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 By using up to 30% of the Internet's Bandwidth, Netflix has become the place to watch movies and TV shows online. They have the largest movie catalog available online with the best prices. Yet, is Netflix opening the door to defeat?

In the past when users subscribed to Netflix, they would get 1,2, or 3 DVDs at a time with unlimited online movies and videos. Recently, Netflix announced new subscriber plans that essentially broke up their two main services. The change has caused a major backlash from its users, as it greatly increases the monthly subscription price. Will Netflix be able to weather the storm, or is this the beginning of the end for them?

Netflix knocked out the previous video rental king, Blockbuster. Now Netflix DVD is facing stiff competition from RedBox. Redbox is placing kiosks all over the country and offering a good selection of new movies at a low price of $1.15, which is almost half the price one would get from a subscription plan from Netflix. Redbox also has the advantage of instant gratification with instant rentals. Customers can also rent as many movies as they want, when they want. Netflix DVD service's only advantage is its massive back catalog of movies. Look for RedBox to continue to get stronger as they continue to add more kiosks throughout the country. Netflix DVD is now vulnerable to being replaced by Redbox in the near future.

Netflix online has been a rising star that was been driven by offering a free service for DVD subscribers.
Now this online service has to survive on its own. Netflix has the largest online catalog on the Internet and continues to grow as the company inks more deal with content providers. The one weak spot of Netflix online is its lack of new movies and TV shows. That was ok when subscribers could get the latest with the DVD rentals, but now that they are separate, it has become a big weakness. Online Video is all about the contracts and Netflix is ahead of the game at this time. Yet, it does not take long to sign deals and there are plenty of big names in the same space like Apple, Amazon, and Walmart. Netflix will need to keep signing better deals or risk losing their lead in a short time.

What is a Netflix subscriber to do with the new subscription offerings? If one watches a lot of movies from Netflix's back catalog, and the online version is not enough, Netflix DVD is still the only option. For the casual movie watcher that is only interested in new movies, Redbox will be the best option. For those in the middle, the best option will be to split it up and use Netflix Online for everyday movie watching, and Redbox for new Movies with instant gratification.

By splitting up their two services, Netflix has weakened their product offering. Users must now look at each service separately and weigh them against different competitors. Netflix DVD is facing stiff competition with Redbox, which could bring their downfall. Steaming movies online is the future and Netflix is still out in front of the pack, but Netflix is vulnerable as online video is dependent on who has the best contracts. They have to continue to sign bigger deals for new movies or risk being replaced by someone who can.

2 Comments

1. Bonnie ~ July 29, 2011 05:19
   We're bummed about it b/c with my husband's hearing loss we need the subtitles. The online movies don't have subtitles unless they are foreign films. And we like the Netflix vast library but we probably won't pay the new price. I wonder if others are feeling the same? It's a bummer b/c we've really enjoyed the Netflix subscription.
2. wendy ~ September 7, 2011 03:05
   I love netflix.......I'm so glad im a customer..... Prices are affordable.... Hope they stay in business a loooonnnnnggggg time.

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