Netflix draws ire with Blu-ray surcharge

Posted by Wolfgang Gruener

Chicago (IL) – By now, most of us are used to surcharges that are often justified to “make up for extra cost” caused by external factors. Netflix has been talking about potential price increases for Blu-ray rentals for some time and revealed today that it will be charging customers who want access to Blu-ray movies an extra $1 per month – which translates into an increase of at least 6% for subscribers who choose this option.

Netflix vice president of marketing Jessie Teitz said that the surcharge is necessary to help Netflix to “to make up for this significant cost difference” between DVD and Blu-ray media. “We've decided to charge a little bit more for those who want to rent Blu-ray movies,” the executive wrote. “On November 5th, we'll start charging an extra $1 a month for Blu-ray access.”

$1 may sound negligible, perhaps even symbolic. But on percentage basis, the “little bit more” as described by Teitz translates into a visible cost increase. The increase is at least 5.9% for subscribers of the 3 DVDs-at-a-time plan and 20% for the 2 DVDs-per-month $4.99 plan. Teitz believes that a $1 increase is “pretty modest” in exchange for higher quality movies. Of course, Blu-ray access is an option and can be added and removed at any time from Netflix accounts. Netflix said that it has a library of about 800 Blu-ray movies.

Not surprisingly, comments responding to the post were overwhelmingly negative. Users replied with notes such as “This stinks”, “Don't think so” and “I don't buy the argument at all.” However, there were numerous commenters understanding the move and claiming that a $1 increase is not that much.

While a price increase for Blu-ray rentals has been expected at all, the surcharge announcement comes just two days after the company revised its third-quarter user numbers: Netflix ended the third quarter with approximately 8.672 million subscribers, just below the low end of its previous guidance of 8.675 million to 8.875 million subscribers. Also, the company revised its fourth quarter guidance and now expects 8.95 million to 9.25 million subscribers, down from 9.1 million to 9.7 million at the end of Q4. Fourth quarter revenue will be $353 million to $359 million, down from a previous guidance of $357 million to $367million.

What is your opinion? Is access to Blu-ray worth an extra $1 per month or is the DVD good enough? Or do you prefer movie streaming? Share your thoughts by writing a comment below.