Disks are dead. It’s only a matter of time before DVDs and Blu-rays will be a thing of the past for the mass market. Yes, Internet streaming will eventually kill DVD and Blu-rays (sniff, sniff for Blu-ray). Netflix knows it and they want you to know it too. With a variety of carrots, Netflix hoped you would get the hint. First, Netflix offered a streaming only plan late last year for only $7.99. Enough of us didn’t go for it. They removed DVD features from their developer API. Then Netflix redesigned their website. Go to the front page as a non-member and you will see they don’t even talk about DVDs being delivered by mail. Log in as a member and streaming takes center stage. Well, carrots didn’t work so it’s time for a stick. Netflix is telling you if you want DVDs and streaming its going to cost you more. Actually, what they are really saying is they don’t want to be in the DVD business anymore. To Netflix, the future is now.
Getting out of the DVD business will eliminate some of there high costs around postage and processing. Some folks think it’s a mistake for Netflix to get out of the DVD delivery business. Netflix can buy any titles they want. It’s a proven business model that’s profitable. But is it the future?
There’s been a lot written that the studios are going to stick it to Netflix for streaming rights. Apparently, many of their content deals are set to expire within a year or two. The studios are going to jack up the price of content and put additional restrictions in place. This analysis assumes that the studios will behave like mindless Cylons bent on Netflix’s destruction. The reality is that both Netflix and the studios are in this to make money. No other streaming service is delivering the number of customers that Netflix has (24 million at last count). DVD sales are significantly down. While the studios will demand a bigger take as Netflix’s revenue rises, they realize that no one else is paying these amounts for content. Netflix is a golden goose for the studios (and the goose is going international).
For customers, stop fretting about the price increase since you didn’t watch the DVDs anyway. This is a good excuse to finally mail it back and move to the $7.99 streaming-only plan. If there’s a recent release you really want to watch, you can rent it on iTunes, VUDU or Amazon for the cost of Sweetened Iced Tea Lemonade at Starbucks. If you do it twice a month, it would cost about the same as Netflix’s stand-alone DVD plan. Alternatively, you could quit Netflix for a few months and go with Hulu Plus or Amazon Instant (for a year) to mix things up a bit. The nice thing is that you didn’t sign a contract with Netflix. Netflix has enough confidence to do without them.