Netflix boosting Blu-ray fee by 20%

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Zahveed
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Postby Zahveed » Mon Mar 30, 2009 5:05 pm

They'll raise now, but the price will fall when DVDs are obsolete.
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Postby Sonic Youth » Mon Mar 30, 2009 4:20 pm

Netflix to Boost Blu-ray Fee 20%, Citing More Demand
By Meg Tirrell


March 30 (Bloomberg) -- Netflix Inc., the largest U.S. mail-order movie service, plans to raise rental fees for Blu-ray discs by about 20 percent at the end of April as members increasingly choose the high-definition format over conventional DVDs.

The price increase applies only to Blu-ray rentals and will begin on or after April 27, the Los Gatos, California-based company said in an e-mailed statement. Netflix currently charges $1 a month on top of its membership fee for access to Blu-ray movies, according to its Web site.

Almost 10 percent of Netflix customers are choosing Blu-ray over standard-definition rentals, the company said. Netflix offers more than 1,300 titles in the high-definition format, up 60 percent in six months, it said. The company plans to double the number of subscribers using Blu-ray this year, Chief Executive Officer Reed Hastings said in an interview today.

“We’re evangelizing the format,” Hastings said from Los Gatos. “If Blu-ray gets to 100 percent of U.S. homes like DVD did, then consumers will be watching disc-based entertainment for at least another 20 years.”

Greater consumer adoption would benefit Netflix because it has fewer competitors in disc rentals than in online streaming, where it battles Amazon.com Inc., Apple Inc., Blockbuster Inc. and others for audiences, Hastings said. The CEO, named “Innovator of the Year” yesterday by the Hollywood Reporter, a trade publication, said streaming is a longer-term focus for the company.

Higher Costs

The Blu-ray fee is also rising because high-definition discs can cost as much as 30 percent more than standard DVDs, Netflix said. At Amazon.com, the largest Internet retailer, Warner Bros.’ “Dark Knight” sells for $23.99 on Blu-ray, 37 percent more than the $17.49 asking price for the conventional format.

Under the new pricing model, access to Blu-ray discs at Netflix will vary by plan, starting at an additional $1 for the lowest-priced membership and adding as much as $9 to the highest-priced, the company said. For the $13.99 a month plan, allowing members to have two DVDs at a time and an unlimited number per month, customers will pay an extra $3 for Blu-ray.

At Blockbuster, the largest movie-rental chain, customers can rent two DVDs by mail at a time with an unlimited number per month for $16.99, including Blu-ray. For three DVDs at a time, including Blu-ray, Blockbuster customers pay $19.99, compared with $20.99 at Netflix.

Netflix rose $2.35, or 5.9 percent, to $42.03 at 4 p.m. New York time in Nasdaq Stock Market composite trading. The shares have gained 41 percent this year.
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