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Netflix announced yesterday in an email to its customers that it is raising prices by 60 percent, with much of the hit being taken by people who gets DVDs by mail, as opposed to streaming movies and TV shows via the internet.

As the New York Times reported, “What cost $10 a month — online streams of movies plus one DVD by mail at a time — will now cost $16 a month, the company said, tacitly acknowledging the high costs of mailing physical DVDs, but also admitting that many people still want the skinny little discs. Online streaming alone will remain $8 a month. Netflix advertised the change as a new choice for consumers.

“For millions of customers, the shift in price might change the daily calculus of an entertainment diet made up of a myriad of choices: cable television packages, online streams, Redbox rentals and iTunes downloads. The price increase spurred complaints from thousands of Netflix customers on Facebook and other Web sites, some of whom said they may now rely less on physical DVDs and more on online options.”

And, the Times goes on, “Thanks in large part to its four-year-old streaming service, Netflix has more than 20 million customers in the United States. The company expects that as broadband speeds become faster and TV sets get connected to the Internet, it can become an even bigger player in streaming video.”
KC's View:
Ironically, the Wall Street Journal has yet another piece - there seems to be one about every two or three months in some major newspaper - about the “small but dedicated cadre of film buffs, artists, cash-strapped couch potatoes and Internet-phobes who are helping New York City's independent video retailers stave off extinction,” refusing to make the shift (at least not completely) to Netflix or Redbox. It may be a surprise to some, but “a stalwart bunch of stores are paying their bills, paying small staffs and in some cases turning a profit - buoyed by New Yorkers with rarefied tastes, or just a soft spot for the corner shop.”

Rarefied tastes, indeed. But they’re also smart to be playing to their customer service strengths, which are the things that Netflix and Redbox cannot do as well.

I got that email from Netflix yesterday, and will have to think about what I will do ... I probably use DVDs more than my kids, who are enthusiastic users of streaming technology.

But I also would not be surprised if within 30 days Netflix scales back the planned rate increase. This just feels like something that may get some tweaking.