Netflix announced on their blog on Tuesday, July 12th that they plan to do away with their combined unlimited streaming and DVD by mail plans and increase pricing by 60%.  Of course, they tried to spin it as a positive solution for their customers.

“First, we are launching new DVD only plans. These plans offer our lowest prices ever for unlimited DVDs – only $7.99 a month for our 1 DVD out at-a-time plan and $11.99 a month for our 2 DVDs out at-a-time plan. By offering our lowest prices ever, we hope to provide great value to our current and future DVDs by mail members."

Now, as a Netflix customer myself and TV Lift Cabinet Owner, this paragraph clearly did not make sense to me.  Offering their lowest prices ever?  Um…how do you figure?

Let’s recap shall we.  Currently, Netflix customers enjoy an unlimited streaming plan for only $7.99 (which has not changed on their new price structure).  However, if Netflix customers wish to get DVDs by mail, they can at only a $2 increase to their unlimited streaming plan, bringing their total to only $9.99.

Now Netflix wants to do away with the combined plans.  If you wish to get both services you will have to to pay $7.99 per service, bringing your total to $15.98.  That is a $5.99 increase per month to each customer, which is a 60% increase!  I ask how are those their lowest prices ever?

Or if you look at it this way that is $71.88 per year extra customers will have to pay.  Netflix advertises that they have 23 million members.  Let’s say half have combo plans which is 11.5 million members.  Using this estimation of combo plan members, Netflix will make an extra $826,620,000 in profit per year.  Now to be fair, I understand that mailing costs have gone up, but this price increase is extremely steep.

On top of increasing their pricing by 60%, they are limiting the amount of DVDs customers get with the $7.99 unlimited DVD plan to one at a time.  As one customer pointed out, at most customers can rent seven movies per month with the three day mail delays back and forth.  That does not seem unlimited to me.

It turns out I am not the only customer to observe this steep spike in their pricing strategy.  Their blog post announcing the price change received over 11,022 comments.  I perused the first 200 comments and 198 of them were angry customers threatening to cancel.  It should be interesting to see how many of these people cancel their plans.