Streaming-Only Netflix Debuts In The U.S.; Less Content But Cheaper, Faster

Take that, Hulu. Less than a week after the video portal dropped its price for Hulu Plus to $7.99, a dollar below the basic Netflix (NSDQ: NFLX) rate for full access, its rival is out with a similarly priced stream-only package and a new pitch. But Netflix is also raising prices — upping the minimum cost of including DVDs by 10 percent to $9.99. And neither video service can serve up the whole enchilada.

Want more movies? Go for Netflix, which has deals with Starz and Epix, among others. Want more current primetime TV? Try Hulu Plus, unless you’re a big CBS (NYSE: CBS) fan; the broadcast nets there are from JV partners News Corp. (NSDQ: NWS) NBC Universal (NYSE: GE) and Disney (NYSE: DIS). Want a deep selection of movies and a full palate of primetime? Even combining the two won’t get you there.

The new Netflix pitch: Watch TV and movies instantly on the internet — or pay $2 more for a “broader selection” selection. Netflix is now “primarily a streaming video company delivering a wide selection of TV shows and films over the Internet,” CEO Reed Hastings said in the announcement, adding: “Today’s action reflects the tremendous customer value we’ve injected into streaming from Netflix, our initial success with a pure streaming service in Canada for $7.99 a month and what our U.S. members tell us they want.”

The explanation for the price drop: no mail costs. The new unlimited plan rates (rate card) now range from $7.99 to $55.99 for 8 DVDs at a time, a hefty price increase of about 17 percent.

In a Netflix blog post, Jessie Becker, VP of Marketing, explained why there is no DVD-only plan:

The fact is that Netflix members are already watching more TV episodes and movies streamed instantly over the Internet than on DVDs, and we expect that trend to continue. Creating the best user experience that we can around watching instantly is how we’re spending the vast majority of our time and resources. Because of this, we are not creating any plans that are focused solely on DVDs by mail.