Netflix Options

This week, Netflix announced that it would discontinue its existing $7.99 plan for one-DVD at a time along with unlimited streaming and replace it with two offerings that each cost $7.99, essentially increasing the price of the service by 60%. While some have argued that it’s an attempt by Netflix to wean its users from the DVD service, the approach is not without its limitations.

Evaluating options

By breaking apart the service into two offerings, Netflix is now forcing its users to think of the services not as a bundle but as two very specific different types of offerings.

On one side, we have the DVD service which can be compared, to some extent to the Redbox and Blockbuster direct services. From that standpoint, one has to consider whether he/she wants to rent DVDs of popular movies from those services or dig into Netflix’s more extensive options. The challenge, for Netflix, is that the DVD offering is not quite as cost efficient as the streaming one. For each DVD, Netflix has to not only have the movie on hand but also pay for shipping and return of the plastic DVD. I’ve heard that those costs are in the range of $.50 per segment or roughly $1 per DVD shipped. By comparison, streaming costs have been estimated to be in the range of $.10 to $.25 per stream, which is substantially lower.

On the streaming side, however, the Netflix offering is now something that can be compared to Hulu+ or Amazon Prime, two services that offer unlimited streaming. The Hulu+ offering is priced at $7.99, a price that Netflix is apparently looking to match with its streaming service. Amazon Prime is $79 per year (or $6.58 per month if you break the price down) and include streaming and free shipping for goods bought from Amazon. In both of the streaming options, the products are different: For example, if one’s interest lies more in TV offering, then maybe the Hulu+ service works better. However, what becomes apparent from looking at the different unlimited streaming services is that the offerings are still relatively slim, compared to what one might get from regular or cable television.

The 2-DVD option

There is, however, a path that Netflix has left open for those who are interested in doing a little hacking. Imagine a plan that would cost $12.98 and provide you unlimited streaming with a small backstop for DVDs. Only one concession needs to be made: the willingness to only receive 2 DVDs per month instead of the theoretical 8 one could get under the unlimited DVD plan.

Netflix offers a 2 DVD per month plan for $4.99. The trick to getting it is that Netflix does not allow to sign-up for it online. You must sign-up for a streaming plan (which it now defaults to) and then call their support number. Once you have called the support number, ask them to allow you to switch to the $4.99 plan. The person on the phone will first try to sell you either the unlimited DVD deal or the bundled option. Turn those down and insist on getting the $4.99 option. Once you’ve accomplished this, you will have a DVD plan that allows you to get access to the extensive DVD collection Netflix has. This can serve as a convenient backstop to the online streaming option.

One needs to then either create a separate account on Netflix to get access to online streaming or get a Hulu+ account. In either case, it would be $7.99 .

A question remains as to how long Netflix will maintain that loophole but for now, it may be a better option than paying 60% more than you previously did and it brings to mind questions as to whether Netflix is really a solid alternative to cable or other TV-related options.

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About the Author

Tristan Louis

Writing and working on the internet since 1993, I've launched six companies, of which two went public and three were sold. This is my personal site and all opinions here are mine.

  • Ron Phillips

    DVDs are soooo 2009 (and yes, I’m saying that tongue in cheek).  If its recent, bittorrent it.  If you really want a DVD, you can get it from redbox for free, using one of the promo codes posted at insideredbox or other sites (each code can be used an unlimited number of times, the restriction is a code can only be used once per credit card). 

    I have netflix streaming and hulu+ (which replaces my dvr).  Along with a couple of sites that have all the tv channels I want streaming (tvpc.com for example), I got rid of cable.  My cost is $15.98 a month, and no dealing with Comcast customer service. 

  • Ron Phillips

    DVDs are soooo 2009 (and yes, I’m saying that tongue in cheek).  If its recent, bittorrent it.  If you really want a DVD, you can get it from redbox for free, using one of the promo codes posted at insideredbox or other sites (each code can be used an unlimited number of times, the restriction is a code can only be used once per credit card). 

    I have netflix streaming and hulu+ (which replaces my dvr).  Along with a couple of sites that have all the tv channels I want streaming (tvpc.com for example), I got rid of cable.  My cost is $15.98 a month, and no dealing with Comcast customer service. 

    • http://www.tnl.net Tristan Louis

      Some shows and/or movies, unfortunately, are not available for streaming or on things like redbox (unfortunately, offerings like Redbox and Blockbuster express are limited in their offerings due to space constraints, leaving them with titles that are mostly available online). And I’d rather go for LEGAL options than torrents.

    • http://www.tnl.net Tristan Louis

      Some shows and/or movies, unfortunately, are not available for streaming or on things like redbox (unfortunately, offerings like Redbox and Blockbuster express are limited in their offerings due to space constraints, leaving them with titles that are mostly available online). And I’d rather go for LEGAL options than torrents.