Netflix Testing Lower Prices

Video Business is reporting that Netflix is testing lower subscription prices. "[CFO Barry] McCarthy said that Netflix had no plans to raise its subscription fees if Blockbuster raises its fees." Blockbuster is rumored to be exploring raising subscription pricing, and it would seem that Netflix is looking to start another price war.

One alert reader has already seen new Netflix pricing:

1 DVD at a Time - Unlimited - $7.99
2 DVDs at a Time - Unlimited - $12.99
3 DVDs at a Time - Unlimited - $15.99

Comments

[Eric]

GOOD!

[Chris]

This is good news, though I wonder if they'd adjust the $2/dvd/month profit throttle. I'm paying $15/mo for 2 out at a time, and I just started getting throttled for watching almost 2 per week (maybe 7 in a 4 week span).

If the pricing changes affect current customers, I'd get throttled sooner or have to pay an additional $1/mo for the same I get now.

I'm not complaining, just observing and speculating. Please don't jump down my throat because you think netflix is so l33t. :-)

[SykoBoy]

...and the increased throttling comes for free!

How long is the period of time before it can be called 'throttling"? a week? a month? I'm asking because you say your are 'starting to get throttled'. I haven't experienced "throttling" but have had service slow down for a week or two only to pick right back up. I always chalked it up to postal delays or just life.

[Matt]

Chris has a good point. They'll still manipulate your shipments so that you don't get discs for less than $2 a piece.

Netflix should have a plan that has NO throttling, and they bill you at the end of the month $2.00 or $2.50 for each disc they shipped that month. You could choose how many discs you want out at a time.

[Rick H]

Why is NFLX allowed to use the word unlimited? Probably because the nitwits at the FCC, or whoever, are nitwits.

Why doesn't NFLX name the number of total films, even if it is a range of something like 3 to 6 for the cheap plan, and then stick to it. They could finally appear honest. Maybe they are not. But the top officers sure are getting rich, now aren't they. I don't think they really love us.

[Marc]

I'm curious where they found this new pricing info. I clicked on the change my account and the prices are still the same. I even signed out and went to the start a free trial and the prices are still the same.

[Mike]

If it wasent for BBO, they would be testing higher fees. Anyone remember $23 bucks for 3 movies? Thank god for BBO!!!!!

[Morgan]

Rick H:

Netflix no longer advertises unlimited rentals.

[greg]

yes, where can i get the 15 dollar deal?

[Matt H.]

"Netflix no longer advertises unlimited rentals."

Yes they do. I don't currently have an active membership since I cancelled in Sept. when I returned to school, but when I go to the restart account page NF still uses the word UNLIMITED on all but the fixed number plan (2 at a time 4 a month). Check the website for yourself.

[Morgan]

I was under the impression that part of the class action settlement was they could no longer advertise services as unlimited. None of the banner ads I've seen advertise unlimited service and neither does the main page of the Netflix site, but sure enough, you're right. The sign up page does state that rentals are unlimited.

[Fred Thompson]

@Morgan,

Look under your account page:
"Membership: 3 at-a-time (Unlimited) Plan (Change)"

Also look at the plan types. They all say (Unlimited) except fot the "2-at-a-time: 4-out" plan.

Also in the "Terms of Use" under: How Our Service Works, see under "The Number of DVDs You Can Rent"

"In our unlimited plans, we do not establish a monthly limit on the number of DVDs you can rent, however, the actual number of DVDs you rent in any month will vary based on a number of factors (See "Allocation, Delivery and Return of Rented DVDs" below)."

So basically, they still use the term "unlimited" - they just define what "unlimited" means - as far as a NF subscriber.

So, where exactly is this new pricing seen? I just took a look at my 'change' screen - eh, I expected to see netflix not offer me the reduced pricing. I tried going to the new user sign-up page, and they offered the same pricing I'm on now (then again they probably tracked my IP and knew not to offer me a reduced rate).

