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Price increases are always a thorny issue with consumers, and Netflix, the video streaming and DVD-by-mail giant, set off a firestorm by announcing a 60 percent price increase on its most affordable rental plan.  Until recently, for $9.99 per month, customers were able to rent one DVD at a time and enjoy unlimited streaming over the Internet.  That same service now costs $15.98 per month, a combination of an existing $7.99-a-month streaming-only plan with a new $7.99-a-month DVD-only plan that allows customers to receive one disc at a time via mail.  Because of this change, customers have either had to ante up to continue with the same level of service or step down to one of the more limited services priced at $7.99 per month.  Analysts predict that many customers will switch to the streaming only option, which reduced variable costs for Netflix, due to postage savings.  However, a Netflix spokesperson indicated that the DVD format will be viable for a while yet.  The company better hope that’s true because the company needs this product to generate considerable funds to finance its investments in online movie and television show rights.


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Q1. Is this a smart move by Netflix?
Explain why or why not in depth with logic based on research.

Q2. Identify and discuss 3 pros. Explain each of the pros.

Q3. Identify and discuss 3 cons. Explain each of the cons.