Netflix is offering a $7.99 per month streaming-only subscription plan to U.S. customers, while at the same time it is raising prices for its DVDs-by-mail packages by 11% to 18%.
According to Netflix, its members now watch more content streamed over the Internet than via DVDs on an hourly basis. The rise in streaming is taking its toll on broadband networks, with Netflix accounting for more than 20% of bandwidth usage during peak times in the U.S., according to a survey by Sandvine.
"We are now primarily a streaming video company delivering a wide selection of TV shows and films over the Internet," Netflix CEO Reed Hastings said in announcing the changes. "Today's action reflects the tremendous customer value we've injected into streaming from Netflix, our initial success with a pure streaming service in Canada for $7.99 a month and what our U.S. members tell us they want."
Netflix also is boosting the prices for all of its DVDs-by-mail plans. The starting unlimited plan (one DVD out at a time) will increase from $8.99 to $9.99; two DVDs out at a time will increase from $13.99 to $14.99; and the popular three-DVDs-out-at-a-time tier will increase from $16.99 to $19.99. The price changes take effect now for new Netflix customers, and in January 2011 for existing members.
Netflix offers less content via Internet streaming -- around 20,000 titles -- compared with more than 100,000 DVD titles.
In late September Netflix introduced a streaming-only service in Canada, its first service launch outside the U.S., available for $7.99 Canadian a month. The company said the Canadian service has "surpassed initial expectations" and expects to accelerate plans for further international expansion in 2011.
Netflix had 16.9 million subscribers at the end of September 2010. The company said 66% of members in the U.S. instantly watched more than 15 minutes of a TV episode or movie in the third quarter of 2010, compared with 41% for the same period of 2009 and 61% for the second quarter of 2010.
The "Watch Now" Internet streaming service is now available on more than 200 devices, including TiVo DVRs, Roku, Apple TV, Google TV, Microsoft Xbox 360, Sony PlayStation3, Nintendo Wii, and many Internet-connected TVs and Blu-ray Disc players.
Netflix recently struck deals expanding its streaming content with companies including Epix, NBC Universal and Warner Bros., and also has agreements for cable TV content with MTV Networks, Starz Entertainment and Walt Disney Co. among others.