The recent announcement that Netflix wants you to either stream or get DVDs but not both at least without paying a higher premium has a lot of people dumping the DVD option with vows to head to the RedBox.  It is a significant jump from the 9 dollar price point to the 15 dollar area for one DVD out at a time and streaming, the three disk and streaming plan is almost 20 now.

I have already read this about a thousand times on various reviews of the situation, but like everyone else I have held a Netflix DVD hostage for about 4 months (Pirate Radio) and have just been watching the stream.  Interestingly I'll save a couple bucks a month going back to streaming only, but I suspect Netflix will save a lot more money.  For one they'll recover millions of dollars of lost inventory like mine.  Secondly mailing disks flat out costs a ton and with new digital agreements with studios you can be sure that more quality content will make it to the stream faster in the future.

It needs to be said that collectors will still buy DVDs and BluRay (though the rate of that has slowed).  But I think this is a pretty strong indicator that the financial issues related to hard media are significant.  For a high turn-over business like Netflix, you have to have a high cycle rate on those DVDs to recover the costs associated with buying them, mailing them and replacing scratched disks.  This decision was not made in whimsy, they looked at the numbers it simply wasn't working.

People are making a statement about what they are willing to pay for home entertainment.  It's my opinion people are fine with RedBox, and fishing in bargain bins for disks to bring home.  For the impulse watch, Netflix streaming offers more than most people need.  On demand pay-per-view covers a lot of the new titles before Netflix or RedBox has access.  This leaves the 30 dollar DVD or BluRay on the shelf to be purchased by collectors or people really excited by the film.

What's missing?  DVD and BluRay extras, but I would argue the people who watch those already are in the category of the passionate fans of the movies who simply need to own them.

I know a lot of people will opt for the disks still getting mailed to them and not stream, but I think the tide is turning there.  Why?  If for no other reason that people are having to make a choice.

The in the theater experience is getting to be pretty expensive, especially if you see a 3-d movie or have to take a family larger than two.  So when it comes to the rest of it people are being careful and so are companies.  Netflix wants to make ends meet so they change pricing, internet service providers are getting hammered on bandwidth since so many are watching video online that they are putting in usage caps, and cable and satellite providers are duking it out as many are opting to get almost all their entertainment through Hulu or Netflix or a combination of both.

This isn't the first volley of this war, and it won't be the last.  But it probably is a significant one as millions of people will be making choices on this one and I'm gonna bet they aren't all just going to pay more.  Streaming is coming.