Netflix to keep priority on DVD until 2011

According to CEO Reed Hastings, physical DVDs will remain the prioritized movie delivery format for Netflix for the next two years, before the company moves its focus to either streaming video or Blu-ray.

Hastings does add however that the DVDs will continue to be part of the company's business for the next 20 years.

Earlier this year, Hastings said he expected DVD to reach peak volume sometime between 2013 and 2018 but spokesman Steve Swasey admits the company hasn't �nailed it specifically� (The date.)

Netflix currently has over 11 million subscribers and Hastings adds that most pay for the cheapest unlimited offerings, $8.99 USD (one movie out) or $13.99 (two).

Written by: Andre Yoskowitz @ 9 Oct 2009 1:05

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6 comments

KillerBug

"adds that most pay for the cheapest unlimited offerings, $8.99 USD (one movie out) or $13.99 (two)."

I bet they don't even realize why they can't sell the >3 plans...

1 at a time: $09...$9 per DVD
2 at a time: $14...$7 per DVD
3 at a time: $17...$5.66 per DVD
4 at a time: $24...$6 per DVD
5 at a time: $30...$6 per DVD
6 at a time: $36...$6 per DVD
7 at a time: $42...$6 per DVD
8 at a time: $48...$6 per DVD

Anyone see the problem here? Shouldn't the 8 at a time plan be the cheapest per disk?

9.10.2009 03:34 #1

SProdigy

Definitely agree with the pricing. The 3 at a time is the one I have, and also gives me the streaming options, which is great for my 2 Samsung Blu-Ray players that support the Netflix streaming.

I also have the Blu-Ray add-on feature is worth the price, since most Blu new releases are $25-$30 to buy, and most movies are not worth the risk of buying for that cost, especially if it's your first time watching.

9.10.2009 12:54 #2

Pop_Smith

Cost is not the only reason for not selling three-pluls discs plan. They also have one to two day shipping on their disks, depending on where you live.

Unless your household likes to change movies a lot there isn't really a reason to get more than two discs out at once. You have two you want then you cue the next one (or two), return the "old" ones and with-in a day or two you have new movies. Since their shipping is so quick you don't really need more than two, maximum three, discs out at once.

The streaming service is also pretty good so that also cuts into the amount of discs people want to pay for at a time.

9.10.2009 15:15 #3

handsom

Seriously guys? Wow.

Depending on where you live, many customers DO receive their DVD in one day, I get them right away.

Additionally, they're not going to pay for one day express... They have to make money somewhere. And if you think your paltry $8.99 or $13.99 is going to cover that and still leave ANY room for profit, you're overdue for a reality check. If you want super premium service like that, expect to pay a higher price.

On the pricing scheme, yeah; it's nice to get a discount on higher rental plans. But there's a limit of reason. Just because you're paying for more doesn't mean it costs them less to ship your movie, or to handle it, etc. Many industries have a limited bulk discount, it's entirely common. Insurance offers a discount for having more than one vehicle -period, the discount doesn't become a higher percentage because you have four. Costco doesn't incrementally lower your price per item based on how large your shopping cart is. And Verizon doesn't offer the third and fourth lines for any less than the second. It comes back to reality again, yeah companies will offer a discount to really get you hooked, but all discounts have a ceiling. And frankly, a minor added discount on 3+ discs a month wouldn't bring them a significantly higher number of customers in those plans, most folks have no real USE for that many at a time, so if it costs more at all, they just pass it over. It's not price that's keeping Netflix from having more high-quanitity customers, it's purely demand.

As for blu-ray, while In don't necessarily like paying more for them, I understand a few things about this:

-They're new, and as such they're 'novelty priced' much like DVD was for the first few years, studios want 25-30 instead of 15-20. Netflix has to absorb that cost SOMEWHERE

-Blu-ray is still a long way from being standard. Sure, it beat out HD DVD, but that doesn't make it the standard. Blu-ray is still estimated to be available in a relatively small percentage of homes, compared to DVD. It would be foolish for them to begin investing in large scale conversion at this time.

9.10.2009 17:55 #4

KillerBug

I'm not even asking for an added discount for more than 3 disks...I just want the same deal...6 disks should not cost more than twice as much as 3 disks, especialy given that someone with a 6 disk plan will tend to have fewer ship/return cycles per disk.

If they offered a plan with 6 disks for $34 a month, I would have it. Instead, I pay half that and use about 2/3 of the shipping I would use with the 6 disk plan. I also use lots of streaming movies...and would efectivly be paying twice as much for this part of the service.

9.10.2009 23:57 #5

Gneiss1

Yes, NetFlix clearly encourages the 3 disk plan, with streaming. People must not want to stream. Though I have Comcast, the disc a day assures me (bedridden) that I'll have something to watch on television each day: usually old, classic movies or British mini-series.

Though I've both Mac, Unix, & Linux computers, I can't stream without buying a box. (My favorite movies are those least liked and streamed :-) This I won't do because a 3.0 Mbits/sec connection is claimed to be needed for DVD quality. There is absolutely no technical reason for this. The drive for caching in a 'box' is smaller than a DVD? I can't afford a 3.0 Mbits/sec DSL, so I won't be streaming.

This may be the reason people are opting for the 1- or 2-disk plans, despite the lure to stream with a lowest per disk price for the 3-disk plan.

Pricing goods according to a reasonable % profit, I'm dreadfully sorry to say, disappeared with the soda fountain in the family pharmacy.

28.10.2009 18:24 #6

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