Netflix’s price increase was largely created to encourage subscribers to adopt streaming only, because Netflix clearly sees that streaming is the future of video, not plastic disks shipped in the mail (and stored in big, expensive warehouses).
Netflix also wants to encourage content holders to release more content digitally. If the majority of Netflix’s customers are on streaming only plans (which is not the case today), that would push reluctant content holders to see that the days of the DVD are over.
A lot of people are upset with Netflix now, but in five years it will be clear that this was the prudent decision. They’ll end up convincing more subscribers to go streaming only and sell more new subscribers on the idea of streaming video, especially as their streaming library grows. Their streaming library will grow as content holders see more and more people signing up for Netflix streaming (and hopefully my streaming video dreams will come true).
The Nieman Lab tries to see if these lessons could be applied to the news industry:
Newspaper publishers started this process several years ago, saying, “Let’s have these print customers pay more of the freight of creating and delivering print.” Since then, community dailies that used to cost a quarter a day havetripled to 75 cents, and The New York Times goes for $6 on Sunday. They have priced in more of the cost of that expensive newsprint, ink, and delivery.
Now, this year, we’ve seen added in the charging for digital access. We’ve begun to see the answer to this question: How much will consumers pay for digital access? That’s still uncertain, though early evidence is coming in from The New York Times, Time Inc., and Journalism Online experiments, among others. In newspapers and in magazines, we see the interim play: the bundled, all-access subscription — pay us once and get both analog and digital, print and pixel. That’s a move for more consumer revenue in the short-term, but also a longer-term pricing play to get pure digital revenue as readers give up print.
What do you think? In my view, legacy news organizations, particularly newspapers, have been double- and triple- downing on print. Investment in digital has seen fits and starts, and there hasn’t been enough attention paid as to how to monetize the future, which is clearly digital distribution of news.
I have a dream for streaming movies, and it doesn’t involve mailing DVDs around the world.