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Monday, March 30, 2009

Netflix taxes Blu-ray users 20%


You are receiving this email because you added unlimited Blu-ray access to your account for $1 a month. The number of Blu-ray titles has increased significantly and will continue to do so. As we buy more, you are able to choose from a rapidly expanding selection of Blu-ray titles. And as you've probably heard, Blu-ray discs are substantially more expensive than standard definition DVDs.

As a result, the monthly charge for Blu-ray access is increasing for most plans and will now vary by plan. The charge for monthly Blu-ray access on your 5 DVDs at-a-time (Unlimited) plan will increase from $1 a month to $6 a month. The price of your 5 DVDs at-a-time (Unlimited) plan is not changing and remains at $29.99

It comes out to about a 20% hike across the account, so the more discs you can have a month - the more you pay. I just had a long post I deleted detailing the math on it, but the short version is that if all of Netflix's 7.5 million users or so switched to Blu-Ray, Netflix could easily buy over a million Blu-ray discs a month without losing a dime. I suppose I could see Netflix's point if they had a large amount of 8 disc/month types planning to go all Blu-ray, but considering we're 5 discers and we usually have only one out of five being one with blue label, I'd say that's unlikely.

Short, short version: Netflix is heavily covering their costs here, and their power users will be shouldering most of it. It stinks, it's infuriating - but there's not much we can really do about it. The moment The Girl logs into Netflix and finds her Watch Instantly gone, she'd probably file for divorce.

Which is the real battle here. Netflix would love to kill physical distribution. But I still say, I love me my Blu-ray. I prefer the quality well over the convenience of distribution, and since I don't see my bandwidth increasing by tenfold any day soon - I don't think that's going to change.


sterno said...

Yeah I was none too thrilled to see this note from Netflix. It feels like a way to increase prices in a back door way. The cost difference between BluRay and DVD varies from movie to movie, but I saw a 15% difference for the Dark Knight, and 0% difference for Iron Man as a couple examples.

1) BluRay prices are sometimes higher now, but will likely drop as the technology matures. You can expect that the prices from Netflix will not drop in concert with that.

2) They are charging me 20% more when a good portion of what I get is still on DVD. If I was only ever getting BluRay's the price increase is more reasonable.

I didn't mind too much when it was $1 extra. But this is getting a bit out of hand...

Josh said...

Yeah, and I haven't noticed Netflix handing any savings down to users as first release DVD prices have gone down.

The math doesn't work for me, plain and simple. Maybe 20% of our Netflix usage is Blu-Ray - so Netflix is saying that for that one disc, it's worth 100% markup? It can't be even close.

You're right, if 100% of our queue was suddenly high def, maybe I could see it. This just feels like being punished for using the option at all.