Will Netflix's New Pricing Strategy Stick?
It used to be that aging technologies would depreciate as new things came along and replaced older versions. It doesn't seem to be that way on Netflix's watch.
Remember Beta and VHS tapes? If you're old enough, you probably rolled your eyes over at the memory. As soon as DVD's came into the market, movie tapes started depreciating, to the point of give away, and eventually disappearing from the scene altogether.
Then came online video streaming, which Netflix took it upon itself to revolutionize the way in which people rent and watch movies. The company has combined both Online Streaming and mailing DVD rentals to its customers for a fixed monthly fee.
However, recently it launched a controversial new pricing strategy. Instead of bringing prices down on DVD rentals (which would be seen as an aging technology when faced with online streaming), Netflix has raised by 60% when signing up for both services as detailed on All Things Digital.
A lot of unhappy customers may be so for quite some time, but that same article also describes how Wall Street applauded the new strategy after watching Netflix stock go up.
Perhaps this isn't just a strategy to raise equity, but also to start making a difference in technology. As discussed in another article here on Technorati, "The Multi-Screen Era," WebTV is a growing trend. Is it then Netflix's intention to leave DVD's to the past? Seemingly different indeed from VHS and BETA times when even at their cheapest price or giveaway, they eventually vanished. This time, aging technology is a luxury.
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