SmartMoney Blogs

Pay Dirt
A daily look at what we buy, how we spend, and the companies that do right - and wrong - by their customers.

Netflix Raises Prices


It’s time to reassess your movie rental options.

Netflix users who use the service to watch DVDs and stream video will pay an extra $72 per year starting in September, according to an announcement on the company’s blog today. That additional $6 per month stems from the site’s new policy to split DVD rentals and unlimited streaming into two separate plans. Instead of $9.99 for both unlimited streaming and unlimited one-at-a-time DVD rentals, subscribers will pay $7.99 per month for the DVD portion (more if they want to have multiple DVDs out at one time) and another $7.99 for the streaming. Even people who don’t watch streaming video and DVDs could end up paying that higher rate — Netflix has yet to email subscribers about the change, and the new plans kick in September 1. Consumers who don’t change their account to eliminate one component will end up paying for both plans. Prices are effective immediately for new members and subscribers who change their plan.

Adding salt to the wound, Netflix presented the changes as “our lowest prices ever for unlimited DVDs.” Though its claim is technically true — $7.99 is less than $9.99 — consumers are getting less for their money. Later in the announcement, the company says in its most recent plans DVDs by mail “was treated as a $2 add on to our unlimited streaming plan.” By that measure, DVDs are now quadruple the price. Netflix did not respond to requests for comment. Michael Pachter, an analyst for equity research firm Wedbush, said the move was likely done to cover the cost of adding more movies and TV shows, but that Netflix would have benefited more from simply raising prices. “The hybrid plans don’t make any sense,” he says. Many consumers will likely just rent their DVDs from another source, losing Netflix not just that extra $72 but also the $24 it was getting when DVD/streaming plans cost $9.99.

Consumers’ best recourse is to go elsewhere for DVD rentals, says Dan Rayburn, a principal analyst with Frost & Sullivan. “Netflix is basically forcing consumers to decide, do you want DVDs?” he says. Redbox and Blockbuster On Demand kiosks charge as little as $1 per night for new releases, letting someone rent up to seven DVDs a month and still come out ahead of Netflix pricing. Movies are available sooner at the kiosk, too, since Netflix has 28-day delays on many titles under studio agreements.

On the streaming side, you may not need Netflix much, either. Cable companies such as Comcast have developed free streaming sites that anyone can access, but with more shows and movies for cable customers, and there’s also $8-per-month Hulu Plus for those who have cut the cord. Amazon has been growing its on demand video selection, too, fueled by free access to shoppers who pay $79 a year for free shipping through Amazon Prime. They’re likely to keep prices low, because video on demand isn’t their sole business, Rayburn says.

Update: This post has been updated to include a comment from Michael Pachter.


We welcome thoughtful comments from readers. Please comply with our guidelines. Our blogs do not require the use of your real name.

Comments (5 of 47)

View all Comments »
    • I have a trial to watch some old shows, I will be quiting my trial in about 6 days.I was tinnkhig I might join, but now they can forget it. It makes me sick all the greedy butt orfices. I have gotten to the point that I have to stretch my dollars. If they don’t want to help me, then I don’t care what they do, I am not buying. If enough people don’t but then they will go out of business. Don’t forget the consumer is king. So you have to get to the point of being a mercenary and stop whinning and stop buying. I don’t travel on holidays, because of the gass prices. I make sure I fill my tank with gass befor the oil companys greed cranks up the prices. Then I walk or hitch rides with other people and share expenses in a bundle. I say if enought people would allow themselves to be inconveinced for a little while, these jackasses might come to their senses. But as a nation, I think hardly anybody will put that behavior into action. Lazy, addicted and soft. Companies know this, so they take advantage of the American people.

    • I am a blind disabled vetrean living on a tiny pension. I need DVDs to listen and catch up with the latest movies, as well as the classics. Thanks for taking more $$ from a blind vetrean who gave all I had to this country and to the people of Iraq, who placed a roadside explosive so it could detonate and I lost my vision, my hair, nose, ears, lips. I have to get my nutriton thru a feeding tube. I don’t have many things to look forward to, and now they want to force legalized extortion on their customers. Real classy netflix, thanks for taking what little money I have. Your Dvds are a luxury item and I may have to part ways with you. What do I get for that extra money? I keep getting Dvds that are damaged, and have to skip forward then reverse it back, it get old real fast. Give a blind disabled vetrean a discount for serving this country. I will be happy to show you my certificate for the blind, if that would save money. Do the right thing stop and think about your customers who can go anywhere, I can’t I am housebound, I need my movies to distract from my rotten life. Image not being able to read anymore, and having to ask for someone to read my mail and emails. Haven’t I suffered enough without taking money from disabled vetreans, like me. Money grubbing weasels.. Dawn from MASS

    • netflix is not worth the money

    • It’s not worth having Netflix anymore. I used streaming for my child and the dvd selection for me and my wife. Now its not worth it. We have Uverse with on-Demand and a Redbox at any store we go to.. If Netflix would of only raised it by 10 or 20% maybe I would of kept it.. But 60% comon… I loved to hear how many people drop it…

    • Who still orders DVD’s in the mail? I want to watch a movie when I want to watch a movie, not order it and then wait for it to eventually get to me.

      I already streamed what was available from Netflix streaming service at $7.99 (and that price isn’t changing) and then went down the street to the Redbox for any movie I wanted to see that wasn’t available via streaming… and you can too!

About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.