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Why Netflix is unbundling streaming from DVD rental

Here’s the clearest explanation I’ve seen of why Netflix is splitting up the DVD and online parts of your subscription, courtesy of Felix Salmon:

Up until now, it seems, Netflix has paid the studios a flat monthly fee, linked to the number of subscribers it has with access to their content. And when that got too expensive, it wound up cutting off streaming from its DVD subscribers to save on its own library-subscription costs.

1 Comment

  1. The studios are certainly pressuring Netflix for cash, but Netflix managed this very poorly. You might say they blew it starting with when they bundled the DVD and streaming during their last price increase a year or so ago. They should have known a $2 increase wasn’t enough to cover future costs. But since that was such a good deal this $7 increase looks terrible in comparison. In fact, I voted with my wallet and dropped my subscription entirely because that $7 was just the incentive I needed to seek out alternatives. Lo and behold, there are a lot of them. Amazon, Crackle, Hulu, it is a different world than it was in 2007 when they were the only streaming service in town.

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