Netflix just went and raised their prices by 60%. Currently for unlimited streaming and 1 DVD out at a time the price is $9.99 per month. For new customers this price just skyrocketed to $15.98 per month ($7.99 for streaming and $7.99 for DVDs). Existing customers get a reprieve until September 1st (a fact they have yet to email current customers about). This is going to make customer loyalty go down a lot. I also suspect their gross revenue to go down as they will lose customers or customers will either cut streaming or cut DVDs (I for one will be dropping the DVDs by mail). It will probably increase their profit margins though. Basically for most customers at best the customers who are paying $7.99 a month for 1 at a time the DVDs are going to get no more than 8 DVDs a month, making the price the same as getting 8 movies at Redbox or Blockbuster Express. Yes getting DVDs by mail is convenient, but when most of the movies say Long Wait or Very Long Wait for months after they are released I might as well go to Redbox and get the movie I want right away. Redbox almost always has copies of the new movies. For most people they are also within a 2 minute drive of where they live. Apparently investors do like this strategy since Netflix stock went up $12 in overnight trading. I think this is temporary however until their next quarterly earnings statement comes out.
Shame on you Netflix I hope you rethink this strategy.
