The Netflix Apocalypse

As you all probably have heard, Netflix recently announced some new plans and pricing changes.  While, in the past, you could buy a DVD plan and get streaming bundled together, or opt to go streaming-only, now you need to purchase a streaming plan (the only one is Unlimited Streaming) and a DVD plan separately.  The reason for this, according to Netflix is to separate “unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both.”

Netflix is claiming that this is to help customers out and save them money.  Let’s look at the old pricing structure.


Right now, we’re on the 2 DVD at a time plan so we pay $15 a month.  (Well, it reflects on our bill as $16 and change.  That’s probably due to taxes or something.  I’ll let this slide for now.)  To get a similar plan under Netflix’s new pricing structure, I’ll need to buy the $7.99 Unlimited Streaming plan and the 2-DVDs-At-A-Time plan for $11.99.  Total monthly bill: $19.98.  That’s a 33% price hike.

Do I get anything extra for this hike?  More movies than I’m currently getting?  Newer releases?  Quicker DVD mailings?  Anything at all?  Nope.  I get the privilege of paying them 33% more for the same service they’re providing me now.

My first thought was maybe we should reduce our plan level.  We could go with 1 DVD at a time and streaming for $15.98.  This would be a 6.5% price hike for reduced services.  Or maybe I could go streaming only for $7.99 a month.  This would save us $7 a month.  Sure we wouldn’t have access to Netflix’s impressive DVD selection, but there are ways of replacing that.

Bye Bye DVDs, Hello Streaming Only?

But is Streaming Only a real option?  While doing some reading, I came upon a question on Twitter that asked whether the Streaming Only plan limited the number of streams.  The answer was: “All streaming plans will be limited to one stream.”


Now I was confused.  So I called Netflix and asked them.  I was told that going Streaming Only would indeed limit the user to only one stream at a time.  So if B was in the bedroom watching Netflix on our Roku and the boys wanted to watch a cartoon in the living room, they couldn’t.  Or if the boys were watching their cartoon and I wanted to catch up with a show on my laptop, I’d be locked out.  So much for the “unlimited" in Unlimited Streaming!

Increase The Streams, Just Don’t Cross Them

Still, I wondered, how does one increase one’s available streams.  Surely, Netflix wouldn’t doom everyone to a single stream.  Not with Netflix on Roku boxes, built into TVs, Blu-Ray players, iPads, etc.  It turns out there is a way to get more streams: Buy the DVD plans.  If you buy the 2 DVD At A Time plan, you get 2 streams.  The 3 DVD plan gets you 3 streams and so on.

But wait.  Netflix’s “justification” for this price increase plan change was that they were separating out the DVD and Streaming portions.  Let’s reread their blog statement again to be sure:

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

It certainly sounds like they are making the two (DVD and Streaming) completely separate entities.  Doesn’t tying the number of streams available to the DVD plan purchased contradict this statement?  I called back and asked and was told that they would forward this question to a supervisor higher up in the chain.

I’ve heard some reports from people that they have Streaming Only now and can do 2 or more streams at the same time.  This might be a quirk in the system or an upcoming change.  Either way, I’ve got to look at Netflix company policy and not “what you can get away with now.”  Even if they don’t come down on people and enforce the 1 Stream At A Time rule on September 1st, they could in the future.  And that would vastly undermine the value of their Streaming plan.

The Real Reason For The Price Increase

I’ve actually been anticipating this price increase for awhile.  Back when most of the content providers inked deals with Netflix, they saw the company as a “last stop” for content.  They figured that a show/movie would come out on TV/theatres and then go to pay-TV (for movies), then to DVD, then to rental DVD and then finally to streaming.  Along the way, the content providers figured, people would pay each time to view their content.  People would pay for premium cable channels and then buy the DVD/Blu-Rays and then pay to have it streamed.

Instead, people saved their money.  They cancelled their subscriptions to HBO, Cinemax and other premium stations.  They didn’t buy the DVDs.  They waited for the shows/movies to appear in the Netflix DVD and Streaming queues.

In addition, more and more people noticed the value of Netflix and joined up.  Many of the deals specified a limit to the number of people who would be signed up to Netflix and able to view the streams.  Netflix blew by those numbers.

Now, the content providers are seeing red.  Or green.  Or a mixture of both.  (“Seeing grey?”)  They are angry that so many people are streaming videos and want more money.  A lot more.  Some estimates figure that Netflix will need to pay ten times as much just to keep their same streaming content.

