When Netflix raised the price of its DVD-plus-streaming video package 60 percent, its customers revolted.
AP
Netflix
The company described the fee hike as giving consumers a choice. If they wanted just the streaming video package, they could get it for $10. If they also wanted to keep getting DVDs in the mail, they'd have to pay $6 more.
Customers balked. Many people I talked with about the change said that the streaming service was too limited in terms of film choices to make it worth subscribing alone, and the joint package was too expensive.
Netflix predicted that it would lose about 1 million subscribers because of the new pricing plan.
Now Netflix CEO Reed Hastings has put forth a new plan: Instead of one service with the option of buying a streaming-only subscription, or a streaming-plus-DVD subscription, there will be two different services.
The price of subscribing to both will be exactly the same as the price of subscribing to the old joint package.
Got that? The solution to customers revolting over the high price of the joint package is to sell the joint package as two different services for the same high price.
I do not believe in a minute that Netflix thinks that this will satisfy customers. So something else must be going on here.
I suspect that Netflix just wants to make it more difficult for subscribers to dump Netflix altogether. Now customers will have to unsubscribe to two different services to stop paying bills to Netflix.
This makes it more likely that they won't unsubscribe altogether.
Instead, many will likely just dump either the DVD or streaming option. Which means that Netflix won't lose as many subscribers as it might have prior to the change.
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