Yesterday, Netflix announced a new pricing structure, eliminating the “all you can eat” streaming and DVD packages. The old low-end product, that allowed unlimited streaming and one DVD at a time for $9.99 per month, was discontinued. If you want to continue both streaming and one DVD at a time, you will now have to buy two $7.99 services: one for the streaming and one for the physical DVD.
Like Roger Ebert and a lot of other people, I immediately cancelled my old subscription and re-upped for the streaming-only package (so sorry, Netflix, $2 less of my money is coming to you each month). There are just too many options for new discs at a lower rate (both Redbox and Blockbuster Express are only $1 per DVD…and I don’t usually watch more than one new-release DVD per month—that’s why I have premium cable.). I was mostly using Netflix to catch up on old movies and TV series that I’ve missed, which are usually available for free at my local library a few blocks from home. (I often rented the DVD of a series instead of watching it on instant view: since a lot of instant view content isn’t available with closed captioning and DVDs are. Sorry, Tim Roth on Lie to Me mumbles in a British accent, and neither my wife nor I can make out what he’s saying without subtitles.) And then there’s always Hulu and other streaming services that I can tap into, so I don’t feel like I’ll be missing out on anything.
In addition to losing some subscribers and some revenue (almost certainly more than offset with the cost savings of not having to purchase, inventory, sort and mail physical DVDs), Netflix may have also just dropped the final straw on the back of the camel that was the US Postal Service.
It’s no secret that the USPS is struggling to survive. Between competition from FedEx and UPS, and most importantly email, USPS revenue has been consistently shrinking in a growing economy. Considering that the USPS is currently operating at a loss ($2.2 billion as of Q2 2011), any additional loss of revenue from Netflix is only going to exacerbate their situation. And how much lost revenue is this? Reed Hastings, Netflix CEO, posted on Quora that Netflix spends between $500 and $600 million a year on postage. Not all of that revenue will go away, obviously, since there are (probably) a lot of Netflix users that either *only* rent DVDs or will still subscribe to packages that include shipping of DVDs.
I’ve joked for months that Netflix and Amazon are the only reasons that the USPS is still in business, and now one of those rugs has been pulled out from underneath them. It’s a good thing you can’t download books from the internet. Oh, wait…
Oh well. Who needs all those bills and junk mail anyway.
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