Netflix announces new plans, no more combined unlimited DVD and streaming plans

Netflix has announced that they are making some changes to the rental/streaming plans they offer, as well as price changes. The company is launching new DVD-only plans. For $7.99 a month you get 1 DVD out at-a-time or for $11.99 a month you can have 2 DVDs out at-a-time. Netflix hopes to "provide great value to our current and future DVDs by mail members," by offering the lowest prices.

They will also be separating the unlimited DVDs and streaming plans to "better reflect the costs of each." This will give customers a choice between streaming only plan, a DVD only plan or you can subscribe to both. There will no longer be a plan that offers unlimited streaming in addiition to DVDs.

For more details about the pricing plans read the official release below:

So for instance, our current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
Plan 2: Unlimited DVDs, 1 out at-a-time (no streaming), for $7.99 a month.

The price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). For new members, these changes are effective immediately; for existing members, the new pricing will start for charges on or after September 1, 2011.

Why the changes? 

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. At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs. Creating an unlimited DVDs by mail plan (no streaming) at our lowest price ever, $7.99, does make sense and will ensure a long life for our DVDs by mail offering. Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix.

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. 

I have used Netflix for over four years, and have made numerous changes to my rental plan over that period. I am currently on the streaming only plan for $7.99 because most of the films I want to see I watch in theaters or rent via Redbox. I do like the option of having unlimited movie rentals option, since I have a voracious appetite for watching movies. The bandwidth cost and the deals with studios to offer movies streaming costs Netflix a lot, so it makes sense that prices have gone up.

What are your thought on these new plans and prices?

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