Netflix’s Latest Pricing Increase Proves They Want To Exit The DVD Business

While Netflix won't admit it, and in fact says the opposite in their blog post, the latest pricing hikes by the company is a clear sign that they want to exit the DVD business. While they want us to believe otherwise, Netflix is smart enough to know that you don't raise rates by 62% and then expect to retain a large portion of your subscribers for that particular service.

Netflix clearly wants to take the money they will no longer have to spend on DVDs and use it to license more streaming content. And if by chance you do want both streaming and DVDs, Netflix is fine with that because as much as they would like to be a streaming only service, they have raised the monthly price for DVDs by a large enough amount, $6 a month, that they will make money off of most users that keep the option. In my opinion, this latest move by Netflix shows they are no longer in touch with the reality of their current streaming offering and its lack of content.

While it's nice to think that we can all move to a streaming only plan, Netflix knows very well that many seasons of shows are only available via DVD. So you could watch all the episodes of seasons 1-4 of Psych via streaming, but the final season is only available via DVD. If Netflix was trying to force all of us to streaming only plans and they had their entire DVD catalog available in streaming, fine, but we know that is not the case. Netflix has not increased the volume of their streaming content by much and having 25% or less of their entire DVD catalog in streaming is not going to cut it.

Netflix can spin this any way they want, but the bottom line is that they simply want to get out of the DVD business as fast as possible so they can take that money and use it to license more content for streaming. And with Netflix launching a streaming service in Latin America sometime this year, the company needs to license a lot of in-country content since a good portion of the content licensed for the streaming service in North America is not relevant to the Latin American market. As a result, Netflix's licensing costs are going to skyrocket and they need as much money as they can.

But forcing users away from getting DVDs in the mail only weakens their streaming service since Netflix's real value comes from a dual combination of streaming and DVDs.