I found some interesting articles regarding Netflix. As many of you are probably aware, Netflix recently started charging separate prices for DVDs-by-mail and streaming video plans. In fact, the cheapest possible price for customers desiring to retain both services jumped from $10 to $16. In response to this price hike, Netflix’s subscriber base has dropped from approximately 25 million to 24 million in just a few weeks.
While Netflix’s pricing strategy is a major media focus, I am more fascinated by the impact technology has had on the Netflix business model. Netflix has almost 22 million streaming video subscribers and, in contrast, approximately 2.2 million in DVD only subscribers. This is a sharp contrast for a company that was founded on its DVD-by-mail service. Additionally, Netflix has faced much stiffer competition in the streaming video market (i.e., Hulu). Further, it is estimated that the streaming video content cost for Netflix will increase from $180 million in 2010 to a whopping $1.98 billion in 2012. You have to wonder what the future holds for Netflix?
On a side note, the Netflix price increase has convinced my parents to adopt streaming video as their primary movie source. It’s amazing how the motivation of saving a few dollars helps to overcome the technology generation gap. Now, if I could just figure out a way to get them to set the clock on the VCR…
On a side note, the Netflix price increase has convinced my parents to adopt streaming video as their primary movie source. It’s amazing how the motivation of saving a few dollars helps to overcome the technology generation gap. Now, if I could just figure out a way to get them to set the clock on the VCR…
Rick S.
http://www.huffingtonpost.com/2011/09/15/netflix-price-increase-subscriber-loss_n_964026.html
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