If you thought Netflix
"We are looking at adding a streaming-only option for the USA over the coming months," CEO Reed Hastings wrote in a blog post last night.
Hastings made the comment as part of a larger apology after calling Americans "self-absorbed" relative to its Canadian pricing in a Toronto interview. Yes, Netflix has stumbled quite a bit in its first international rollout.
However, it's clear that the product now being sold in Canada -- an unlimited streaming option available for $7.99 a month -- may very well make its way back home to the United States.
It's going to be a hard sell.
Right now, folks can pay $8.99 a month for unlimited streaming and unlimited DVDs (with only one disc out at a time). The streaming is cool, but not universal. Just 61% of Netflix subscribers streamed at least 15 minutes of video this past quarter. Put another way, 6 million of Netflix's 15 million subscribers don't care -- for now.
There is also a problem with content. Roughly a fifth of Netflix's DVDs are available in its digital catalog. In other words, odds are that the movie you really want to see is only available on DVD or Blu-ray. Who would pay $1 less for an 80% reduction in available content and the perpetual requirement of a healthy Internet connection?
One can argue that Netflix can always go with a more viable price point -- say $4.99 -- but it can't. The move would be yet another Netflix insult in Canada. It's a serious pricing quandary. Netflix has to price its digital offering low enough to attract new accounts, but not low enough to force existing subscribers to migrate to cheaper plans.
There's also Coinstar's
Netflix's advantage is that it has years of building up its content library. Just this morning, it announced a deal with General Electric's
Either way, waiting a few months will give Netflix a fair read on how Canada takes to its service and time to assess the seriousness of Coinstar's digital offering.
I can just picture the new ad campaign: Netflix, no mailbox or DVD player required!
Will Netflix work as a streaming-only offering? Share your thoughts in the comment box below.
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