NetFlix increases cost of getting DVD+streaming service

While NetFlix isn't music, it's very much tied to the move toward digital content distribution of all sorts.

Today NetFlix took a major step toward their next strategic reality: going to a 100% streaming only service. What this means is, on or after September 1st, NetFlix will change the cost of DVD+streaming service from $9.99 to $15.98 ($7.99x2). Other than the change in price, there will be absolutely no change in the service that you receive if you're currently gettign DVDs+streaming.

So why are they changing the pricing plan? Why charge customers more for something they've already been doing at a lower cost for years? The answer is pretty simple: in order to head toward streaming only, they need to people to drop the DVD shipping option.

They actually tried to accomplish this by changing their prices already, somewhere around a year ago, by announcing a the DVD+streaming price change from $8.99 o $9.99. Even though that's a >10% price increase for (once again) absolutely no change in the service itself, it clearly wasn't enough to get people to cancel DVD shipping. After all, you could have changed your plan to streaming only, and SAVED >10% by going down to $7.99. But, the fact is, NetFlix seems to have so many fans that I'll bet hardly anyone had a problem paying the extra $1.

Well, not long after that happened, NetFlix really focused its message on getting new customers, based completely around the streaming only service, and tons of people signed up. Streaming only service, having been a massive success since then, NetFlix is ready to further accelerate their move away from physical media. From a business standpoint, the sooner they can stop shipping DVDs, the sooner they can spend that money on better distribution deals, so their streaming service will include absolutely everything that is currently covered in their physical DVD collection. NetFlix obviously believes that their streaming offerings are strong enough to practically gut their DVD-only business, and this is reflected by today's announcement of the price increase.

So, my money is on this: a year from now two things will have happened (or be about to happen). First, the streaming library will have drastically improved, and their streaming-only customer base will continue to grow at an incredible pace, meaning they won't care if a relatively small percentage of customers decide to cancel the service in reaction to today's announced price increase. Second, they will announce they are dropping DVD shipping service altogether.

The downside to this? Well, if I were working in one of NetFlix's DVD handling centers, I wouldn't expect to have a job handling DVDs for much longer. I'd either be looking for something new, or trying to move into some aspect of the streaming service. Love it or hate it, the days of physical media are numbered, and this is just one more reminder of that simple fact.