The Wall Street Journal reports that Netflix is testing a new pricing model - $5.99 for three DVDs a month.
The company already has a $17.99/month plan that allows people to rent three DVDs at a time, and a $9.99/month plan that allows for the rental of one movie at a time.
According to analysts interviewed by the Journal, “the $5.99 offering could end up having higher gross margins because of lower costs per disc.”
This news comes as Netflix, often held out as a strong example of finding a new business model to compete with an established presence (Blockbuster), has been enduring some criticism “throttling” shipments of DVDs to frequent renters. The company has been charged by some heavy users of delaying shipments to them because it wants to protect its profits – it makes more money if people get fewer DVDs for the regular monthly fee. So it reportedly is shoving frequent shoppers to the back of the line for oft-requested DVDs, preferring to send them to infrequent renters and new customers.
The company already has a $17.99/month plan that allows people to rent three DVDs at a time, and a $9.99/month plan that allows for the rental of one movie at a time.
According to analysts interviewed by the Journal, “the $5.99 offering could end up having higher gross margins because of lower costs per disc.”
This news comes as Netflix, often held out as a strong example of finding a new business model to compete with an established presence (Blockbuster), has been enduring some criticism “throttling” shipments of DVDs to frequent renters. The company has been charged by some heavy users of delaying shipments to them because it wants to protect its profits – it makes more money if people get fewer DVDs for the regular monthly fee. So it reportedly is shoving frequent shoppers to the back of the line for oft-requested DVDs, preferring to send them to infrequent renters and new customers.
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