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Netflix to Separate Streaming from DVD Plans

in Broadband's Impact/Media by

WASHINGTON July 12, 2011 -Netflix announced Wednesday that it will no longer offer a combined DVD and streaming plan, instead offering customers a la carte plans to choose from.

“Netflix members love watching instantly, but we’ve come to recognize there is still a very large continuing demand for DVDs by mail,” said Andy Rendich, Netflix Chief Service and Operations Officer. “By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members.”

Starting September 1,existing customers will have to add the streaming plan to their choice of DVD plans. The unlimited streaming plan will cost $7.99. A new 1 DVD out at-a-time unlimited plan was announced which will cost $7.99.

Currently customers are able to get a combined unlimited streaming and 1 DVD out at-a-time unlimited plan for $9.99.

The change is effective immediately for new members.

Netflix first began offering its streaming plans in October of 2007 but limited the usage to a maximum of 17 hours per customer. Those restrictions were lifted in 2008.

In November 2010, Netflix first separated its DVD and streaming plans, offering streaming-only for the first time.

“Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs,” said Jessie Becker VP of Marketing in a blog post. “Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering.”

The company will also restructure its management team creating a distinct unit for the DVD by mail unit. Andy Rendich, Chief Service and Operations Officer will head the new division.

Rahul Gaitonde has been writing for BroadbandBreakfast.com since the fall of 2009, and in May of 2010 he became Deputy Editor. He was a fellow at George Mason University’s Long Term Governance Project, a researcher at the International Center for Applied Studies in Information Technology and worked at the National Telecommunications and Information Administration. He holds a Masters of Public Policy from George Mason University, where his research focused on the economic and social benefits of broadband expansion. He has written extensively about Universal Service Fund reform, the Broadband Technology Opportunities Program and the Broadband Data Improvement Act

2 Comments

  1. I am a current customer of Netflix and enjoy both instant stream and DVD by mail. With this change I will see an increase in my bill by $5.99. That is a 60% rate increase. I’m going to have to drop the DVD by mail and use Redbox because I don’t watch DVD movies each month.

  2. I agree, and will do the same. Netflix didn’t think this one thru. Don’t hold your Netflix stock in September….

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