Netflix’s long planned price increase went into effect yesterday causing many customers to reconfigure their subscriptions. In July, Netflix announced that users that subscribed to their most popular plan, $9.99 per month for one DVD at a time and unlimited streaming, would be subjected to a 60% increase price unless they changed their subscription by September 1. Users can now sign up for one DVD out at a time for $7.99 per month or unlimited streaming for $7.99 a month.
Other companies that have been struggling lately are seeing this price increase as an opportunity to win over some new customers. Blockbuster, for example, has been sending out tweets in an attempt to coax current Netflix customers into signing up for a free 30-day trial of Blockbuster Total Access. Amazon has also recently purchased the European version of Netflix, called Lovefilm, and there are rumors flying about of plans to introduce it to the United States.
In a poll taken just after Netflix made their announcement in July, around 22% of 1100 users proclaimed that they are going to cancel their accounts and begin using other vendors such as Amazon, Hulu, and Redbox. Obviously, it is far too early to predict how the price hike will ultimately affect Netflix. But with the increase in competition, and the growing popularity of OnDemand and Blu-Ray, Netflix can probably expect a significant number of subscription cancellations.
