Los Gatos (CA) – Netflix subscribers will soon need to start paying a “modest monthly premium” if they want to rent Blu-ray Discs, even though over the past two years high-def movies have been included in the standard rates.
The online rental leader made the announcement in its latest quarterly earnings conference call, and came alongside news that Netflix was lowering its earnings forecast for the rest of the year.
The company’s CEO Reed Hastings said that increased competition from Blockbuster and a greater interest in digital video downloads have hurt profitability more than expected.
Netflix does offer its own online streaming platform, but its business model is built with a much higher focus on its physical DVD and Blu-ray distribution.
As a small way to curb the expected slip in profit margin, Hastings said the ability to rent Blu-ray Discs from Netflix will be an added feature that tacks on an undisclosed rate to monthly subscription fees. Marketwatch quoted Hastings justifying the move by saying, “Consumers are used to paying more for high definition content.”
Current subscription rates range from around $5 to $17 per month, with the fee varying based mainly on how many DVDs users are allowed to have rented out at the same time.
Adding a premium to users who want to rent Blu-ray Discs will additionally allow Netflix to bulk up its BD inventory, said the rental service.
Hastings also noted that of all current Netflix subscribers, the amount that are renting Blu-ray Discs is “in the low single digits.”
Blu-ray knocked out HD DVD earlier this year, causing all facets of the industry to merge to the high-def market. It has negatively affected consumers in some ways, though. In addition to Netflix’s pending rate hike, Blu-ray player prices have shot up without the HD DVD competition.