They don't want to state the real reason that when they go back to negotiate their contracts next year, they'll need extra revenue just to buy the content they already had because the providers are now getting better offers from more powerful companies like Blockbuster (DISH network). I agree with their need to raise prices, but the execution was horrible. No one likes an over 50 percent increase, regardless of the reasoning.
Netflix wants to increase their streaming, but it will cost them far too much to get the streaming rights for a larger catalog. They have an advantage in how many devices can currently play Netflix easily, but they could lose this advantage pretty easily if Blockbuster got on those devices. Their real advantage right now is in the DVD rental, this is where they should expand. Redbox is fine for new releases, but they can't keep a large catalog in those little machines. There is little competition for older release DVD/BR rental and their mail based business could keep a massive physical catalog. There's a growing amount of competition for streaming content, they're going to lose ground on that front.