Netflix takes on Hulu with streaming plan

The video rental company will offer a $7.99 subscription for streaming services, matching Hulu's rate.

By TheStreet Staff Nov 22, 2010 12:00PM

Credit: (© Paul Sakuma/AP)
Caption: Netflix DVDBy Jeanine Poggi, TheStreet


Netflix (NFLX) is going punch for punch with Hulu by matching the Internet video company's streaming prices.


The movie-rental company said on Monday that it will offer its lowest subscription yet, a $7.99 deal for its streaming services only. The plan, which will allow subscribers to watch streaming movies and television shows, is now available to all its customers.


Netflix also raised the price on its plan for unlimited movies (one DVD out at a time) and streaming videos to $9.99 from $8.99. Prices for plans that allow customers to receive more than one DVD at a time are increasing too.


Netflix is trying to go from a DVD-by-mail company to a streaming service. After reporting third-quarter earnings last month, CEO Reed Hastings said, "We are now primarily a video streaming company."


In the third quarter, the company saw its subscriber base grow by 1.9 million, bringing its total to 16.9 million new users. That's 90% more than the 1 million new users it had in the second quarter, and it marks the fourth consecutive quarter Netflix has gained more than 1 million new subscribers.

The company attributed record subscriber growth to the acceleration of its streaming service, as the number of users who streamed content for more than 15 minutes was 66%, up from 41% in the third quarter of 2009 and 61% in the second quarter of this year.


As a streaming service, Netflix faces more competition. Last week, rival Hulu said it is lowering its subscription price for its Hulu Plus service by $2 to $7.99 from $9.99.


There has been speculation that Hulu -- which is backed by General Electric (GE), NBC Universal, Walt Disney (DIS), News Corp. (NWSA) and private-equity firm Providence Equity Partners -- might money through an initial public offering.


Coinstar (CSTR), owner of Redbox DVD kiosks, is currently searching for a partner to enter the streaming market, and Apple (AAPL), Google (GOOG) and Amazon (AMZN) are all vying for pieces of the business.


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Nov 23, 2010 12:33AM
As a Netflix subscriber I will say this: Lousy selection, and newer movies are a joke. Welcome Redbox !!!
Netflix will soon lose their customers Because of this decision, So good luck to them. No one beats Redbox Currently.  So Raise your prices Netflix, You have become greedy just like most Companies that fail.

Nov 22, 2010 7:55PM
When is Netflix going to comply with the 21st Century Communications & Video Accessibility Act? When are captions/subtitles going to be available and accessible for the hard of hearing and Deaf community? Hulu already captions most...
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