I knew this wouldn't last. I joined Netflix early on about 6 years ago for about $8 a month. When they hyped up with instant streaming it got even better. But now Netflix has little real competition, and they are making members pay... dearly. Now they've separated the discs by mail and the Watch Instantly for a combined monthly fee of $18/month.
I'd say that Netflix has plenty of competition, not only from Red Box but, other streaming services as well. Netflix may be the only firm that offers both DVD/Blu-Ray & streaming video however, clearly this type of service is in high demand so more than likely other firms will jump in. Especially the Blockbuster/Hollywood Video firms being put out of business by Netflix!
As far as pricing goes, it's helpful to keep in mind that resources are inherently scarce and, most have alternative uses. Demand plays a huge part in how scarce resources are allocated to their most efficient use. The petroleum used to produce CD's can also be used to produce myriad amounts of other products spanning multiple firms & industries. An increase in demand for any one petroleum product is a signal to the market to shift supply to adequatley meet that demand. It is also a signal to raise prices in order to meet demand.
For example: Milk is used to produce ice cream, yogurt, and cheese. If the demand for ice cream increases, dairy firms must raise the price of ice cream and shift the supply of milk to producing ice cream in order to meet that demand otherwise, they run out of ice cream to sell (shortage). Conversely, dairy firms must lower the price of yogurt & butter and shift supply of milk away from them otherwise, they have a bunch of yogurt & butter on their hands that nobody wants to buy (surplus).
In other words, crude oil as a resource that has alternative uses, plays a HUGE part in the way Netflix does business. Not only as a producer of petroleum based products but, as a consumer of them as well. Any increase in demand or decrease in supply eventually affects their prices. Raising revenue by increasing prices in order to meet demand is essential for Netflix (or any other firm) to stay in business. This is just one of the many aspects of how Netflix, and the market in general, operate.
And if that wasn't reason enough to bail, they are cutting a lot of the available shows and movies to watch instantly. No longer can you watch "30 Rock", "The Office" and "Dexter". These are just the ones I've noticed, and I'll bet there are many more. Result? More money and a lesser product.
As another user mentioned, this is due to intellectual property rights. The explosion of the video rental/streaming industry is challenging the way studios and distributers do business. As long as consumers like ourselves ( I also have Netflix and enjoy the office) continue to demand these services, all firms involved must get their act together or risk going out of business.
They key point to remember is that, ultimately, price is based on what consumers are willing to pay. If you don't want to spend $18/month, simply "bail" and send a signal to Netflix and the market that $18/month is a price you are unwilling to pay.
and once it ends I just quit.
