Citing the need to better reflect "underlying costs," Netflix is effectively raising the price to subscribers who want both DVDs by mail and Internet-streaming video selections by up to 60% by eliminating unlimited DVD-plus-streaming plans in the U.S.
For new Netflix members, the changes will be effective immediately. For existing members, the new pricing will start for charges on or after Sept. 1, 2011.
Netflix on Tuesday announced it will offer two separate DVD-only plans: $7.99 a month for the 1 DVD out at-a-time plan and $11.99 a month for the two DVDs out at-a-time plan. The company rolled out the $7.99-per-month streaming-only plan last November.
Under the revised pricing structure, to get both unlimited streaming and unlimited DVDs, a subscriber will need to take two separate plans and will pay $15.98 per month for unlimited streaming plus one DVD out at a time ($7.99 plus $7.99), compared with $9.99 monthly under the revised pricing announced last fall.
For two DVDs out at a time, the total cost will be $19.98 per month ($7.99 plus $11.99) -- a 33% hike over $14.99 per month currently.
"Netflix members love watching instantly, but we've come to recognize there is still a very large continuing demand for DVDs by mail," Netflix chief service and operations officer Andy Rendich said in a statement. "By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members."
Netflix is establishing a "separate and distinct management team" solely focused on DVDs by mail, led by Rendich, according to a blog post Tuesday by vice president of marketing Jessie Becker.
"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," Becker wrote. "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."
Since adding the "Watch Instantly" streaming option as part of its popular DVD-by-mail business in 2007, Netflix's subscribers rolls have grown from 6 million to 22.8 million in the U.S. as of the end of March 2011.
In the first quarter of 2011, according to Netflix, new subscribers took the streaming-only and the hybrid plans in roughly equal numbers.
Los Gatos, Calif.-based Netflix offers more than 20,000 titles available for instant streaming over the Internet, available on more than 200 different devices. It offers a catalog of more than 100,000 DVDs available via mail.