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Netflix Raises Prices, Garners Criticism

Netflix this week did something that only a very confident and successful company could possibly do: It raised prices for a popular service that, quite frankly, should simply cost consumers less over time, not more. Similar in that way to last year's Xbox LIVE price hike, the Netflix price hike is seen, perhaps correctly, as a blatant money grab for a captive audience. And it's going to be interesting to see how customers react, in real life--with their dollars--after all the bitching subsides.

Here's the email that Netflix sent me:

We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.

Your current $14.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

   Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month

   Plan 2: Unlimited DVDs, 2 out at-a-time (no streaming) for $11.99 a month

Your price for getting both of these plans will be $19.98 a month ($7.99 + $11.99). You don't need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.

These prices will start for charges on or after September 1, 2011.

In my case, this change will result in about $5 in addition costs per month. Is it worth that? Yes, to me it is. But I understand where the additional cost will be problematic for many people. I also understand that Netflix likely expects many to simply drop the DVD part of their subscription. Which, when you think about it, was likely the plan all along.

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