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Netflix Price Increase Angers Users: NBCU Contract Extended

By Admin on July 15, 2011 6:39 AM

The recent Netflix price increase has stirred the pot - but in a negative way. Many customers are irritated and some are angry that their Netflix subscriptions, now facing a 60% increase, may soon be much more expensive. But, maybe these prices are necessary considering the increasing cost of licensing fees and contracts from big studios: Netflix's NBC Universal contract was just renewed.

Netflix is doing away with its package DVD and unlimited streaming deal that had originally cost $9.99 a month. Instead, the package will be split into two deals: DVD for $7.99 and unlimited streaming for $7.99, reports Bloomberg. The new prices will start in September.

But, why the new price increase? Maybe it's because Netflix has been trying to reposition itself away from DVDs and focus on its streaming service. More customers who switch over to "only" streaming and do away with DVDs would allow the company to cut down on operating costs, since streaming services don't require massive warehouses and thousands of printed red Netflix envelopes. And, there's always the cost of mailing.

Netflix's streaming options are available either via a customer's laptop, Xbox 360, PlayStation 3, Apple TV, or Roku.

Netflix probably also will need to start charging higher prices for some of its products considering the pressure it is getting from big studios. Recently, its deal with Starz allowing Netflix to stream Sony movies met with a hiccup: the contract was null because Netflix's subscriber base put the number of online viewers over the contract's cap. Now, Sony movies have been pulled from Netflix - and there's probably little doubt that studios will want more money and more pull with Netflix.

While the Netflix price increase may be bad for customers who want to get DVDs in the mail, it's ultimately up to the customer whether or not they wish to keep their Netflix subscription, or if they wish to downgrade their subscription. And, with the new Netflix/NBC Universal contract signed, all hopes are that more big studios will follow - and more content will be available as streaming via Netflix.

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