Showbiz Sandbox 112: Why Netflix Had To Raise Its Prices

You would have thought the world was coming to an end last week after popular movie streaming service Netflix raised its prices by 60%. The company’s customers took to blogs and social networks in revolt, threatening to cancel their subscriptions. However, between the cost of mailing DVDs and paying increased licensing fees for content, a Netflix rate hike was inevitable. Is Netflix still one of the best movie bargains available today, and if not, are there any alternatives?

Speaking of subscription offerings, one of Europe’s hottest music streaming services is finally available in the United States. Will Spotify be able to displace some of the entrenched players in the space like Spotify and Rdio? You can find out for yourself since we have some Spotify invitations to give away to a few lucky listeners.

Over in television-land the Emmy nominations were announced and as usual, there were a few noticeable omissions. Just ask “Sons of Anarchy” producer Kurt Sutter who chastised the Academy via Twitter for not recognizing the show’s star Katey Sagal (who also happens to be his wife).

During Inside Baseball we talk to Abigail Phillips from the Electronic Frontier Foundation who helps us unravel the “Common Framework for Copyright Alerts” agreed upon by major content owners and Internet service providers.

We also cover the week’s top entertainment news stories including the News Corp. phone hacking scandal, Arnold Schwarzenegger’s comeback and who Mila Kunis is accompanying to the Marine Corps ball.

Play

‘Harry Potter and the Deathly Hallows Part 2’ Final Weekend Total Hits $481.5 Million
http://www.hollywoodreporter.com/news/harry-potter-final-weekend-total-212505

Sherwood Schwartz Dies At 94; ‘Gilligan’s Island’ And ‘Brady Bunch’ Creator
http://articles.latimes.com/2011/jul/13/local/la-me-sherwood-schwartz-20110713

2011 Emmy Nominations Complete List
http://www.hollywoodreporter.com/news/emmy-nominations-2011-full-list-211331

Sons of Anarchy’s Kurt Sutter Tweets Away His Rage At Emmy Snub
http://nymag.com/daily/entertainment/2011/07/kurt_sutter_tweets_away….

Emmy Snubs: Here’s Our Grouse List
http://insidetv.ew.com/2011/07/14/emmy-snubs/

Why Netflix Raised It’s Prices
http://pogue.blogs.nytimes.com/2011/07/14/why-netflix-raised-its-prices/

Netflix Alternatives
http://www.pcworld.com/article/235629/netflix_alternatives_other_places….

Netflix Renews Deal With NBCUniversal For Streaming TV Shows, Movies
http://www.hollywoodreporter.com/news/netflix-renews-deal-nbcunivers….

Spotify Music Streaming Service Comes To U.S.
http://www.nytimes.com/2011/07/14/technology/spotify-music-streaming….

George R. R. Martin’s “Dance With Dragons” Sells Well
http://www.nytimes.com/2011/07/14/books/george-r-r-martins-dance….

Borders Closer To Folding
http://www.publishersweekly.com/pw/by-topic/industry-news/booksel….

Arnold Schwarzenegger Will Make A New Stand
http://latimesblogs.latimes.com/movies/2011/07/arnold-schwarzenegger….

Rupert Murdoch’s News Corp. Withdraws BSkyB Bid Amid Phone Hacking Scandal
http://www.hollywoodreporter.com/news/rupert-murdochs-news-corp….

Oprah Winfrey To Take CEO Post At OWN
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/07/oprah….

Ted Danson Replaces Laurence Fishburne On CSI
http://www.hollywoodreporter.com/live-feed/csi-ted-danson-replaces….

Lea Michele, Chris Colfer, Cory Monteith Not Returning For Season 4 Of ‘Glee’
http://www.hollywoodreporter.com/live-feed/glee-lea-michele-chris….

Mila Kunis Confirms: Date With Marine Sgt. Scott Moore Is On!
http://latimesblogs.latimes.com/gossip/2011/07/mila-kunis-marine….

Barbara Streisand In ‘Heated’ Talks For Columbia Records Deal Renewal
http://www.hollywoodreporter.com/news/barbra-streisand-heated….

The Content Industry and ISPs Announce a “Common Framework for Copyright Alerts”: What Does it Mean for Users?
http://www.eff.org/deeplinks/2011/07/content-industry-and-isps….

  • R

    “It’s” should read “Its”.

    “It’s” only ever means “it is” or “it has”. “Its” is the possessive word.

  • How embarrassing! Especially after ready Chris Baker’s book, “The Elements of F*cking Style” which we featured on Episode 109 “Making Grammar Fun (And F*cking Funny)”. I should have known better.

    This was definitely a case of rewriting the headline one too many times. Thanks for pointing out the error. I’ve already corrected it in the post. Not sure how I’m going to correct it on Digg, StumbleUpon, Facebook, etc. Ugh!

  • InMe

    “Will Spotify be able to displace some of the entrenched players in the space like Spotify and Rdio? ”

    Huh?

