Netflix's Price Hike For More Streaming Content?

Updated

Netflix is actually talking about its decision to charge more money for its combined DVD+streaming service and remove any incentive to those that are actually subscribing to both.

The general assumption has been that Netflix simply wants to kill the DVD and is sending out a message not to subscribe to the mail service anymore. That, in fact, may be true, but not exactly in the sense it was generally perceived. In a response to an open letter, Netflix CEO Reed Hastings said that Netflix will be using the increased revenue to strengthen its streaming content: "We will take the increased revenue and mostly spend it on more streaming content … we want to be able to have stronger and stronger streaming."

He also noted that at $7.99, both streaming and mailed DVDs are good deals by themselves. That may be accurate, but the typically expected incentive for subscribed to more services is gone. Hastings conceded that Netflix has put a "big increase" in place, but the quotes sounded like Hastings is very confident that the strategy will work out.