz content will be gone from Netflix Streaming. Starz controls streaming rights for Walt Disney Studios and Sony Pictures.
- Until September 1, Netflix offered plans that bundled DVD rentals and unlimited video streaming for as little as $10 per month. Those options are now sold separately, resulting in a cost of at least $16 per month for people who want streaming and DVDs. Having both choices is appealing because Netflix’s streaming library primarily consists of old TV shows and movies, leaving DVDs as the main way to see recently released films.
- The players who will benefit from this misstep are predicted to be Redbox, whose share price rose more than 33 percent this week, and Dish Network, the company that now owns Blockbuster. Dish Network’s shares rose 11 cents this week to $25.82.
- Adding to Netflix’s woes, Amazon launched a flank attack by announcing that customers who subscribe to its Amazon Prime two-day shipping service would be able to stream movies from its servers for free. Also, YouTube (owned by Google) is looking to include full-length movies in its offerings. Google could accomplish this easily by purchasing Hulu, since that company has been put up for sale by the television networks that own its content.
