Netflix Raises Rates by 77% in a Year

From the Netflix blog:

Now we offer a choice: Unlimited Streaming for $7.99 a month, Unlimited DVDs for $7.99 a month, or both for $15.98 a month ($7.99 + $7.99). We think $7.99 is a terrific value for our unlimited streaming plan and $7.99 a terrific value for our unlimited DVD plan. We hope one, or both, of these plans makes sense for our members and their entertainment needs.

The new $7.99 plan sans streaming is a decent idea for those who will never use streaming, but remember that up until last November, the plan with both streaming and DVDs-by-mail cost just $8.99. Netflix's blog entry is somewhat misleading when it says “Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan.” The statement is factually true, but it obscures the fact that existing customers who wanted to keep the same level of service saw a $1/month price increase (and given that so much of Netflix's catalogue is still unavailable for streaming, the bundle is still their most attractive plan).

Still, a buck a month is the sort of thing most people will absorb and ignore. I think nudging it up another dollar or two a year later would also have been OK. But, a 77% price hike in less than a year is overly bold. It is enough of an increase to reach the “let's reassess if I need this” category. I'm guessing I won't be the only one to pull the plug on my Netflix service when September rolls around.

Now would be a good time for Apple to announce its oft rumored Netflix competitor. I wonder what Netflix alternatives people will primarily be switching to?