Netflix: Here’s How the New Pricing Plans Affect Subscribers

Thursday, higher pricing will go into effect for millions of existing Netflix (NASDAQ:NFLX) subscribers.

The new pricing plan does away with the old model that required subscribers to pay a base fee of $7.99 a month for a streaming-only plan, and an additional $2 a month more for the streaming plan plus a DVD-delivery plan, which allowed for one DVD out at a time. Plans allowing 2 or 3 DVDs out a time required an additional monthly fee.

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But there is no basic package with the new plan — subscribers can choose between just having video streaming or just having the DVD service, each of which will cost $7.99. However, those choosing both will pay a minimum of $15.98 a month, whereas in the past, they would have paid only $9.99 a month. Announced last month and already in effect for new Netflix subscribers, the plan is expected to have many users fleeing to other services in protest. Hulu (NASDAQ:CMCSA), iTunes (NASDAQ:AAPL), Amazon on Demand and Amazon Prime (NASDAQ:AMZN) will all be waiting with open arms

The overwhelming majority of Netflix’s (NASDAQ:NFLX) 25 million subscribers currently use both services, and will either have to submit to higher prices, or choose just one service from here on out. Anyone opting to downgrade to a single service, streaming or DVD, should change his or her account settings before the next billing period, which is different for everyone, depending on the calendar date on which you signed up. While the new pricing goes into effect tomorrow, many users will have days, even weeks, before the pricing truly goes into effect on their accounts.

Those choosing between the DVD service and the streaming service will have to weigh the negatives and positives of each. While the DVD service is the best way to see the latest movies, and has a significantly larger library, it usually takes 2-3 days between dropping your old DVD in the mail and getting a new one, whereas streaming videos can be watched any time on a host of different platforms, including computers, tablets, and smartphones. However, Netflix’s streaming-video library is significantly smaller than its DVD library, and it tends to take longer for new movies or TV shows to be made available online.

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Of course, the reason for the new pricing scheme is to encourage users to do away with the DVD service, which is more costly for Netflix (NASDAQ:NFLX). The company is making streaming its top priority, which could mean that, with the added revenue from higher prices, it will build its streaming library to rival that of its DVD library so that users no longer have to choose between content and convenience.