Netflix debuts streaming-only plan, raises prices, as DVD business takes a backseat

As anticipated, Netflix has rolled out an all-streaming offering, announcing today on its blog that subscribers will have the option of choosing to stream unlimited TV episodes and movies for $7.99 a month with no DVD-by-mail service required.

The company also said it was raising the price of its DVD-by-mail service on all tiers, with basic service, which Netflic price chartincludes one DVD at a time and unlimited streaming of movies and TV shows, to $9.99 from $8.99.

VP of marketing Jessie Becker said the changes were being driven by several factors.

"Our selection of TV episodes and movies available to stream has grown dramatically, and as a result most members want us to deliver unlimited TV episodes and movies two ways: streaming instantly over the internet plus DVDs by mail," Baker said. "The price increase will allow us to continue to offer the popular plan choice of unlimited TV episodes and movies streaming instantly along with unlimited DVDs."

Baker said the $7.99 plan for streaming only reflected postage savings for the company.

Baker also said Netflix had no plans to offer a DVD-only option because "Netflix members are already watching more TV episodes and movies streamed instantly over the Internet than on DVDs, and we expect that trend to continue."

During the company's Q3 earnings call in October, CEO Reed Hastings said the company planned to focus its efforts on building the streaming side of its business.

"Q3 represents our fourth consecutive quarter of more than one million net subscriber additions," he said. "This growth is clearly driven by the strength of our streaming offering. In fact, by every measure, we are now primarily a streaming company that also offers DVD-by-mail."

Netflix also said subscription numbers increased to 16.9 million, a whopping 52 percent jump from the same time last year. The company reported 15 million subscribers at the end of the previous quarter.

Some 66 percent of all subscribers watched at least 15 minutes of streaming video from Netflix in the quarter, up from 41 percent a year ago, and 61 percent for the second quarter of 2010. In Q4 a majority of Netflix subscribers will watch more content streamed from Netflix than delivered on DVD. And, Netflix said, with that transition in the business from mostly DVD to mostly streaming, this will be the last quarter the company will report this metric.

In September, Netflix introduced a streaming-only offering in Canada, its first foray into the international market, prompting pundits to speculate that a streaming-only option would soon be introduced in the U.S. as well.

For more:
- see this blog post

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