The DVD format is starting to show its age, so Netflix
The movie-rental pioneer just told its 700,000 Blu-ray fans that the fees they pay will go up soon. On April 27, the current flat fee of $1 per month for access to Blu-ray titles becomes a sliding scale. The cheapest one-disc plan keeps the $1 Blu-ray premium, while the priciest eight-disc option tacks on $9 for that privilege.
Blu-ray movies typically cost about 30% more than the same content packaged on a plain old DVD, so it makes sense for Netflix to try covering its costs a little bit. A few subscribers may opt out of the new charges, but I suspect that most of 'em will stick around.
You might remember a hue and cry about the original $1 fee and the low availability of those pricey titles. But Netflix keeps growing its Blu-ray subscriber base regardless, so a lot of those customers might not be too price-sensitive. And there are other ways to cover that extra expense that would actually benefit Netflix overall: The seven-disc plan plus $1 Blu-ray surcharge comes out to $42.99 today. After the price change if you drop down to six movies out at a time plus the $7 Blu-ray charge, the price stays the same. And you can get some fresh air where that seventh movie would have shown up. Sheesh. Netflix likes the lower-priced, fewer-disc plans because you get a volume discount on the heftier alternatives.
In the grand scheme of things, I see Sony's
You can tell by the name that Netflix always wanted to be a purely online service, and that day is approaching. The competition will be tough from other digital-media mavens such as TiVo
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Fool contributor Anders Bylund owns shares in Netflix, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.