Netflix Price Increase, Streaming Only Plan
Interesting to note the shift in consumer habits in Netflix as reported in an article in today’s WSJ:
The company, which says its customers now use its Web-streaming service more than its by-mail rentals, will charge $7.99 a month for customers that only want to watch films and TV shows delivered over the Internet.
“We are now primarily a streaming video company delivering a wide selection of TV shows and films over the Internet,” Netflix Chief Executive Reed Hastings said.
Netflix has said the costs of distributing DVDs—-including the roughly $600 million it will pay to the U.S. Postal Service in 2010—can ultimately be diverted into paying for content rights for online streaming.
Read more: http://online.wsj.com/article/SB10001424052748704243904575630441038304032.html#ixzz162bgsklD
It seems like Netflix is following a model similar to premium cable channels: revenue is generated through subscriptions versus ads. But to keep its audience it will need to create a more compelling reason for them to use its services. Watch for more original fare created by Netflix as it moves away from its mail-based business towards online streaming.
