An Explanation For Netflix Price Hike – Reed Hastings Wants To Force Hollywood’s Hand

Originally published on WebTVWire.com – a TV Technology blog.

Netflix may not be so stupid in risking a customer revolt by hiking its prices after all. It’s all part of Reed Hastings’ plan to take over the world, or at least influence Hollywood. He’s an evil genius, clearly.

Netflix Price Hike

There was huge outcry from Netflix customers last week when the company announced it was splitting the two sides of its business – DVDs-by-mail and streaming – completely, with the subscription plan which combined the two being dropped. In its place was an either/or choice, with streaming costing $7.99-per-month, and DVDs-by-mail also costing $7.99-per-month.

The customers who weren’t happy with this were the ones who up to now have enjoyed both sides of Netflix’ business for a combined $9.99-per-month. And you really cannot blame them for balking at a $6 price hike or being forced to choose one or the other.

However, Netflix CEO Reed Hastings may have had good reason to make this change, at least according to Big Champagne CEO Eric Garland talking to CNET.

Hastings Vs. Hollywood

Garland claims Hastings knows exactly what he is doing, and knew there would be an initial outcry over the changes. However, he proceeded because he’s looking ahead into the future and trying to effectively force Hollywood’s hand into accepting Netflix and accepting video streaming are here to stay.

According to Garland, Hastings is “deliberately creating dissatisfaction.” First among the customer base and then among the studios. Which will eventually lead to a new solution being forged where all content is made available to stream online. At least that is what Hastings is gambling on.

At the moment Netflix‘ streaming offering is lacking in new, popular titles, with Hollywood so far insisting DVD and Blu-ray is still the way to go. But with Netflix growing in stature the company could have a big role to play in the future direction of how content is delivered to consumers.

Conclusions

It’s a compelling theory but still a theory nonetheless. But is does feel like it could have a basis in fact. Netflix is already huge in the U.S. and looking to expand aggressively overseas, both in Latin America and Europe. And the bigger you are the more influence you exert on others. Netflix could be positioning itself to be the king of online video streaming for the next decade.

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