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Should Netflix customers be annoyed or happy that they are being asked to pay more

Our vote goes to cancelling the physical contract and still purely with the online version of Netflix

By PETER WHITE

Published: 16 July, 2011

READ MORE: US

Our first feelings were to sympathize with Netflix customers when we heard about the 50% plus price rises it brought in this week, but you can only go on so long giving something away - an old saying about a free lunch comes to mind. The Netflix online service has now been separated both in management and cost structures - its offering is no longer a bundle of two services with the unlimited online portion appearing to be free - to get that you now have to pay twice over, and both services have a minimum of $8 a month.

It was always the incredible reach of Netflix and the appearance of it being free that made subscriptions scale, but Netflix was not really making enough profit and investors were keen, but always cautious.

Now Netflix has original content coming to it, it has an unprecedented number of devices which can pick up its online programming and no rival has emerged head and shoulders above the rest (not even Amazon) to scrabble for its online video crown.

Netflix can now allocate all $8 of its online subscription to paying for the online service - what will that mean? No more complaining when Comcast asks for higher peering charges, and more money spent on adding to the online catalog and more expansion overseas.

It says it still believes that there is a place for online DVD rental, but why should Netflix continue to be the largest customer of DVDs in the US, when people really prefer the immediacy of watching films online. Netflix is poised to make more money and provide a better service and the shortsighted few who cancel their subscriptions will be rapidly replaced by additional customers clamoring to get in. Who's to say that Netflix won't let the online DVD rental slide for a few years, completely ignore it as it develops outside the US and then sell it off.

See this video from Netcrunch

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