Netflix Resurrects the $7.99 DVD-Only Plan

After months of criticism and a subscriber exodus, Netflix (NASDAQ:NFLX) is bringing back its single-disc DVD-only plan that retails at $7.99 per month. The popular option was removed from the line-up last fall as the company tried to push its streaming service in the wake of the Qwikster debacle and an overall gaffe-filled 2011.

Though still the top of the home video provider food chain, Netflix undercut its own standing last year as a Wall Street darling by doing precisely what no business should ever do: willingly antagonize its customer base. In an attempt to force its subscribers to meet its vision for the future, Netflix tried to force them to more rapidly downgrade their DVD services in favor of streaming.

Netflix’s first step was to separate its streaming option from its DVD home-delivery plan under the auspices of needing to compensate for increased content-licensing fees, effectively raising the price of its most popular package — unlimited streaming and one DVD out at-a-time — by about 60 percent.

In a final act of much-maligned hubris, Netflix then decided that it was going to spin off its delivery service into a separate division called Qwikster. After a series of profit-driven moves made to the detriment of the customer, Qwikster was the icing on the cake — it would have further separate the two complementary services and forced customers using both to keep separate accounts.  Ultimately, the Quickster plan backfired, badly, as Netflix lost subscribers, forcing them to do an immediate about-face, but not before the stock lost, at one point, about a fifth of its value.

Netflix has managed to regain a great deal of its standing, as its stock price currently hovers around $120, or about double its 52-week low from last year. The move to bring back the basic DVD-only plan, though it represents a backpedaling away from Netflix’s vision for the future, allows the company to continue leveraging its legacy business for a profit while keeping its customers happy. Much to Netflix’s chagrin, it seems the future isn’t here just yet.

To contact the reporter on this story: Jonathan Morris at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com