Netflix hikes rates, feels wrath

Netflix rates are going up. Cue the firestorm.

Netflix announced this week that it would hike rates on one of its most popular plans, enraging users all over the Web, and jamming up the official Netflix blog with angry comments.

The changes shake out like this: Beginning in September, existing customers will pay $16 for unlimited streaming and a single DVD rental, six bucks more than they paid before. Meanwhile, Netflix is introducing a pair of DVD-only plans – $8 for one DVD at a time, $12 for two – for folks who don't care for streaming video.

Speaking to Reuters, Netflix rep Steve Swasey said that for most people, the increases would amount to "a latte or two." And news of the price hike was greeted warmly on Wall Street, which sent Netflix shares up this afternoon. But mostly, the new plans were unwelcome – furious comments were flung back and forth on Twitter and Facebook.

So what's behind all the outrage? Well, as Adrian Covert argues over on Gizmodo, in order to really justify the new rates, Netflix would have to boast a really diverse streaming video library. Which it doesn't have. Netflix is "mostly full of old and forgotten films that people either have already seen or have no desire to see. Sometimes good movies and TV shows will pop up in, but they generally disappear weeks later," Covert writes.

Conversely, although Netflix has a "great" DVD service, "that only underscores how emaciated its streaming library is," he added.

Back in May, a company called Sandvine published a study showing Netflix movie and TV show streaming accounted for 22 percent of all North American Internet traffic – a serious chunk of bandwidth, no matter which way you slice it. As streaming video services become more and more popular – witness also the rise of Hulu Plus and a new offering from HBO – rates are bound to go up.

But should Netflix bolster its library first? You tell us. Drop us a line in the comments section – we're listening.