Reuters: Netflix officially lowered the price for the 2 movies per month plan (one at a time) to $4.99.
Netflix spokesman Steve Swasey said the $4.99 plan is used to attract new customers who often upgrade to more expensive plans after testing the service."This is in response to an ever-evolving and competitive market," Swasey said of the price cut. "We are lowering an introductory price but we have profitability objectives and they stay in place."
via DVD Dossier.
"This is in response to an ever-evolving and competitive market," Swasey said of the price cut. "We are lowering an introductory price but we have profitability objectives {THROTTLING} and they stay in place."
Posted by: Eric | January 23, 2007 at 04:57 PM
I'm one of thew few people that is actually on this plan. I changed to the cheaper price, but I was actually conflicted. I now get one hour less of video on demand.
Posted by: kilarney | January 23, 2007 at 05:12 PM
Throttle the two-a-month plan? How?
Posted by: gir | January 23, 2007 at 06:38 PM
The limited plans are a good way of guessing their average "price per rental" goal. Their limited plans cost $2.50-3.00 per rental. We can expect throttling if we try to rent more than 6-7 DVDs per month on the 3-out plan.
Posted by: type-cast | January 24, 2007 at 02:12 AM
A 6 out customer is highly profitable for Netflix, why would they downgrade their service quality and potentially chase them off?
If you want to equate the profitability threshold with the throttling threshold (that alone is a major assumption I wouldn't even agree with), than you need to look at the average cost of delivering a disk which is close to 1.80$.
Posted by: Aron | January 24, 2007 at 12:05 PM
I've heard as high as $3 per disc. Anyway, a 6-out customer isn't profitable if they rent more than 20 a month, assuming your $1.80 is right. I don't equate throttling directly to profitability, because it's aggregate, based on limiting total shipments from each distro center. If you are less profitable, you seem less likely to get fast turn-around and high priority for new releases.
Posted by: type-cast | January 24, 2007 at 01:12 PM
Business 101 : price cuts in an industry where there are very few players where the product or service is generic is:
1) idiotic
2) desperate
3) all of the above
A price cut on the lowest priced plan will not stop the hemorrhaging of customers from Netflix to Blockbuster. Especially since the plan is capped at 2 per month.
Posted by: Edward R Murrow | January 24, 2007 at 01:17 PM
I signed up for this plan today. I am a Blockbuster member, and love TA. But for $4.99 I can get "This Movie is Not Yet Rated" and try out the "Instant Watching", which I was lucky enough to get.
Posted by: drinkmasta | January 24, 2007 at 08:26 PM
Gee, that's great that NetFlix is giving instant watch passes to new customers on the cheapest plan, while loyal customers have to wait. Should I quit and sign up again?
Posted by: CopaceticOpus | January 31, 2007 at 01:53 PM