LOS GATOS, Calif. — Netflix introduced a new plan Monday that relies solely on video streamed over the Internet rather than the DVDs it has mailed to customers since the company was founded more than a decade ago.
The shift demonstrates how quickly consumers have transitioned from physical media players to digital entertainment that can be browsed, watched again or discarded without handling a disk.
The company has already said its members are watching more content streamed over the Internet than on DVDs. To keep customers happy, the company said it will spend more to license streaming content this quarter than it will on buying DVDs.
“We are now primarily a streaming-video company,” said co- founder and chief executive Reed Hastings.
Netflix said it will raise prices on plans that include physical DVDs. That sent shares up 9 percent to an all-time high Monday.
Under a plan that allows for one DVD rental at a time, along with unlimited movies and TV shows streamed over the Internet, the cost will be $9.99 per month, a $1 increase. Current members will see the change in their monthly bill in January, while new members will see the price immediately.
The streaming-only plan will cost $7.99 a month.
Netflix ended October with 16.9 million members in the U.S. and Canada and predicted it would gain another 2.1 million to 2.9 million customers by year’s end. That means Netflix could enter 2011 with more than 19 million subscribers, doubling the service’s size in two years.
Netflix is spending heavily to obtain the streaming rights to more movies and TV shows to help lure more customers and shift more of its existing subscribers away from DVDs.
