As was long expected, Netflix this week introduced a streaming video subscription offering in addition to its higher-priced plans, which include home delivery of DVD movies. The Netflix streaming-only subscription plan costs $7.99 a month and is available in the United States.
"We are now primarily a streaming video company delivering a wide selection of TV shows and films over the Internet," said Netflix co-founder and CEO Reed Hastings. "Today's action reflects the tremendous customer value we've injected into streaming from Netflix, our initial success with a pure streaming service in Canada for $7.99 a month and what our US members tell us they want."
Netflix rose to prominence on the back of its efficient DVD delivery service, ushering in the near-death of DVD rental chains like Blockbuster. But understanding that DVDs and other optical media would have a limited and temporary lifecycle triggered the launch of a streaming service, Netflix On Demand, which started off in fairly lackluster fashion, with B-movies and older TV shows. Today, however, this service is incredibly popular and stocked with a vast array of high quality content. That it's accessible via multiple channels—including PC and Macs, specially-designed TVs, and devices like the Xbox 360, PlayStation 3, Wii, Roku box, and many others—only adds to the value.
As the In Demand service has matured, more and more of Netflix's 16 million customers have moved away from DVDs and toward the new delivery method. In fact, the company reports that its members will watch more content streamed over the Internet than on DVDs this quarter for the first time ever.
In tandem with the new streaming subscription offering, Netflix is also raising prices on its DVD subscription by $1 to $8 per month. It's most popular DVD-based offering is a two-DVD-at-a-time option that will go from $13.99 per month to $14.99 per month. Tellingly, Netflix is not offering any DVD-only options.
There really aren't any competing offerings that make much sense. The closest, perhaps, is Hulu Plus, which costs $7.99 a month as well, but comes with timed advertisements, much like network TV. Hulu's content collection is much smaller than that of Netflix, however, and the service isn't available on nearly as many devices: Where Netflix can claim access via over 200 devices, Hulu Plus works with only 12.