I'll check it from a browser I never use at work today and see if I see the lower prices. Also, amusingly enough on the new-user signup page, above all but the 4-a-month plan the word "Unlimited!" appears above the plans you choose when signing up.

I imagine they may even be doing geo-targetting to only offer it to one region at a time...

[Rick H]

RICK H: HERE'S THE DEAL (FORGET ALL THE OTHER NOISE, THIS EXCERPT BELOW FROM MOTLEY FOOL SAYS IT SO WELL)

From Motley Fool

Vanishing Values
By Chuck Saletta
November 17, 2005

"...Unfortunately, at this point, the opportunity to profit from the market's discount on Netflix is long gone. Like so many values before it, that chance went to those who were prepared to make their move during a short window...
...Do you honestly believe that Netflix is more than a merely "OK" business? Go ahead and send me your criticisms. The fact is that Netflix, while a far more nimble company than its nemesis Blockbuster, faces pressure from all sides. On one hand, video-on-demand services allow cable operators like Time Warner (NYSE: TWX) and Comcast (Nasdaq: CMCSA) to give customers a way to rent what they want when they want, without waiting for a disc to arrive. And with discount retailers like Wal-Mart (NYSE: WMT) constantly driving down the price of purchasing new DVDs, the savings that come from renting are rapidly evaporating. Things are tough, and they only look to get tougher as competitors start to take advantage of their economies of scale..."

[Aron]

Rick, you will find that no one here has an acute investor's mind. Good luck with your short.

[Eric]

Rick, I made my 178% off Nextflix then sold, Then I bought Blockbuster stock.

Hooray! Save two dollars and get an extra DVD throttled every month for free. What a deal!

"Netflix no longer advertises unlimited rentals."

BULLSHIT! Bullshit! bullshit!

"With our most popular plan, 3 at-a-time (Unlimited), you can rent as many DVDs as you want for just $17.99 a month plus any applicable tax."

http://www.netflix.com/HowItWorks?hnjr=8

[wheelie]

Bull Shit! on the lower prices.

[Ghost Dog]

It's too bad to hear that Netflix continues to Throttle.
I had been thinking about returning to Netflix.

Shill Butt.

"I haven't experienced "throttling" but have had service slow down for a week or two only to pick right back up. I always chalked it up to postal delays or just life."

you are living in a dreamworld. I deal with a huge amount of postal work. Even the term "postal delays" is a crock nowadays. Variances in mailing times are nearly nil now even during the holdiays.

"you are living in a dreamworld. Even the term "postal delays" is a crock nowadays. Variances in mailing times are nearly nil now even during the holdiays."

Any time a company tries to blame the post office, you know they're lying. There is a little variance depending on when and where you send it. It's faster to go inside the main post office than to drop outside some local branch. I haven't had one lost DVD at Netflix out of hundreds sent and returned. But BB lost one recently and NicheFlix lost one they claim. I believe in both cases it is the company's fault or they are lying. There just isn't that much chance of theft from mail box to mail box. It should be a red flag any time a company claims not to receive your movies in a timely manner. If they can't deliver in the same time they do during a trial, assume they're throttling.

[Becky]

My brother worked in a USPS distribution center. He said there were bins full of mail that got lost or mangled by machines. I do not say the USPS is always to blame. Neither do I say that the USPS is never to blame. But the USPS can be responsible for a certain amount of delays. I know that at least one day per week, my USPS carrier is a substitute. Sometimes the substitutes make mistakes, and misdeliver mail, because they are unfamiliar with the route.

People are human. Even if human error is only 1.5%, that would mean 750 Netflix discs per day would be messed up somewhere along the way from each distribution center which sends out 50,000 discs per day. That's enough to account for all the disgruntled customers on the Web.

From what I'm reading here, if the DVD is late by even one day that is considred throttling? Seems kinda steep seeing as anytime I've sent or recived something via the USPS it never arrives on an exact date. Of course, they are advertising "in about one business day" which is like a department store saying "save up to 50%" and having everything in the store marked down 5% except for one or two items.

