Blu-Ray Price Increase

When I was younger I worked at my relatives video store for several years. The VHS tapes that we rented cost the video store around 80$ per copy. We were not allowed to just run down to Target and pick up a 20$ copy of the new releases and rent them. That video store closed shortly after things started moving to DVDs. DVDs were more expensive and the local population felt that a DVD should rent for the same price as a VHS. Now we are not talking about Netflix here, an independent video store just does not have the same scale and cash flow so a format change is more problematic than it will be for Netflix. So assuming the status quo has been maintained in the movie industry there is likely an additional cost associated with the new format. I don't know what the delta between a DVD and a Blue-ray would be today but I am sure it is there. Even if it is a marginal cost difference between the two formats the other factor here is that Netflix has to keep track of the same title twice once on Blu-Ray and once on DVD, there is a cost associated with that. They are not going to rent a movie twice as many times if it is on Blu-Ray. Blue-Ray is going to cannibalize their DVD rentals, so they are managing more material, using more space and processing a 2nd set of transactions to receive the same amount of profit (this is where that dang 1$ comes in). In my mind Netflix is being more than fair giving their customers the choice to pay for the upgrade or not. The movie studios are not selling retail Blu-Ray releases for the same price as DVDs are they? From what I can see at the local retailers there is generally a 10$ difference in price. So how do we justify that? In my line of thinking I ask myself, am I getting an extra 10$ in value when I buy a blue-ray? In certain cases I think I am. Iron Man is much more enjoyable on Blu-Ray than on DVD. So the 1$ a month or 12$ a year for the option to get Blu-Ray via Netflix is worth it to me when framed in those terms. If the added value is there I am willing to pay for it and I do not expect to receive it for free. Now will these costs be maintained over time? I don't know. As Blu-Ray overtakes DVD in volume for Nexflix the associated cost of maintaining 2 library's will change with Blu-ray representing a larger number until ultimately DVDs go away. Will the cost of the Blue-Ray disk to Netflix go down, that I cannot say. I rented VHS for 4 years and the price to the video store never changed, what did change is that as the catalog of older movies grew, that would offset the price of a new releases and you just had more business in general to spread cost around. You also had more tapes that were bought and paid for to help support the new releases. Replacement cost on older movies could drive you right out of business if you were not careful, so if an old move came back broken it was not always replaced and were it someones pet movie they would complain and that was always problematic. The cost of maintaining two library s will always be a factor for Netflix until they are back to one format. Between now and then the price of the service will have gone up more than one dollar. I expect to see the day that the one dollar fee goes away and is replaced by a 1$ dollar fee for having the ability to get a DVD from Netflix. Or Netflix will simply give people a date for the final day to get DVDs and well then we will hear complaints. If the fee moves from Blue-ray to DVD we will stop paying this fee the day the DVD format dies.

As for the airlines and their baggage fees I will gladly pay the 25$, because it makes sense. Try to ship your luggage to your destination overnight to avoid the 25$ fee, you can't do it. The Airlines did sneak it in with the "high price of gas", but our luggage was pretty much getting a free ride anyway. Since the cost of fuel and competition eroded the airlines margins there was nothing they could do. The only reason Northwest made a profit last quarter was because they charged for extra bags. Over the years the airlines gave up way too much margin due to competition, it was their own fault but they ran themselves so thin that when 911 happened or the cost of fuel went up they could no longer stay in business. The government had to bail them out. If charging for baggage is what it takes to keep them out of the tax payers coffers then so be it. At least I can choose when and how much money I give to an airline. When the Tax man shows up at my door I have to pay what he tells me or I can go to jail. I encourage everyone I know to buy a full price airline ticket at least once in their life and see how that flight goes. I fly for work every month, my company pays close to full fair for tickets and it is a totally different experience when something goes wrong. I digress, the airline discussion belongs in a different thread. ( Delete or Edit)

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