Despite higher costs, Netflix is still a good deal

By Thomas Fernandez, COLUMNIST
On July 14, 2011

On Tuesday, online video streaming website Netflix announced that it will change the current plans offered to subscriber by Sept. 1, inciting backlash from consumers.

According to their website, Netflix will now offer three plans - unlimited video streaming, unlimited DVD rental and a combination of both. Their combined plan, which 80 percent of their customers use according to Bloomberg, will see an increase in price of 50 percent or more. Yet, a higher price is justified.

Previously, Netflix offered customers unlimited instant streaming and one DVD by mail per month for only $9.99. However, with the company's $100 million purchase of the Miramax Studio's film library in May, consumers are now absorbing the cost to improve the service while receiving more content such as this.

Even with Netflix's increasing prices, it is still a cheaper form of entertainment compared to traditional venues such as movie theaters. Movie ticket prices are on the rise, with companies such as AMC Theaters charging $10 per adult ticket in Florida, up from $9.50 last September, and up to $19 in Manhattan, according to the Wall Street Journal. Netflix offers movies and TV shows in the comfort of your own home and on a variety of media streaming consoles, such as Xbox, PlayStation, Blu-ray players and laptops.

What consumers may not forget is that these plans are also cheaper, in comparison, to some of the other cable options available. Bright House Networks offer packages starting at $100 for cable, Internet and phone, according to its website. On the other hand, Netflix consumers can pay $7.99 for instant streaming of many favorite shows with no commercials. The combination that used to be $14.99 for instant streaming and two DVDs a month is now $19.99, which is still cheaper than taking a date to the movies.

Another thing that consumers may not be aware of is the price of licensing content. Netflix not only purchased the Miramax library earlier this year, but also signed an agreement with Paramount Pictures in March, according to a Netflix news release. These deals cost money, yet provide entire libraries of content that justify higher priced plans.

Consumers that only use limited plans - paying for access to either streaming or mailed DVDs - will not be affected by the price change. For those that are, Redbox and Blockbuster offer viable DVD rental alternatives.

Though no one likes to deal with a price raise in a recession, Netflix customers need to realize that in this case the higher cost is a necessary evil. Consumers can always rework their account plans with other options to make it manageable for their needs come Sept. 1.

Thomas Fernandez is a senior majoring in mass communications.

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