This discussion about how "unlimited" really isn't is useless folks. It is well established in law that when a company advertises claims which are clearly exaggerated that is okay because people are smart enough to realize when these things are exaggerated. Claims like: "World's best", "infinite", and yes "unlimited" all fall in this category. Also, I can't believe that everyone gives the USPS as much credit as they get here. I've always felt that the USPS has the worst service. Priority letters I have sent have never, and I mean never, arrived on time. After dealing with the USPS in the real world I find it hard that in the throttler's universe they are god's gift to mail delivery when it comes to delivering NFLX red envelopes.

[bf110c4]

Testing new pricing plans is a good idea Netflix. But not just lower priced ones. How about some higher priced ones for us "movie hounds." Hastings hates us because we're not profitable. Well do something positive about it. I know it will tough to spin a new higher priced plan when you have been selling "unlimited rentals" all along, but you're sneaky enough to pull it off. I want to be profitable for you so you'll send me a new movie as soon as you get the old one. I'll pay more - the postage, a flat fee, whatever you need to stop being so freakin sneakly, and do the right thing.

"People are human. Even if human error is only 1.5%, that would mean 750 Netflix discs per day would be messed up somewhere along the way from each distribution center which sends out 50,000 discs per day. That's enough to account for all the disgruntled customers on the Web."

OK, so you're the #1 fan of Netflix, even though you're not a shareholder.
Very few people believe your obvious posturing for this company. How does this account for the constant "Shipping Tomorrows" that heavy users get.

OK Netflix. Been thinking how you could launch a higher priced truly "unlimited" rentals plan for the Movie Hounds, without having another class action lawsuit slapped on your ass. You know how in your TOS you say you reserve the right to send movies to low usage customers first, so all customers will have a "balanced experience." Well you know this has bothered the heavier users, so you are now launching a new Heavy User Rental Plan that allows movies to be sent out immediately to the Heavy User. No need to balance anything because the Heavier Users will be paying extra for their experience. How much to charge for this New Plan - a flat $2.00 per movie rental. Still a great deal compared to brick and mortar stores, and a decent profit margin will be delivered from the Heavy User segment. A win-win all the way around. Now run this by your legal department and let them shoot holes in it.

Regarding above idea for flat $2 per movie. Why would Netflix be opposed to this idea?
Something in the corporate business model must imply that it's better to shun the Hogs and Hounds and spend $$ on advertising to sign up their ideal customers who rent 6 DVDs or less per month.

Netflix should love this idea. Their website is designed around stimulating more demand for watching movies, and this way they actually get paid for each incremental movie watched, versus current rental plans that have to be throttled to avoid racking up more fufillment expense.

"I can't believe that everyone gives the USPS as much credit as they get here. I've always felt that the USPS has the worst service. Priority letters I have sent have never, and I mean never, arrived on time. After dealing with the USPS in the real world I find it hard that in the throttler's universe they are god's gift to mail delivery when it comes to delivering NFLX red envelopes."

The USPS is perfectly capable of delivering local mail overnight if it's dropped off B4 the last pick-up. I always use their local envelopes for returns. If Netflix claims to not receive my discs by the next day, they are LYING. Every day is a day of throttling. Plus, the main throttle comes when they've already RECEIVED the discs and force you to wait another day or two or three before you get something else. That's BS. They easily deliver over-night to their light usres. We know they're capable of over-night delivery both ways.

Sending stuff from another city is one more way they throttle, because they try to make you return discs where they came from, even though there's no way they could know which movie would go in which envelope. I always save up local return envelopes and stuff 2 to 3 movies in each. If they don't bother to keep a complete inventory in each city, I'm not gonna be punished with extra days on my returns.

Then, when I send multiple discs in the same envelope, they sometimes to receive them all at different times or even different days... Yeah, right. How could that possibly happen? The rationalization of shills never ceases to amaze me. We know throttling when we see it. There is no way Netflix can hide it. If one of my movies arrives in a day, ALL OF MY MOVIES should arrive in a day. If my returns usually arrive in a day, they should ALWAYS arrive in a day.

