Modest price increases are to be expected; Netflix's price increase (depending on the plan used) was in the neighborhood of 60%.
The cost of DVDs hasn't gone up.
The cost of postage has gone up maybe 2 or 3%.
That leaves the cost of streaming. If the cost of streaming has somehow gone up 60% (which is doubtful) then they need to do a better job explaining it.
Oh, and this was far from an apology. It was am “explaination” that the CEO gave with a smary smile on his face. It was an announcement of the split.
This is being done to save Netflix and nothing else.
The DVD rental industry has a few more years at most and everyone knows it. Qwikster is being set-up as a business that will die quietly in the near future.
Netflix will now be able to advertise that their most expensive plan is under $8 a month. Streaming is far more lucrative because it requires a much smaller staff, no packaging, no postage and the product never gets damaged, lost or worn-out.
Had the CEO come out and explained to the customers about the studios and distributors causing them angst BEFORE the price increase, dollars to donuts, there wouldn’t have been as many people dropping. This is just frosting on the cake for those who were ticked already.
Netflix is in a death spiral. I will be surprised if they pull out at all.
The price increase was only 60% for the lowest end of subscriber (1 DVD and stream). Basically if you had DVD and stream they added $4 flat. My price went up 25% because I’m on 3 at a time, they’re basic level).
And actually the cost of DVDs HAS gone up, and the cost of postage has gone up over 25% since the company started, and the cost of their licensing for the streaming content has nearly quadrupled in the last year.