Rational pricing and reality

Another Title Too Important For The Post candidate…

I might as well alienate all my Netflix-using colleagues at once, instead of bit by bit on FF and G+.


  • We’re on a budget (not having earned income will do that to you), and part of that–and our distance from the nearest telco office–is that we have 1.5Mbps broadband, and would have to pay a LOT more, to a company we despise, to get faster broadband.
  • Which means Netflix streaming is useless for us–the picture quality is too poor to even consider.
  • Which means I wasn’t happy about the previous rate increase, which got us unlimited streaming–that we can’t and don’t use–along with the three-DVD-with-Blu-ray paln that we do use.
  • I complained to Netflix about this.
  • So I’m real happy with the forthcoming rate changes: we’ll pay for what we use, and won’t pay for what we can’t use. We get a $4 or $5 monthly decrease for no change in service. Sounds good to me.
  • On a broader basis, I have yet to figure out how $16/month is “twice as much” as $10/month, and to the best of my knowledge there is no rental+streaming plan that now costs twice as much as it used to.

Looking at it more broadly:

  • I see people saying “Well, I’ll just go to streaming and use Redbox if I want a DVD.” I suspect that’s just fine with Netflix.
  • I see people saying “Netflix is trying to push everybody to streaming-only.” If Netflix is doing that in a way that rewards those of us who really just want discs, more power to them.
  • Realistically: Next time around, you can pretty well bet that Netflix’ agreements for streaming are going to be, at least in part, based on actual streaming usage. That’s partly true for DVDs: If Netflix has more demand, it spends more on discs–and only one account can use a disc at a time.
  • So: If, say, 20% of Netflix users don’t stream at all, then it’s to Netflix’ benefit–and, ultimately, to the subscribers’ benefit–for those 20% not to have streaming: The eventual cost of streaming licenses is likely to be roughly 20% lower.
  • Am I sympathetic to those who (a) pay enough to have really high-speed broadband, (b) watch enough TV to “need” both streaming and discs, (c) in some cases even admit that the new rates will still be cheaper than cable, but (d) are complaining bitterly about the new rates? Perhaps less so than I should be. In the long run, I’m pretty sure those folks will be a lot worse off if Netflix insists that everybody have both streaming and discs.

I could be wrong, of course, and I’m sure I’m not going to get much agreement on this. But unless you can convince me that Hollywood would never, ever do something like make streaming licenses usage-dependent (and if you believe that, talk to Pandora and other streaming radio services…), then we’re dealing with economic reality.

Update, July 13: While nobody’s commented directly on this post, it’s pretty clear from watching other streams that I must be an Evil Employee of Netflix to even suggest that this is anything other than:

  • Doubling prices! (In the new math, 60% of one plan is now doubling all plans.)
  • UnAmerican! (You know, “Life, liberty, and unlimited streaming plus one DVD at a time by mail for $9.99 total”–isn’t that in the Declaration of Independence?)
  • Vastly increasing the price of every Netflix service! (I’m apparently hallucinating about saving $4/month)
  • A deliberate attempt to force people to stop using DVDs! (And the statements by Evil Netflix Employees that some folks–like me–prefer to stick with DVDs are clearly lies, lies, lies…)
  • A huge crisis requiring tens of thousands of semiliterate complaints on Netflix’ Facebook page (many of them along the lines of “This food is terrible…and the portions are so small!”) and the like.

Oh, OK, there is Jenica, but hell, she’s rational anyway, so she doesn’t count.

Anyway: I hereby apologize for trying to add logic to the discussion. I’ll stop now. After all, $6 can buy two lattes or, what, about three days of cable TV, so this is clearly a Very Big Deal.

2 Responses to “Rational pricing and reality”

  1. Rebecca says:

    I can’t say that I’m all that upset with netflix either. The rate increase was rather obvious considering all the contracts that needed re-upted by netflix recently; I’m sure they are paying more for the content they are now streaming.

    Also I am on the dvd/streaming plan; but the dvd’s tend to just sit around gathering dust until I work up the motivation to send them back. Now I have to option to just remove that part of my subscription. It is still a lot cheaper for me to use netflix and the library to watch tv shows and movies than to pay 100+ a month for cable.

  2. Not only am I not alienated, I am in agreement with you.

    I live in the boonies (that is further out than “the sticks”) and rely on satellite Internet access. I have no other options at any price.

    Due to that, streaming is just not workable. I won’t even go into bandwidth limits.

    So with the changes in pricing at Netflix, I am saving $4 a month. You won’t hear any complaints from me.