Netflix raises prices, splits DVD & instant viewing into different plans

Netflix announced on Tuesday a major change to its subscription-based services. Starting in September for current members, the singular unlimited DVD and streaming deal will be split into two different services: one focused solely on DVD rentals, and the other offering the online streaming service which helped the company expand over the past few years.

Jessie Becker, Netflix Vice President of Marketing, outlined the upcoming changes and explained that separating the $9.99/month unlimited DVDs and streaming plan into two unique options was a matter of better supporting its disc-based rental system.

“Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan,” wrote Becker at the company’s official blog. “At the time, we didn’t anticipate offering DVD only plans. Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members.”

The move leaves those enjoying both DVDs and streaming for one low price with two choices: unlimited streaming for $7.99/month, or unlimited DVD rentals for $7.99/month. If you want both, expect to shell out $15.98 each month. Put simply, Netflix is raising its prices. Becker says the distinction is important.

Continuing to treat DVD as a bonus to Netflix’s streaming service would be a mistake, reasoned Becker – adding that he foresees a “long life” for the company’s DVD by mail service. To that end, Netflix is creating a new team to oversee its renewed focus on that aspect of its business headed by Andy Rendich, the company’s Chief Service and Operations Officer.

Of course, there is always another option: subscription cancellation. Based on reactions to the announcement thus far, it seems many long-time subscribers could be opting for that one.

“The whole point is that we use the streaming primarily and only order a DVD when you don’t have it available for streaming, thus the $2 per month for DVDs makes perfect sense,” an anonymous commenter said, adding, “You guys have really messed up here.”

Others voiced various threats to seek the greener pastures of competitors such as Amazon Prime, HBO GO, Redbox and Blockbuster. The announcement does currently boast 16,000 “likes” on Facebook, however.

This isn’t the first time in 2011 that Netflix has angered customers. Controversial changes to its user interface, open API and programming offerings in recent weeks elicited varying degrees of subscriber fury. The company confirmed last week that it would be bringing its services to the Latin American market later this year, and some expect it to launch in European territories by next year.

Which service option will you vouch for? Both? Or is this the move that sends you into the arms of a Netflix competitor? Let us know in the comment section.