  • Conrad

    “Will Spotify be able to displace some of the entrenched players in the space like Spotify and Rdio?”

    Interesting to read about a company displacing itself.

  • SK

    “Will Spotify be able to displace some of the entrenched players in the space like Spotify and Rdio?”

    “Spotify” appears twice in this sentence. Maybe you had other service in your mind?

  • Beep Chirp Whirr

    From the article: Will Spotify be able to displace some of the entrenched players in the space like Spotify and Rdio?

    How is Spotify supposed to displace Spotify ?

  • me

    “Will Spotify be able to displace some of the entrenched players in the space like Spotify and Rdio?” …. hmmmm….

  • I have personally been amazed how much “ink” and attention Spotify has received in the United States during the months leading up to its launch. Rdio and Mog have similar offerings (though without the free ad-supported option) and yet they haven’t received half the media mentions that Spotify has.

    I’m not sure whether it’s Spotify’s popularity in Europe, the company’s struggle to complete U.S. licensing deals or a combination of various reasons which has made their launch such a newsworthy event.

    As to whether it can displace any of the existing players in the market, I think it will come down to interface (usability), catalogue, and marketing efforts (including pricing). Slacker and Pandora have been around for a while, but Spotify is a different kind of service. Rhapsody, Rdio and Mog may not be as entrenched as one might think. How many subscribers do they really have?

    Spotify may not be too worried about market share initially since they have already displaced all these other players when it comes to mindshare and awareness.

  • Jra

    Netflix just had a rate hike. Take your head out of your arse.

  • I have personally been amazed how much “ink” and attention Spotify has received in the United States during the months leading up to its launch. Rdio and Mog have similar offerings (though without the free ad-supported option) and yet they haven’t received half the media mentions that Spotify has.

    I’m not sure whether it’s Spotify’s popularity in Europe, the company’s struggle to complete U.S. licensing deals or a combination of various reasons which has made their launch such a newsworthy event.

    As to whether it can displace any of the existing players in the market, I think it will come down to interface (usability), catalogue, and marketing efforts (including pricing). Slacker and Pandora have been around for a while, but Spotify is a different kind of service. Rhapsody, Rdio and Mog may not be as entrenched as one might think. How many subscribers do they really have?

    Spotify may not be too worried about market share initially since they have already displaced all these other players when it comes to mindshare and awareness.

  • How embarrassing! Especially after ready Chris Baker’s book, “The Elements of F*cking Style” which we featured on Episode 109 “Making Grammar Fun (And F*cking Funny)”. I should have known better.

    This was definitely a case of rewriting the headline one too many times. Thanks for pointing out the error. I’ve already corrected it in the post. Not sure how I’m going to correct it on Digg, StumbleUpon, Facebook, etc. Ugh!

  • Anon

    Could this article be any more informative?

    _WHY_ was the rate hike ‘inevitable’?

  • This post is a summary of what was discussed on this week’s podcast. We talk not only about the Netflix price hike, but also about the Emmy nominations, Spotify launch and Harry Potter opening. We also have a special guest from the Electronic Frontier Foundation who discusses the agreement between the entertainment industry and ISPs.

    As for why the Netflix rate hike was inevitable, as we discuss on the show, the studios felt DVDs were undervalued by the company given that they were a $2 add on. In addition, it costs a fortune for Netflix to mail out DVDs and they were getting to a point where, between bandwidth charges and postal fees, they were going to start losing money at their current price point.

    Raising the price also has the added side effect of pushing more customers towards streaming which Netflix wants to do for two reasons; it’s cheaper for them (delivery-wise) and it shows the studios that there is a high demand for it.

  • Neoneon

    You totally missed the point dude. And people have pointed it out about a half dozen times in the comments. You ask if Spotify will displace entrenched services like… SPOTIFY. HELLO!?

  • You’re right. I probably should have stated upfront that whoever posted the original message obviously had a typo and that, despite the error, I’d provide a a few thoughts. I suppose I assumed most would write it off as a typo. And you know what happens when one assumes……

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  • Jay

    well drop the streaming.. there is hardly any relatively new films there anyway!.

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  • That Netflix’s streaming service leaves a lot to be desired when it comes to new content seems to be the general opinion we’ve been hearing since posting last week’s episode. Thanks for your input here in the comments section. It seems Netflix really needs to focus on getting more content into their streaming service if people are going to stick with it.

  • Reetu

    If you expect the world to be fair with you because you are fair, you’re fooling yourself. That’s like expecting the lion not to eat you because you didn’t eat him.

    Asn Inloggen

  • Bintex Shah

    Education: the path from cocky ignorance to miserable uncertainty.

    Ignou HallTicket

  • Bintex Shah

    The task of the modern educator is not to cut down jungles, but to irrigate deserts.

    Ignou HallTicket

  • Reetu

    Do not go where the path may lead, go instead where there is no path and leave a trail.

    Mijn Tele2 Inloggen