Ballsy Move by Netflix (NFLX) as ir Raises Prices Sharply on Coombo Plans

Looks likes Netflix (NFLX) is herding its customers to go streaming only as it just raised prices substantially on combo plans.  It will be interesting if there is any backlash…however customers have limited alternate choices out there. (Coinstar I suppose)

This will be a positive for profits as long as there are no large scale defections.  It is estimated in a Bloomberg report that these combo plans represent 80% of the current user base.  (current price for the combo plan is $9.99 so anyone who does not change by Sept 1 is going to see a 60% price increase)

Via Marketwatch:

  • Netflix said Tuesday that it would no longer offer unlimited plans that include both streaming and DVDs by mail. Users must now either subscribe to a stream-only plan, a DVD-only plan, or a combined plan.
  • The unlimited streaming plan will remain at $7.99 a month.
  • The price for obtaining both unlimited streaming and unlimited DVDs will be $15.98 a month ($7.99 + $7.99).
  • For new Netflix members, the changes will be effective immediately. For existing members, the new pricing will start for charges on or after September 1.
  • Netflix founder and Chief Executive Reed Hastings has said for some time that the DVD market would exist for at least another decade. Not every title available on DVD or Blu-ray is yet available for streaming, particularly older library titles of a type preferred by many of Netflix’s core customers.

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About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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