Netflix – The Final Frontier?

Netflix, what an interesting company. They have been a pioneer since they opened their doors in 1997 and a few months back, my wife and I finally caved and decided to keep a subscription beyond the free trial.

We actually were full members of Netflix back in 2006 when they only offered DVDs and the plan was cheaper. The reason we canceled our membership was that we moved to a more remote location in the US and it took almost a week for our DVD’s to be delivered where prior to that, it only took about 2 days…that’s really not what this post is about though.

Netflix has come a long way since its beginning. As an innovator, they have overcome continued skepticism of their every move. Why would anyone want to subscribe and have to wait for their movies to be dilevered when they could just step out to the nearest Hollywood or Blockbuster and grab the newest release.

Netflix overcame that obstacle with their price point. For only $12 a month, just over the price of two movies from the local place, you can get unlimited DVDs delivered to your door, two at a time even. No late fees, no delivery fees and an online queue to remember, rate and get suggestions on movies you want to see.

Soon they had imitators and put brick and mortar competitors completely out of business. Those that couldn’t adapt quick enough disappeared…the few big boxes that held on struggled to find a way to compete.

The next bold move that caused Netflix customers to become skeptics was the separation of the DVDs and the streaming services.  Prior to this move, you could stream unlimited movies to your computer or Netflix device as well as receive DVDs in the mail. There was no option to choose one or the other, and the price was reasonable for the most basic plan. After the separation, to get both streaming and DVD deliveries, you’d need to have two plans; one for streaming and one for DVD delivery. For those that used both of these services, this was an outrage. The price increase to have both services was a double-digit percentage, but it wasn’t outrageous considering the quality of service compared to traditional movie rental means. However, people were outraged.

Netflix stock took a hit, they eventually scrapped plans to separate the services and continued to take heat from customers.

Netflix did keep the separate service plans though and I defend their move, aside from the branding (changing names is not a good idea for a company as well branded as Netflix). Here’s why. If you look over the history of the movie industry, formats come and go with time. When something new comes along, the previous device, format and even recording technology is replaced by the newer, better option. Eventually DVDs will be replaced..but with what? Blu-Ray? I don’t think so. They are already being replaced with the digital stream. No media, no scratches, no delivery time. No matter what format comes after DVD, Blu-Ray, whatever, streaming is the future.

And that’s why we decided to again become members of Netflix. We subscribe to the streaming only plan. It’s cheaper than prior Netflix combined plans and we get everything we ever wanted from a movie service; unlimited streaming of movies and TV shows right to our TV via a Netflix capable device.

My prediction for Netflix is people will continue to sign up for Netflix leaning toward the streaming only plan based on its cheaper price, instant and unlimited nature, and huge and growing availability of devices especially those with mobile capabilities. Netflix will continue to improve upon the streaming plan, compression and quality, as well as movie offerings and they will eventually scrap the DVD plan again. They will continue to be a household name for movie watching.

What do you think? Will Netflix die out and be replaced or will they take streaming to the next level?

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11 People have left comments on this post

» Rebecca @ Trim Waist Fat WalletNo Gravatar said: { Jun 30, 2012 - 01:06:48 }

My husband and I switched to their streaming only service, ditching their DVD service. They’re obviously pushing to have more recent content offered through their streaming services most significantly in the past 6 months it seems. It will be interesting to see how it contends with Redbox’s upcoming streaming service!

Jesse MichelsenNo Gravatar Reply:

Who needs those dang DVD’s anyway 🙂 our player broke a few years ago and we haven’t missed it. The biggest complaint about their streaming only was the content so I’m sure that’s exactly what they’re doing, boosting the library so more people opt for that.

Redbox is pretty genius too, I love innovators in such an age old business.

» AndyNo Gravatar said: { Aug 21, 2012 - 01:08:26 }

I use redbox all the time. They always have some promo code to get a free rental and I live right next to a CVS with a redbox so I’m never late in returning them. I am curious about a streaming service from them though!

» ChrisNo Gravatar said: { Sep 17, 2012 - 11:09:21 }

I don’t think Netflix will die out. I read a while ago that Blockbuster bought the rights to first release Universal Studios productions. I’m not sure if that still stands but the movie companies are going to make out like a bandit if they leverage their power over Netflix, Hulu, and Redbox.

I subscribe to Netflix and Hulu Plus. Between the two, I can basically watch anything.

» UcloserNo Gravatar said: { Sep 22, 2012 - 05:09:58 }

I feel like they’ve been the frontrunner for so long that I don’t really see them capsizing just yet. The only thing I can see happening is one of the bigger companies like Amazon or Google buying them out. For us, Netflix has replaced cable, so I’m not going anywhere to do business anytime soon.

» W at Off-Road FinanaceNo Gravatar said: { Oct 17, 2012 - 08:10:18 }

The problem with the Netflix streaming-only plan is that in order to take advantage of it you have to have a Netflix-capable device attached to your TV. Most people don’t. So they need DVDs. But they want to be able to watch on their iPad, so they need streaming. There is no solution other than to pay more in the current Netflix lineup.

This is why the whole world is short NFLX (to the tune of about 25% short interest).

» Adam RandallNo Gravatar said: { Dec 1, 2012 - 05:12:26 }

I do have to say my experience with Netflix has been less than desireable. Their issue is licensing movies people would actually watch. They do have some good selections, but their streaming catalog is too small.

» sarkari naukriNo Gravatar said: { Dec 17, 2012 - 05:12:30 }

@Jesse Michelsen

I love the door service they provide…Planning to order lots of DVD and watch it during my x-mas holidays!!Yepppiii!!!

» Financial Black SheepNo Gravatar said: { Jan 30, 2013 - 01:01:04 }

I wish Netflix would die out, because the expense to have Netflix is more than I would like to spend for the service. I agree the streaming part is nice, but if I upgrade to Amazon Prime (regularly 79.99) I would get free streaming to any game console and the use of a kindle book (free on my computer, no kindle required). Which would mean I would pay about $6.67 per month to have streaming and another library at my finger tips.

As for their competition, Blockbuster, I liked the fact you could trade DVD’s in at the stores. I think Blockbuster will die first, unless Dish Network can rally something huge to keep them going–doubt it.

» Bob GoldNo Gravatar said: { Apr 18, 2013 - 06:04:15 }

I had Netflix when it was only the mail in version. We found we weren’t using it that much and canceled it. Then we signed up for the streaming program when it first started and were disappointed by the limited selections. We have recently signed up for the streaming program again and it has improved a lot. There are a lot more movies and shows to watch. Still could use some improvement but it’s much better than it used to be. Our streaming gets interrupted occasionally but even that seems to be getting better.

» Danielle @ Young Adult Personal FinanceNo Gravatar said: { Aug 26, 2013 - 07:08:35 }

My husband & I canceled our cable service earlier this year to save money. We watch Netflix a lot and although the pricing is good, the streaming selection is very limited. As a customer I would enjoy the service a lot more if there was more to watch. We also watch Hulu Plus which has some shows and movies that Netflix doesn’t have so we are quite happy with that.

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