It completely makes sense that Netflix would bet the farm on streaming of films and television shows. It also makes sense that Netflix would raise its prices to compensate for higher negotiated costs for content.
The problem, which I think they are also aware of, is that customers continue to receive DVDs in the mail not so much because they want that content in solid form, but because content available through streaming remains limited. Without a dramatic rise in the quality and quantity of content many users may go elsewhere.
Jessie Becker, Netflix's vice president of marketing, made the pricing announcement on the company's blog yesterday and frankly didn't do a good job of justifying the company's pricing moves. When using phrases like "we didn’t anticipate" the company comes off looking bad and inviting criticism from its customer base – which is precisely what happened in the comments.
"DVD renters can pay more to access more of the voluminous DVD library, but what are streamers supposed to do about the lack of current releases or desired catalog titles?" wrote Travis McClain in the comments area. "I realize Netflix cannot stream what the studios do not allow, but this is a disparity that really should be acknowledged in the price scheme."
Over 5,800 comments are currently on the blog post.
The real problem for Netflix is that while the company has a huge catalog of DVDs to offer its customers, its streaming options run into a different level of competition. Netflix beat up on Blockbuster pretty badly, but how will it do when up against Apple and other streaming media competitors?
They are finally starting to say what others have thought:
Pittsburgh Post-Gazette: The practices of all Mr. Murdoch's media properties should be scrutinized in light of the criminal enterprise that was once the News of the World.
Digby (Heather Parton): It's a criminal enterprise, that's all there is to it.
Paul Krugman: At this point it’s starting to look as if News Corp is better viewed as a criminal enterprise than as a media organization.