Print the local address on return envelopes, you cheap bastards. Send new movies the same day. Stop putting quotas/limits on how many movies each center will ship in a day. Stop throttling, you focks.

"Print the local address on return envelopes, you cheap bastards. Send new movies the same day. Stop putting quotas/limits on how many movies each center will ship in a day. Stop throttling, you focks."

How DARE you talk to Netflix this way!!! You know, when the powerful corporations take over the earth (and you know perfectly well they are headed in that direction), Netflix will haul your ass into a nice little Wal-Mart runned concentration camp for your blasphemous blasphemy.
;-)

"Print the local address on return envelopes, you cheap bastards. Send new movies the same day. Stop putting quotas/limits on how many movies each center will ship in a day. Stop throttling, you focks."

How DARE you talk to Netflix this way!!! You know, when the powerful corporations take over the earth (and you know perfectly well they are headed in that direction), Netflix will haul your ass into a nice little Wal-Mart run concentration camp for your blasphemous blasphemy.
;-)

[katohater]

"We know throttling when we see it. There is no way Netflix can hide it. If one of my movies arrives in a day, ALL OF MY MOVIES should arrive in a day. If my returns usually arrive in a day, they should ALWAYS arrive in a day."

i just read about this 'throttling' term for the first time today, and i must say it is a fantastic label for people's frustrations. very good work whoever started using it.

it would be pretty asinine to think that they would keep a thousand copies of each title at every distribution center. there have to be times when a disc comes from a different distribution location, because your local one is out of that title. and this could conceivably cause a delay in delivery, no?

but netflix is evil. and they 'throttle' us every chance they get, right?

netflix can 'throttle' me any old time they want to, because it's really very simple... if i'm ever unhappy with their service, i have little button that says 'cancel'.

"it would be pretty asinine to think that they would keep a thousand copies of each title at every distribution center. there have to be times when a disc comes from a different distribution location, because your local one is out of that title."

Just 'cause you BELIEVE that doesn't make it so. It's feasible for them to keep copies of every title in every city. What's asinine is to force customers to wait an extra day when movies are coming from another city. Why not send them immediately, so they would arrive sooner? That's an obvious throttling trick.

Who believes, for instance, that NFLX really has to send movies from HAWAII to someone in Florida? Are there any dumb shills who could argue with a straight face that there wasn't ANY place between Hawaii and Florida with a copy of the movie in stock? Puh-lease.

[katohater]

"It's feasible for them to keep copies of every title in every city."

so, isn't it also possible that they might run out of a title in a city? and if they have to outsource to a different distribution center, shouldn't the local people in that area be given priority? that seems fair to me. why should you get to cut in line just because your local distribution center was out of your movie?

if you really don't have enough patience to wait an extra day for a disc, you need to think about just driving to your local blockbuster or mom 'n' pop video store.

'throttling' is an idea that helps you express your impatience, but it is not at all based on fact. it's just something for you to complain about.

[PlungeBob]

"I know that at least one day per week, my USPS carrier is a substitute."

This is true Becky. In fact, right now, our mail carrier
is on vacation. The mail is arriving as much as 4-5 hours later
then it usually does.

I think that the USPS does a decent job. Back before throttling
(now a couple of years ago) I could send a movie back today
and see a return sent tomorrow. This was possible because the
USPS did an overnight shipment for delivery the next day.

I do not think that the USPS has anything to do with the fact that
over time I have gotten fewer disks. I attribute this change
to throttling.

"when the powerful corporations take over the earth..."

They already have. What will you do now?

"Netflix will haul your ass into a nice little Wal-Mart run concentration camp for your blasphemy."

I don't Netflix is sympathetic to Wal-Mart, since they're going to rent the documentary "Wal-Mart: The High Cost of Low Price." It shreds the last remnants of respectability that Wal-Mart had left. Wal-Mart treats its workers about one step above concentration camp prisoners.