Netflix hikes prices for DVDs + streaming

@CNNMoneyTech July 12, 2011: 5:43 PM ET

NEW YORK (CNNMoney) -- Netflix is launching new, unlimited DVD-only plans in the U.S. -- but as a part of that move, it's scrapping unlimited plans that include both physical DVDs and online streaming.

Subscription movie rental service Netflix (NFLX) said Tuesday that the changes are meant to "better reflect the costs" of each option. The changes cut prices slightly for customers who only want DVDs, but streaming video will now cost extra. Customers who want both options will essentially have to pay for two plans, raising their overall bill.

Netflix's unlimited streaming-only plan will remain at $7.99 a month, while its "1 DVD at a time" plan will also cost $7.99. That means customers who want both streaming and DVDs will have to shell out at least $15.98 a month.

That's a big jump from the $9.99 a month customers currently pay for a plan that offers unlimited streaming plus 1 DVD at a time.

The changes will be effective immediately for new customers and will take effect September 1 for existing members, Netflix said.

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The move comes as Netflix continues to shift its focus toward online streaming video -- an option that, while popular, costs Netflix loads of cash as studios start commanding higher prices for their content.

Netflix's announcement sparked an immediate and loud backlash from customers. By Tuesday afternoon, more than 3,000 comments filled the Netflix blog post announcing the changes -- most overwhelmingly negative. Hundreds of commenters said they would cancel their plan, some in favor of rival streaming offerings from Hulu and Amazon (AMZN, Fortune 500).

Others planned to stock up on DVDs from rental kiosk Redbox (owned by Coinstar (CSTR)), which said earlier this year that it is working on its own streaming service to take on Netflix.

"The only way that this is terrific for the customer is if you plan to offer your entire collection available for streaming," one respondent wrote on Netflix's blog. "Otherwise this is just yet another way to choke more change out of your customers."

"You've decided to raise customer rates during a period of economic downturn, when people are struggling to pay for basic necessities," another customer wrote. "You're forcing me to pay more for products and services I've paid for loyally for quite a while now. You're really, REALLY making me reconsider this business relationship."

Netflix first introduced streaming plans in 2007. Since then, the service's membership has climbed from 6 million to 23 million in the U.S.  To top of page

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