Netflix Splits Streaming and DVD-by-Mail Services

If you want unlimited DVDs mailed to you AND unlimited streaming from Netflix, be prepared to pay a lot more money.

Netflix was always a forward-thinking company. They called themselves Netflix when they launched their DVD by mail service in 1997 because CEO Reed Hastings always envisioned providing media over the internet. But it seems Hastings had his head a little too high in the Cloud when he started transitioning Netflix away from its DVD service. Offering both unlimited streaming and unlimited DVDs (1 disc out at a time) for only $9.99/month was not feasible for them.

Starting September 1st, Netflix will charge $7.99 a month for both services, meaning it will cost you $15.98 to continue watching movies over your Xbox while also having 1 disc being mailed to you. If you want to stick with just DVDs, you actually save some money as Netflix is lowering the price on the unlimited 1 disc ($7.99) and 2 disc plans ($11.99).

Here’s the explanation from the Netflix blog:

Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan. At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members.

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. 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.

I’ve been a Netflix customer since around 2004, I think, and my experience has definitely had its ups and downs. There was a point there where I had the same three discs sitting on my TV for 9 months, but I’ve also loved gorging on series like 24 and Lost without shelling out for the expensive DVD collections.

Once I hooked up my Xbox 360 (and now my PS3 too) to the streaming content, the unlimited-only subscription was a way for me to get those discs off my coffee table while allowing me to watch what I wanted, whenever I wanted. So this change doesn’t really affect me at all.

On the other hand, I hope that Netflix can strike more deals with content providers and get more movies and TV shows on the streaming service. Because seriously, I want to watch Eastbound and Down after watching this K-Swiss commercial.