July 13, 2011, 11:06 AM

Netflix splits DVD and streaming combo plan

The e-retailer says it is setting up a separate team to manage the DVD-by-mail business.

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Netflix Inc. said it is eliminating a combination DVD-by-mail and unlimited streaming rental plan priced at $9.99 in favor of offering consumers the option to subscribe to either format for $7.99 each. If customers want DVDs by mail and streaming they will have to subscribe to both and pay a minimum of $15.98 per month to have one DVD checked out at a time and access to unlimited streaming.

“We are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each,” wrote Jessie Becker, vice president of marketing for Netflix, on the company’s blog. The plan and price changes take effect immediately for new Netflix customers and on or after Sept. 1 for existing customers.

The company also will reorganize and manage the DVD-by-mail side of the business separately from the streaming business. Netflix chief service and operations officer Andrew Rendich will lead the DVD business, while CEO Reed Hastings will continue to lead the company and the streaming side of the business, a Netflix spokesman says.

"Netflix members love watching instantly, but we've come to recognize there is still a very large continuing demand for DVDs by mail," Rendich says. "By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members."

At the end of Q1 2011, Netflix had 21.4 million paid subscribers, up 57.4% from 13.6 a year earlier. Netflix is No. 13 in the Internet Retailer Top 500 Guide.

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