Netflix Price War

Ok, enough with the election posts.

Netflix recently lowered their prices for their standard plan from $21.99 to $17.99. This may sound like a big drop, but just a few months ago the plan ran $19.99 per month. It turns out the competition is heating up, and they’re worried. Cnet has an interesting piece on the price war.

Price is important, but it’s not the only reason someone will choose one rental service over another. Netflix needs to do more work to create a community out of their customers. Members should be able to create a friends list, and recommend movies to each other. There should also be discussion forums for people to talk about movies and more. It’s as simple as adding a few more tables to their database and updating their website. The community would be a cheap and effective way to attract new customers and retain existing ones.

If they really want to beef up their service, they should add music CD and video game rental to their existing plan. The music industry would hate a CD rental service, but I’m pretty sure it’s completely legal and could attract a lot of music fans. Video game rental would attract new customers and could be even more profitable than movies because people would hold on to the media a lot longer which would reduce shipping costs. Netflix is great, but as I’ve said before, they have plenty of room to improve.