Blu-ray Win Could Sting Netflix Renters

Blu-ray's victory over HD DVD in the high-definition format war has given owners of Blu-ray players a sense of smug satisfaction and the right to infinite I-told-you-sos.

But for Blu-ray-owning Netflix subscribers, the end of the format war cuts both ways. The rental service will be tripling the number of Blu-ray discs it carries, but may end up instituting a price hike as it beefs up Blu-ray selection.

On Feb. 11, Netflix said it would phase out HD DVD discs, but at a conference last week, Netflix chief financial officer Barry McCarthy reminded subscribers that Blu-ray discs are pricey: "It seems apparent that content will cost us more. Whether we raise prices will be entirely a function of churn, subscriber acquisition costs and gross margins."

Well, somebody has to pay for it. Netflix wants to increase its Blu-ray selection this year to about 1,500 discs - currently the company only carries about 500. Current subscription plans range from $4.99 per month to $23.99 per month. With more Blu-ray discs in circulation, Netflix subscribers won't have to wait as long to get copies of the soon to be released Independence Day and No Country For Old Men, but Netflix could decide to make subscribers who rent only Blu-ray discs suffer a price hike (quite an incentive for former HD DVD-watchers to buy a Blu-ray player).

Of course, if Netflix continues to receive a windfall of refugee subscribers from BlockBuster, its possible that nobody will be forced to pay more for Blu-ray rentals. -Rachel Rosmarin

Video Business