Netflix recently announced a 60% price hike to a popular plan that combines streaming content and DVD rentals — a plan to which I subscribe — without adding any real value to the overall service.
Once I decided whether or not I was going to stick with the combined plan or just go with streaming for $7.99/month, I got to thinking: Where is this price hike coming from? Is Netflix just covering costs or is there something greater in play?
“Deliberately creating dissatisfaction”
Eric Garland — CEO of Big Champagne — told CNET he believes Netflix is doing this to pressure the studios into licensing more streaming content:
[Netflix CEO Reed Hastings] is deliberately creating dissatisfaction.
He’s creating dissonance precisely because that title availability, those first-run titles, needs to be available more immediately and more widely as a (video on demand) or as a streamed offering. So this is a leverage play.
Netflix is wagering that if all parties are dissatisfied; if Netflix is unhappy because Netflix customers are unhappy and if Hollywood is unhappy and if everyone is unhappy then we’re going to speed the clock on new solutions.
From my own experience, it’s certainly true that I use the DVD rental as backfill for when I can’t get that same title streaming.
Does removing the legacy DVD product kill off DVDs faster, bringing industry change faster, or does it cause current customers to jump to a competing service?
Have you ever played chicken with your subscriber base against a third party for a greater cause?
Would you dare?