Earlier this week, Netflix announced it was separating its unlimited streaming and unlimited DVD plans, effectively raising its prices. With perhaps very good timing, Shaw Communications today unveiled a new video club that will compete with the likes of Netflix and possibly capitalize on the unhappiness of Netflix customers stung by its higher prices.

Netflix’s streaming plan will remain at $7.99 a month, but the subscription price for bundled streaming and DVDs spikes to $15.98 a month. For those just interested in snail-mail DVDs, Netflix offers its 1-DVD-out-at-a-time plan for $7.99 a month and its 2-DVDs-out-at-at-time plan for $11.99 a month. For new Netflix members, the changes will be effective immediately. For existing members, the new pricing will be effective Sept. 1.

Up north, the gloves have come off.

Canada’s Shaw Communications isn’t taking the Netflix threat lying down. Its new Shaw Movie Club gives Shaw customers access to hundreds of movie titles for $12 a month. Subscribers to the club can stream newer movie titles updated monthly online or on their TVs. In a one-two punch, Shaw also plans to provide movie club content in HD later this summer for an additional $5 per month.

“The Shaw Movie Club is the result of listening to our customers and delivering products that fit their needs and the way they use technology,” noted Peter Bissonnette, president of Shaw Communications, in a statement.

The Background

Netflix introduced streaming video to its service in 2007. Since then, membership has grown to 23 million in the United States as people have figured out how to connect their devices to stream Netflix movies, thus avoiding the hassle of red envelopes or trips to the video store.

More than 200 devices now can stream from Netflix, including Microsoft’s Xbox 360, Nintendo’s Wii and Sony’s PS3 consoles; an array of Blu-ray disc players, Internet-connected TVs, home theater systems, digital video recorders and Internet video players; Apple’s iPhone, iPad and iPod touch; and Apple TV and Google TV.

For traditional video providers, Netflix presents two problems: It competes with their video on demand (VOD) services, and it uses substantial amounts of their bandwidth when customers opt to stream. At the Cable Show in June, the kickoff panel wrestled with the topic of new business models for multi-screen TV, with  Pat Esser, president of Cox Communications, commenting, "We have to agree on business models we all support. We have to figure out these business models." (For more, see Cable Show Opening: Business Models vs.Technology).

For its part, Shaw is also fighting back on the bandwidth front. In June, it established new usage-based Internet tiers. (For more, see Usage-Based Billing Gains Steam, May Garner Low-End Subs).

-Linda Hardesty

The Daily


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