Netflix Exiting The DVD-By-Mail Business?

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As IndyPosted predicted in October, Netflix has launched a “streaming-only” plan for $7.99 month in the U.S.  while increasing the subscription rate for those who subscribe to both the DVD-by-mail and on-demand option. The Internet-0nly plan was officially announced yesterday on the Netflix blog and via an e-mail to customers.

It seems like this is the first step in the eventual demise of the by-mail option altogether.

The New York Times claims that “It looks as if the DVD is suffering another death rattle.”

You can’t blame Netflix necessarily for trying to get out from under a huge outlay in shipping expenses. According to the Wall Street Journal, the company’s postage bill totals $600 million this year. Netflix instead wants to use that money for “paying for content rights for online streaming.”

As quoted in the Journal, CEO Reed Hastings boldly proclaimed the following:

We are now primarily a streaming video company delivering a wide selection of TV shows and films over the Internet.

If you subscribe to the three-DVDs-at once plan, for example, you’re going pay $3 more each month, an 18% increase.

The problem with the streaming-option as it stands now is that only a relatively small portion of the massive Netflix film library is available for instant download. The company’s engineers and lawyers need to get busy, otherwise the on-demand option will flop.

In the e-mail, Netflix nonetheless explains the move as follows:

Why the changes? Our selection of TV episodes and movies available to stream has grown dramatically, and as a result most members want us to deliver unlimited movies and TV episodes two ways: streaming instantly over the internet plus DVDs by mail.

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