Just yesterday CNNMoney ran an article titled "Netflix's vanished Sony films are an ominous sign," which predicted that the licensing agreements between Netflix and the world's largest studios would no doubt see a vast increase in the near future. Basically, years ago, when Netflix first signed its streaming licenses with movie studios, they were able to lock in licensing fees on the relative cheap because studios didn't think streaming movies would ever take off. Now we all know how that turned out. Unfortunately for the US' most popular streaming subscription service, most of their contracts will be ending in the next few years and there's no way studios are going to undervalue their streaming licenses this time.
To put things in perspective, according to the CNNMoney article, Netflix paid around $180 million for streaming costs last year. Next year, however, when it's time to sign new contracts, those same costs are going to skyrocket to just shy of $2 billion. And guess who Netflix is going to hit up to cover that roughly 1,100% increase in fees? Its stockholders sure aren't going to pay for it; its subscribers are.
If you're a current Netflix member, these new prices won't take effect until September 1st, but if you're a new subscriber, these pricing plans are immediate:
Unlimited Streaming Only, $7.99/mo. -- This is the same as it used to be.
1 DVD out-at-a-time, $7.99/mo. -- This new plan is cheaper than the old 1 DVD plan, only it is now DVD only. If you want Blu-rays or Streaming, that will cost more.
1 DVD out-at-a-time + Unlimited Streaming, $15.98/mo. -- This is a roughly $6 increase over what this service cost just yesterday. If you want more than a single DVD at your house, prices climb a further $3 per DVD. If you want the option to watch Blu-rays, that's another $2 (or more, depending on how many discs your plan is).
Not only are studios already holding the company that redefined the movie rental market in a headlock by keeping many new releases off the service for nearly a month, now they're forcing the company to squeeze a markedly higher percentage out of its customer base. And while these new, higher costs are still an affordable and good value for movie junkies, it's definitely going to sour some members on Netflix. The question is, will you stick with the company or will you soon find yourself once again changing the way you watch movies at home?