Hey Netflix, Here’s What You Should Do

Still, a 33%+ price increase all at once doesn’t sit well with most folks.  There has been a great uproar on Twitter, Facebook, Netflix’s blog, individuals’ blogs and pretty much anywhere else Netflix users can be found.  They don’t like this and many are willing to go without Netflix or downgrade their plan.

This is the Netflix Apocalypse in the title.  People fleeing en masse will mean fewer subscribers to shoulder Netflix’s additional content fees.  This can only result in more steep price increases which would drive more people away.  Netflix is at the cusp of a downward spiral into oblivion.  There is hope though.  If Netflix did five things, I think they could defuse this situation to a great degree.

First of all, Netflix should admit they blundered.  Admit that this new pricing scheme was a mistake and that, while rates will need to increase thanks to upcoming content price increases, this scheme was poorly thought out.  They need to do this quickly while they still have a shred of sympathy left.

Secondly, increase prices gradually.  Don’t make the increase 33% all at once.  I know you need to raise more money but the way to do this isn’t by slicing your customers’ jugular.  Announce a series of 5% price increases that will ease everyone into the new pricing scheme.

Third, grandfather in all existing users.  Get rid of that September 1st date for existing users and let us keep our plans as is for now.  It’s ok to say that switching plans will get you a new pricing arrangement, but give us loyal users at least six months on our existing plans before we see any pricing shift.  Maybe require existing users to pay for a certain number of months up front to lock in the old rates.  This would get you more money up front, keep people from jumping ship as quickly and would help keep people happier (as they’d perceive that they were getting a bargain).

Fourth, fully untangle the Streaming and DVD plans.  Give us at least 2 or 3 streams at a time on the Unlimited Streaming plan.  Make additional streams something you add onto your streaming plan, not something you obtain by buying a DVD plan.

Fifth, give us bundle discounts.  Learn from the cable companies.  If you buy Internet, TV, and phone service from the cable company, they charge you less than the price of each of those service separately.  This encourages people to sign up for more services.  Similarly, when I sign up for Streaming and DVD plans, my final price should be less than the price of the Streaming plan + the price of the DVD plan.  This will encourage people to buy multiple plans which will get you more money.

If Netflix doesn’t take some, more or all of these steps, I think they’ll be facing a mass user exodus.  If they delay too long, people might leave even if the September 1st deadline* is changed or even if the new plan structure is scrapped entirely.  Sadly, I think we’ll be one of those leaving/downgrading.  We might stick with Netflix Streaming Only for awhile, but if we bump up against that one-stream rule too much then we’ll need to rethink even that.

Please, Netflix, recover from this major blunder.  All of us who are leaving don’t really want to go.  We love your service and want to stick around.  We just can’t justify it with the changes you are making.

* Although the plans change on September 1st, you might see a price increase early.  When your plan renews itself, you’ll get the new rate.  In my case, I was informed that this will take place on August 7th.  So instead of 6 1/2 weeks to consider what we’re going to do, we have a mere 3 weeks.

Cutting The Cable Cord Follow-up

Last year, I wrote about how I would love to cut the cable cord and stop paying for cable TV.  At the time, I assumed that DVD rentals/purchases (including services such as Netflix), in-home streaming (via purchased and ripped DVDs) and the Internet would pick up the slack from our loss of cable TV.  After all was said and done, I figured that cutting the cable cord would save us $15 a month.  Not much, really.

Later on, I actually won a Roku and tried out Netflix.  This resulted in a four part series titled Netflix, Roku and Cut Cable, Oh My!.  (Here are links to part 1, part 2, part 3 and part 4.)  During this series, I revised my estimates, including purchasing equipment to receive OTA signals and a TiVo box to record shows.  I also cut back on Amazon VOD and purchased DVD estimates.  At the end, I wound up estimating a savings of $40 a month.

Since it has been about year, I figured it was time for a follow-up.  First of all, our cable cord is still fully intact.  Despite our calculations of what we would save, it turns out that too many of the shows we like watching are on cable TV.  Still, our television landscape has changed dramatically in the past year and it doesn’t bode well for the future of the cable cord.

First of all, that three month Netflix trial turned into a paid-subscription.  Yes, this is $13.99 extra a month, but it is well worth it.  We get 2 DVDs out at a time and unlimited streaming.  Thanks to our Roku box, we can watch videos streaming from Netflix on our television.  The kids have taken to this the most and will watch the same shows over and over.  They even request “Roku” (by which they usually mean Netflix on Roku) over regular TV on a regular basis.

