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4 EDU Lessons from the Netflix 60% Price Increase
July 17, 2011 - 9:00pm

Last week Netflix announced that the subscription cost for unlimited streaming and 1 DVD out at-a-time is increasing from $10 to $16, or 60%.

4 Lessons for Higher Ed from the Netflix Price Increase:

Digital Content Prices May Not Be Stable: It is so tempting and alluring to advocate for a move toward digital academic content, licensed from consumer providers, delivered from the cloud. Why should our libraries buy video for our courses when we could give all of our students a Netflix account instead? Let's do a deal with Amazon or B & N to supply e-books on demand to everyone on campus. Journals and articles - who needs to subscribe to paper when we can rent access to the digital versions? I've had these dark thoughts myself. The 60% Netflix price hike is a wake-up call for digital fetishists such as myself. If we don't own the content we may lose access to the content, as pricing tomorrow might not be the pricing today.

Stories Trump Data: The big problem with the Netflix price increase is not the extra $6 a month. Netflix is still a great deal. The real problem with the price increase is how it was communicated. If Netflix had been smarter, it would have made and announced a giant streaming content deal in conjunction with the price increase. If Netflix had made significant additions to its (sort of crappy) streaming library then the price increase would have been easier to swallow. Rather than getting something new (more content), we are losing money, and we hate to lose what we already possess.

Delivering Digital and Physical Content is Expensive: Most universities are like Netflix, in that they deliver a combination of physical and digital services. Netflix has its DVD-by-mail shipping business, and its streaming business. Universities deliver educational services (classes, student support, and student services) both on campus and increasingly online. Doing both the physical and the digital is expensive. If Netflix was only delivering its movies digitally, it could afford to charge less. Maintaining a large infrastructure for physical shipping (distribution centers), buying envelopes and paying postage is expensive. The lesson is that educational costs are unlikely to decrease as we move more of our educational delivery to digital platforms, as we will simultaneously need to maintain and improve our physical campuses.

Buying Quality Digital Content is Expensive: Netflix's streaming business makes lots of money, but mostly because the quality of the movies available for streaming is bad compared to the quality of the movies available for physical DVD rental. If Netflix is going to get better movies for instant viewing then it is going to have to pay the content owners (the studios) much more money to license their content. Like most people, I'll pay the 60% extra a month, which will give Netflix more cash to hopefully make deals for better streaming content. The lesson for higher ed is that if we are going to provide high quality educational content (curricular movies, journal articles, e-books etc.) instantly available on multiple mobile devices (such as what Netflix does), then we are going to have to pay. Higher ed curriculum and content costs are going to increase as we desire and demand the same flexibility and mobility in our EDU content as we enjoy in our consumer content.

Are any of you canceling your Netflix subscriptions?

What EDU lessons do you draw from the Netflix news?


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