<<This is an interesting pricing strategy that will send a shockwave to Blockbuster, Hollywood Video, and Movie Gallery.>>
The pricing strategy is not new. Netflix has offered a capped plan (2-out, limit of 4/month) for years, I believe at the $11.99 price point.
The only thing that's new is that Netflix is advertising the plan. In addition, if you click on the $11.99 advertisement and attempt to sign up, Netflix attempts to redirect you to its $17.99/month plan by highlighting it.
So my question is why is Netflix suddenly advertising a teaser plan that it's had in place for many months, if not years?
My guess is that Netflix is feeling pressure from Blockbuster's $14.99/month plan. Apparently, many people are opting for Blockbusters's $14.99/month plan instead of Netflix's $17.99/month plan.
Netflix appears financially unable to match Blockbuster at $14.99, so it's instead choosing to advertise a teaser plan to lure price sensitive customers.
The problem for Netflix is that its teaser plan is not competitive. After all, the plan has been around for years yet has attracted almost nobody. Why pay Netflix $11.99 for a 2-out, 4-cap plan when you can pay Walmart $12.97 for a 2-out unlimited plan or pay Blockbuster $14.99 for a 3-out unlimited plan?
I expect that Blockbuster will match Netflix at $11.99 and offer a similarly-capped plan, if only to ensure that Neflix doesn't get a price-point marketing edge.
In the end, a capped plan is a non-event, spurred by a desperate company that's quickly losing share. |