NHL and JSL have discovered classic cartoons such as Pink Panther and Rugrats and will watch their antics over and over.  (Note to Netflix and Nickelodeon: Please get more than just the first 4 seasons of Rugrats on streaming!)

Amazon VOD has gotten almost no use.  About the only time I’ve used it was when I had a credit to use up.  Even then, my purchase has gone unwatched since the boys love Roku so much.  Still, were I to cut cable, I could see buying Mythbusters this way, but not much else.  A season of Mythbusters on Amazon VOD would cost about $43.50.  At that rate, I might be better off waiting and buying it on DVD.  (I still wish Netflix could get the DVD season sets instead of the “random episode” collection DVDs.)

Paid rentals and DVD purchases have gone virtually extinct.  Yes, we’ll buy the occasional DVD, but this is a rare event.  Meanwhile, our trips to the library to take out DVDs have become a nearly weekly event.  The boys get excited to go to the DVD section and pick out 1 DVD each.  Then they can’t wait to get home and watch it over and over until it is time to return it and pick a new DVD.  This is quite a deal since it is essentially free.  “Essentially” because it is paid for via our taxes, but I can think of worse ways to spend tax money than beefing up our public libraries.  Besides, the boys almost always get books while there too.  We’ll leave with three or four DVDs and a big bag full of books.

Still, there are cable channels that we just love watching too much to cancel.  If these shows were available in a streaming model (say, via Hulu Plus, Netflix or some other provider), we would gladly subscribe to those and ditch the cable cord.  Until that happens, though, I don’t think the cord will get sliced.  Of course, as more content goes streaming and as we watch less and less non-streaming content, the cable cord’s lifespan seems more and more limited.  I’d probably be safe to declare that we won’t cut it in the next year, but I wouldn’t be as sure about the next 3 – 5 years.

Netflix, Roku and Cut Cable, Oh My!, Part 4

It Slices! It Dices! It Cuts Cable Cords In Two!!!

Thanks to the one two punch of Netflix Online and Roku, I’m pretty confident that my kids would survive a cut cable cord without too much screaming.  So where does this leave cable in our household?

For now, it hasn’t been cut, but don’t confuse being uncut with being safe.  We’re currently looking into many options ranging from cutting to going with an alternative service like DirecTV.  (Any DirecTV reps out there who want a technologically savvy daddy blogger to do a review on your service? )

My original conclusion, meanwhile, has been revised.  Previously, I determined that we would save about $15 per month if we cut cable.  However, I soon realized that that relied on two erroneous assumptions.

The first was that we would buy $15 in DVDs every month.  We really don’t buy many DVD movies because we tend to watch them once or twice and then add them to the stack.  Kids movies get a bit more play, but there’s only so many times you can let your child watch a show before you go insane.  Now, we tend to rent our DVDs via Netflix or our local library.  DVD purchases happen pretty much only if a deal is extremely good or for a Chanukah or Birthday present.  Our total DVD purchase budget is probably closer to $30 per year than $15 per month.  This increases the Cut Cable savings to $27.50 per month.

The second assumption was that we would frequent Amazon VOD.  Apart from having Mythbusters episodes, I just can’t see spending a lot of money on this service when I get essentially the same thing "for free" with my paid for Netflix subscription.  (Yeah, I know Netflix isn’t free, but you know what I mean.  I don’t have to pay $1.99 just to see another episode of Heroes.  It’s right there.)

The only thing I might pay for is the aforementioned Mythbusters.  (TechyDad want big boom!)  At $1.99 per episode and an average of 25 episodes per season, I’d only be paying about $24, or $2 per month, for this Amazon VOD.  This is far short of the $26 a month I initially assumed and raises the Cut Cable savings to $51.50 a month.

I’ve also re-thought my setup.  I don’t need to invest in a media streaming setup.  I just need to manage our existing DVDs better.  So I’ve used EMDB to catalog all of my DVDs.  I plan on making a list out of it and laminating it for the kids to refer to.  This way they’ll be able to point to an item on the list and have B or I put it in rather than wondering just what we have to watch.

The only tripping point at the moment is how we would hook our existing TVs up to receive over the air broadcasts (do we need to buy any equipment for this?) and what DVR to buy to replace our cable company issued one.  TiVo is a possibility, of course, but the monthly fee ($129 per year) would eat into our Cut Cable savings.  Still, even after TiVo, we would have over $40 left per month in savings.  The first six months of savings would pay off the purchase price of TiVo.  After that (and possibly a few months paying off equipment to receive digital OTA signals), we’d be in pure savings mode.

