Netflix to launch 'family plan'

Why settle for streaming only 1 movie when you can watch multiple shows at once on your phone, TV and video game console?

By InvestorPlace Apr 21, 2011 9:03AM

Image: Film (© Comstock/SuperStock)By Anthony John Agnello, Consumer and Technology Writer

   

As Netflix (NFLX) has grown dramatically over the past two years, analysts and industry pundits have wondered repeatedly when the streaming video company would hit a glass ceiling: No way could Netflix shares pass $200. No way could the company's subscriber base reach 20 million. No way could it continue to sign new content partners.


Well, Netflix has met and surpassed all of those hurdles, but even now it is facing new challenges. How will it fend off new competitors and keep growing its membership at a breakneck pace?


The answer may have arrived. Netflix offered a preview of its future strategy earlier this week, announcing it will begin offering "family plan" subscription packages later this year.


The family plan will allow multiple streaming from one Netflix account, which would, for example, let kids watch a movie on a computer while parents watch one on TV.

Current Netflix subscriptions, including the $8-a-month streaming-only option that has fueled the company's success in the past six months, allow audiences to stream only one movie or television show at a time, regardless of which type of device -- television, smartphone, etc. -- is being used.


The plan should bring in new customers and begin drawing more revenue from existing subscribers.


Netflix will likely discuss the plans during its earnings call next week, but investors may also hear about other new pay models, as this marks a great time for the company to diversify revenue streams. 


It would also make sense for Netflix to begin offering premium memberships that give access to a broader range of movies and television. As it becomes more difficult for Netflix to persuade content partners to continue giving audiences unlimited access, premium Netflix memberships would be an ideal way to satisfy both content providers and audiences. The groundwork for the pricing model is also ingrained in the audience already. It would be just one more step on Netflix's way to becoming a true cable competitor.

It's also possible that Netflix will introduce a lower-cost membership to its streaming service, albeit one that is advertising-supported. Competitor Hulu hasn't found the same robust audience as Netflix, but it has proved that a premium subscription streaming service can also host ads and be successful (Hulu Plus is on track to hit 1 million subscribers within its first eight months of business.)


As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.

 

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36Comments
Apr 21, 2011 11:57AM
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A few months ago, Netflix sent out a survey asking if you had to pay to stream on more than one device at a time, would you be willing to?  They knew that we were/are able to use our accounts on more than one device at a time and were considering putting an end to that.

 

They "creating" this "plan" they have found a way to charge for a service that we were already receiving.

 

At the time that I completed the survey, I told them that I would consider paying more for the streaming service if they increased the number of movies that are instantly available. Its not just new movies you can't get instantly, its popular ones. I wanted my daughter to watch Sixteen Candles- nope, had to wait to get the dvd in the mail.

 

If they do this, I will cancel my subscription. I can get a ton of movies free through OnDemand with my cable service. I'm not paying for a family plan.  They advertise unlimited movies for one price, what should it matter if they are watched simultainiously or one after the other?

 

Netflix just got greedy.

Apr 21, 2011 10:39AM
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Can't say I'm too keen on some of these changes at Netflix.  First of all, they should fix their streaming service to provide higher quality.  I don't have other services to compare it to, but according to every article I've read, Netflix picture quality is the worst.  I know what I'm seeing now does look a bit poor even on the pc, never mind the TV.

 

Second, introducing ads will kill Netflix.  The reason I use it is to escape advertising.  I used to use Hulu more than I do now, but they're squashing more and more advertising breaks into their programs and I find I don't like it as much, although at least they're not using channel bugs and snipes (yet).  Netflix will lose me as a streaming customer if they start behaving like cable companies.

