08/16/2011 09:34 EDT | Updated 10/16/2011 05:12 EDT

Netflix creates kid-friendly video section as U.S. customers face price increase

SAN FRANCISCO - Netflix Inc. is giving kids and their parents a new reason to embrace its Internet video subscription service amid an outcry over an upcoming price increase in the United States.

A "Just For Kids" tab will be added to subscribers' accounts on Netflix's website beginning Tuesday in both Canada and the United States.

Clicking on the feature will pull up a list of kid-friendly recommendations drawn from the company's Internet video streaming library.

The move is especially significant in the U.S. where, as part of its de-emphasis on DVDs, Netflix last month announced it will unbundle the unlimited video streaming option from is most popular plans that also include disc rentals.

Beginning Sept. 1, Netflix's 24.6 million U.S. subscribers who want DVDs and unlimited streaming will have to buy the plans separately. The change will translate into a 60 per cent, or $6 per month, rate hike. Tens of thousands of subscribers have been posting angry comments on the Internet promising to close their Netflix accounts in protest.

The children's feature grew out of Netflix's recognition that its video streaming service is making it easier for kids to watch movies on a variety of devices at almost any time and any place with a high-speed Internet connection. The video can be streamed through video game consoles, the iPad computer tablet and smartphones. Netflix makes it even easier by allowing several people from the same household to stream through the same account.

It won't suggest titles that are only available as DVD rentals delivered through the mail for its U.S. services. That's an option that Netflix is trying to make less enticing to subscribers to so it can spend more money expanding its selection of video streaming options.

In Canada, the company offers only Internet streaming to its subscribers, and the pricing plan remains the same.

That convenience and affordable pricing has established Netflix as a major provider of children's entertainment. The company, which is based in Los Gatos, Calif., says about half its subscribers have watched at least two movies or TV shows made for kids within the past 90 days.

Netflix has been mulling a change that would eliminate household sharing of Internet video streaming and require each individual user to pay a monthly fee. The decision to create a kid's-only section within its streaming library shouldn't be interpreted as a sign that Netflix is moving any closer to charging each user, said Todd Yellin, the company's vice-president of product innovation. "It doesn't nix that idea (and) it doesn't fuel that idea," he said in an interview. "It's just something that's a possibility, but not imminent."

To shape its definition of kid's entertainment, Netflix relied on ratings from Common Sense Media, a non-profit group focused on how children's issues. Netflix children's section will highlight different categories with the icons of popular characters such as SpongeBob SquarePants, Dora The Explorer and Miley Cyrus to appeal to its new section's the under-12 demographic.