Alternatively, we could switch from Time Warner Cable to DirecTV.  The one year locked in rate would save us $28 per month over cable.  Either way, money talks, especially in this economy.  Unless things radically change, I don’t think our current cable connection has much of a life left in our household.

Disclaimer: I received a complimentary 3 month preview of Netflix for review purposes.  However, after my preview period, I intend to remain on as a paying Netflix member.  As stated, I won the Roku box during an online giveaway.  The reviews expressed above are my own and were not altered in any way by Netflix, Roku or anyone else.

Netflix, Roku and Cut Cable, Oh My!, Part 3

Heeeere’s Roku!

When we last left our intrepid Cable Cutting hero, he was talking about Netflix streaming devices.  There are many of these on the market, to be sure, but my favorite is the Roku box.  This small box, and I’m talking palm of your hand small, will easily fit into any home theater arrangement.  It is easy to set up, navigate and has plenty of content available on it.

Once your Netflix Instant Queue is set up, the titles appear nearly instantly on your Roku box.  If your title includes multiple episodes, say because you’re watching The Addams Family, you can jump to a specific episode easily .  Fast forwarding and rewinding, though inexact, are simple to master.  Simple enough, in fact, that my 6 year old figured it out quickly and now is not to be trusted near the remote.  Not because he’s going to mess something up, but because he *will* fast forward/rewind/change the video when I just want to watch what’s playing.  In fact, all of the controls are easy to master.  If I hand NHL the remote, I can be certain that he will find a show that he wants to watch and will be able to play it with no problem.

The only problem we ran into was constant wireless network connection losses.  However, considering I’ve been experiencing these on my laptop as well, I think this is more of a problem with my network (more specifically, my router) than with Roku/Netflix.  Even when the network is acting funky, though, reconnecting is as easy as clicking "OK" a few times.  Assuming that the network cooperates, that is, but you can hardly fault Roku or Netflix for not being able to connect to a trouble-making router!

Since introducing them to the Roku, my children’s viewing habits have changed.  Whereas before their "default" choice was Noggin, The Disney Channel or possibly PBS Kids, they have rapidly made Roku one of their favorite choices.  Why, after all, bother with waiting until their favorite show is on when you can just click and play.  JSL has learned to ask for "Wiggle Roku" for his favorite Wiggles videos or "Bobby He Can Build It Roku" (Bob the Builder on Roku) and NHL has found enjoyment in some of my old favorites: Inspector Gadget, Super Mario Brothers and The Pink Panther.

Previously, I had mentioned how Netflix wasn’t resting on their laurels.  Well, Roku isn’t either.  While Netflix on Roku might be enough to justify the $80 – $130 price tag (depending on which Roku box you buy), Roku also offers access to Amazon Video on Demand, which has some great movies and TV shows, and Major League baseball.

Those offerings require extra purchases, however.  Amazon VOD requires you to pay for each video while MLB insists on a yearly subscription fee.  To increase the value of your Roku box, they are branching out to other content providers, most of which will be free for all.  Their Channel Guide allows you to customize your channel listing to include Motionbox, Mediafly,,, Facebook Photos, Revision3, Frame Channel, Flickr and Pandora.  These options just came out, so I haven’t explored them fully.  Still, I got a taste for how much more content they have just made available via Roku and I like it.  Clearly, Roku is trying to position itself as the go-to box for streamed media content.

Coming up next, will the cable cord survive being cut?

Disclaimer: I received a complimentary 3 month preview of Netflix for review purposes.  However, after my preview period, I intend to remain on as a paying Netflix member.  As stated, I won the Roku box during an online giveaway.  The reviews expressed above are my own and were not altered in any way by Netflix, Roku or anyone else.

Netflix, Roku and Cut Cable, Oh My!, Part 2

Watching Movies At Warp Speed

Previously, I mentioned that Netflix is keeping up with the changing rental climate.  One of those changes is online viewing.  I’m a big believer that the future successor of DVDs isn’t going to be Blu-Ray or some other super-incredible-ultra-high-resolution disc, but no disc at all.  All of the pieces are in place or nearly so.  Internet speeds are fast enough in many areas to support video streaming. Video codecs can alter video quality to account for changes in bandwidth.  Wireless technology allows for devices (*cough*Roku*cough*) to stream Internet videos without needing any wires (save for the power cord). » Read more

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