Apr 21, 2011 1:41PM
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I wish Netflix would add multi-level parental blocks. The blocks they have now only allow to you block the entire account, takes up to eight hours to implement changes and applies to DVDs as well as streaming. I want to be able to watch my grown-up movies, but not give my kids access to R-rated content :/
Apr 21, 2011 2:21PM
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Kinda confused by this article. In my house we have a PS3, a Wii, 2 vizio Blu ray players with Netfix app and 2 computers. Every since netflix has allowed instant streaming we have been able to watch more than one device at the same time. As I am typing this I am watching married with children instantly on PS3, my wife is watching a show on Vizio instantly, and on the Wii my daughter is watching Dora. That is 3 devices going RIGHT NOW, no special plan.
Apr 21, 2011 10:41AM
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NETFLIX - hear this, your instant streaming inventory stinks!!! Try making available more movies, please! ASAP! This will help you even more.  Definitely disappointed with your instant selections...
Apr 21, 2011 11:10AM
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I love Netflix. We stopped using cable years ago since you could never find anything on and I felt like I watched more commercials then I did show. I don't ever want to go back to cable. If Netflix starts with commercials I'll probably quit watching it. I also like that I can watch a movie instantly and I don't have to watch a half hour of previews since many of the new discs won't let you skip through them and fast forwarding still takes 15 minutes. I would like it if they got a larger selection of movies for instant que, and more new releases. But I'm not unhappy with Netflix at all.
Apr 21, 2011 12:46PM
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I am also confused about what is "new" here, along with some other comments. We currently have the $7.99 plan which allows us to register up to 6 devices on the one account. We split this among the family members and we can stream through the xbox, ps3, Wii, iPad, iTouch and a second ps3. I think like Daz23, I have tried up to 4 of them at the same time with no issues. 
Apr 21, 2011 10:49AM
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I am confused, I stream Netflix on multiple devices all the time, from the same account. I have a one Blue ray/ unlimited streaming plan. The article says "Current Netflix subscriptions, including the $8-a-month streaming-only ........ allow audiences audiences to stream only one movie or television show at a time........",   Which is false my experience.  My family has streamed on a computer, Blue-ray, and Ipad simultaneously.
Apr 21, 2011 11:44AM
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If Netflix ever phases out their disc rental, however, I will drop them like a hot potato.
Apr 21, 2011 1:43PM
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Netflix has a loyal base. Earned it thus far. Lot of competitors entering the streaming. I am staying put for now.
Apr 21, 2011 11:05AM
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i already watch netflix on my ipod , tv in the living room in the bedroom and on my laptop  even at the same time and a different movie on each  device what the heck is this person talking about ? I only pay 8 bucks  a month too. I love netflix !!  it saved us a ton of money we dont need to spend on cable to entertain us its movie galore without  walking to a movie store!
Apr 21, 2011 11:38AM
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I also already watch different movies and shows in different rooms. Not sure what the revelation is ?  I LOVE MY NETFLIX !!
Apr 21, 2011 11:48AM
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@ snowyafternoon...You've been a customer with Netflix since 1993. Yet the company was founded in 1997. Try again.
Apr 21, 2011 11:36AM
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yeah, i am already able to do this in my home. wth? though they can work on the picture quality of some movies. we love you, netflix!!!
Apr 21, 2011 4:09PM
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Yes, I'm confused about this family plan as well. We already watch movies and shows simultaneously throughout the house. On the Wii, the television and on laptops, different programs, all at the same time.  I've been a member of Netflix for 9 or 10 years. We haven't subscribed to cable for 1.5 years now. I can take or leave the dvd's but the streaming is the best thing since sliced bread as far as I'm concerned. my kids can watch just about any show they can spell until the cows come home.
Apr 21, 2011 3:06PM
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For those of you complaining about what is and isn't available on streaming - Netflix doesn't make the call on what is available and what isn't.  The production companies that created the content and own it do.  The streaming option has been very successful for them - don't you think that if they could have everything available via streaming, they would?  It certainly wouldn't hurt their business.  For what's available on DVD and streaming, Netflix needs to negotiate with the production companies that have those movies and TV shows in the first place, and they're the ones that need to loosen up.  For what ticket prices go for these days, for cable prices these days, what Netflix offers at the price they can is a steal.  Try to understand more about how the process works before you go around bashing Netflix.
Apr 21, 2011 10:57AM
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There is going to be a limit to what they can offer for $10 a month.

It's definitely worth paying a few dollars extra to have no ads. That was the cool thing about cable when it started.

We have the 2 disc plan, and the Blu-rays are great.

As for streaming quality - you cannot improve the original quality on the old TV shows. I have seen many Netflix HD streamed that looked good. It's 720, not 1080, but still better than most cable or sat. tv broadcasts.

You are going to have to have super fast internet to show 2 - 720hd shows at the same time. I have noticed picture quality drops at times of peak internet usage (evenings). But I can't put that on Netflix - everyone gets slowed down when demand exceeds supply of bandwidth.

Keep up the good work Netflix! 

Apr 21, 2011 12:18PM
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I currently stream up to 4 at a time. So I'm not sure what this is about. I watch on my PS3, My son watches something on his PS3, my girls are watching cartoons on their Ps3 and my wife was watching an episode on the PS3 in the bedroom. No issues.
Apr 21, 2011 11:30AM
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i agree with many of the posts - we have the subscription only package for $7.99 and are able to watch things on our xbox360 and the roku simultaneously!  so i'm a little confused with this article.  i don't see any difference in this "new" plan he's writing about. i tried hulu plus for its free trial but it's worse than netflix since you have to watch commercials and it's the same price each month.  netflix has gotten better since it has started combining seasons in one queue spot instead of having to add each season in order. 
Apr 21, 2011 12:05PM
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The lowest end streaming plan already supports playing 2 shows at the same time (just checked this, and got a message about it on the third device). So at least that part of the article is wrong.
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