WHY NETFLIX IS RAISING PRICES

Why is Netflix raising its prices? In part, because the company miscalculated how many people still want to receive DVDs by mail each month, a more expensive service to provide compared to its streamed Internet videos.

Netflix has been trying to lure subscribers away from its DVDs by offering cheaper plans that include movies and TV episodes delivered over its Internet streaming service. In November, it began offering a streaming-only plan for $8, its cheapest option at the time. Yet Netflix customers aren't flocking to Internet video as quickly as some analysts said the company expected.
Many consumers are unwilling to give up the trademark red envelopes.

DVDs feature newer titles and the latest theatrical releases that aren't available through the company's streaming service.
So the company is adjusting its pricing to reflect the cost of its DVD business and to help bring in more money to cover growing expenses for streaming content.

NETFLIX RAISES PRICES, INTRODUCES NEW PLANS

Netflix announced two new unlimited DVD plans on Tuesday, including a $7.99 option for one DVD at a time and an $11.99 option that allows users to rent two DVDs at a time. The company also said that it will discontinue its current $9.99 monthly option that provides access to unlimited DVD rentals and unlimited instant streaming each month. Instead, the movie rental service will charge users $7.99 a month for unlimited streaming and a minimum of $7.99 per month for unlimited DVDs (with one rented out at a time at that rate).

Essentially, that means users with the current $9.99 offering will instead have to cough up $15.98 per month in order to maintain their current subscription plan. “Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix,” the company said in a blog post. Netflix’s current plans will expire in September, and users will need to switch to a new plan by that time.

NINTENDO WII U WILL NOT PLAY DVD OR BLU-RAY DISCS

When we discovered that the Wii U would also use a brand new optical disc format for its games, we wondered whether or not it would be able to play DVDs or Blu-ray discs. We figured it would be likely that Blu-ray discs would be excluded, but expected DVDs to work. Unfortunately, Nintendo says that the Wii U won’t play either type of optical disc.

We know that the Wii U will use Nintendo’s new proprietary game format, and that each disc will be 25GB in size. That’s close to, but not exactly the same size as a Blu-ray disc, and Nintendo has already said that the drives in the Wii U are not Blu-ray drives. However, most people expected that the Wii U would be able to at least play standard DVDs. Now, Nintendo’s Satoru Iwata says that won’t be the case.

In an interview, Iwata said that the Wii U “does not have DVD or Blu-ray playback capabilities.” It may not matter very much considering most people already have a device in their living room that can play DVDs, and many have Blu-ray players. Iwata also pointed to the added cost of building in DVD playback functionality into the Wii U as another reason why they didn’t want to include it. They decided they could keep prices down a bit by removing a feature that most people probably already had.

AMAZON BUYS UK MOVIE STREAMING/RENTAL SERVICE LOVEFILM

Amazon has just announced it has agreed terms to buy up all the remaining shares of Lovefilm it didn't already own. The British outfit operates a subscription-based movie rental and streaming service in its home market along with Germany, Denmark, Sweden and Norway, and should give Amazon a very solid base from which to build its presumably Netflix-besting ambitions. Lovefilm has been just about the closest thing Europe has had to the ridiculously successful North American movie distributor and Amazon is arguably getting in just in time, given Netflix's overtures toward expanding into the UK. Customary closing conditions will need to be met before the final stamp of approval is applied, but the acquisition is expected to complete by the end of Q1 of this year.

NETFLIX CUSTOMERS ARE DUE A GIFT CARD FROM WAL-MART

In 2005, Wal-Mart and Netflix teamed-up to ward-off Blockbuster: Wal-Mart ceased renting DVDs online, and Netflix promised never to sell physical DVDs. According to a court case, that agreement violated antitrust laws—which means Netflix customers are owed money.

Wal-Mart chose to settle the case, and will gift Netflix customers who become class members of the case a Walmart.com gift card, or maybe even a check. They're said to be spending between $29 million - $40 million making this issue disappear. Only those living in the US are eligible, but taking into account there's 16 million Netflix customers in the US and Canada, that's still a lot of people who could be in for a lump-sum. No word on how the affected parties will be contacted.