Netflix Fully Expected Backlash Over New Pricing - HotHardware
Netflix Fully Expected Backlash Over New Pricing

Netflix Fully Expected Backlash Over New Pricing

If you were wondering if Netflix went into their recent announcement of a price change ... splitting DVD from streaming, thus making a combined unlimited DVD + streaming subscription cost $15.98 instead of $9.99 ... with blinders on, the answer is no. The company fully expected the negative backlash it has received.

The change, effective immediately for new customers, and on Sept. 1 for existing customers, eliminates the $9.99 unlimited (one dvd out at a time) DVD + unlimited streaming plan. Instead, there will be a $7.99 unlimited (one dvd out at a time) DVD plan, and a $7.99 unlimited streaming plan, and never the twain shall meet. The change was first announced on Tuesday.

So many customers have been calling in to Netflix to complain, or even to cancel, that despite the fact that Netflix added extra CSRs to help handle the expected flood of calls, customers were having to wait an extended period of time before speaking to anyone.

BTIG analyst Rich Greenfield conducted his own test. He called Netflix customer service 35 times over two hours, and said that his wait was typically between 9 and 15 minutes. In the report issued Wednesday, he noted that the company didn't seem concerned with a potential loss of customers.

Greenfield wrote, "There was simply no promo or 'save' technique to offer us a discount to retain our business. This would appear to illustrate that Netflix is simply not concerned with the prospect of losing customers." It was already pretty clear that Netflix wouldn't offer a "grandfather" deal. If they were planning to offer any such deal, they would have offered it from the very start.


Instead, the only advantage existing subscribers have is that they have the $9.99 combined plan for 1 1/2 more months.

Do we think anything will change? Probably not. If there was some sort of rival that could jump on this problem, then maybe they would be more concerned. Additionally, the streaming selection is pretty poor, so they (Netflix) might assume most people would opt for DVD only, at least until the streaming service improves.

On the other hand, considering Amazon.com has opened up its Amazon Prime users to free Instant Streaming, this could be a good way for the company to make some headway, if they were to open up video rentals as well. The online retailer does sell DVDs, but has never rented them.
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I just explored other options (my wife pays the bills, and she says we are *not* staying with Netflix). The article is at http://scifiandgadgets.com/2011/07/15/netflix-killed-by-the-mpaa-where-do-we-go-now/

It's by no means all-inclusive, but it will take care of most people's needs and desires in the USA.

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Netflix won't lose that many customers, although the selection in the streaming category isn't at it's best it's still good and the fact they cover so many platforms so seamlessly (Android, iPhone, Xbox360, Wii, PS3, PC and soon even the 3DS) is what appeals to most people who own multiple tech products of the sort (and many do, particularly in larger families)

Even if the price change is upsetting, its not that drastic of a price change at only $5-$6 dollars more to have streaming and DVD's

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The issue here is the arrogance of the Netflix mgmt team and not understanding that the value here was the sum of the parts not the components.

Netflix was built on the cash cow of physical DVD rentals via an easy convenient delivery system that came with the an understanding that you would need to wait a few months for the latest release due to both a 30 days delay and limited inventory. But since their substandard rental model came with some entertaining, unlimited and commercial free streaming content  users considered the sum of the parts and embraced Netflix in droves.

But with the increase cost in content fee's for streaming content Netflix is needing to raise cash to cover this expense. The problem is that for many we only dealt with the sub par rental service because of the streaming content that came as a bonus for having Netflix.

The blunder here is that Netflix mgmt has done the following.

1). Allowed Blockbuster to be a better rental value - Why,? Because with the new Blockbuster model for those of us that rent Blueray disks the pricing is similar yet you can get movies more than a month earlier than Netflix.

2). Eliminated functionality for those Netflix users on a streaming only service that can only be retained by paying 100% more than their new rates.

For me this means making the switch to Blockbuster for rentals and go from spending $27.98 per month for Bluerays and taking my monthly cost down to 7.99 just for streaming.

If Amazon ramps up their streaming service and availability than Netflix may just become a footnote in my web history.

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Streaming and Rental are two different business models. Netflix bundled them in the past so existing customers could try streaming without any risk. They acquired new customers by continuing to offer the plans bundled together.

Now Netflix wants to be able to service the Streaming customers directly, by being able to negotiate with content owners specifically on their behalf, and being able to direct the money Streaming customers pay entirely to streaming infrastructure and content acquisition.

Wouldn't you rather your money go to the content and services you use, instead of having to pay for a bundle of services that includes things you don't really want to use?

Isn't that why we all wanted to get off cable in the first place?

Pay for Netflix Streaming so they can have the strongest position possible to acquire content for you. Rent your DVDs somewhere else if you don't like Netflix's cost.

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elentar:
Streaming and Rental are two different business models.

Nope, until recently they were not,.....not until they changed what they're doing and added 60% to the cost of dealing with them. Sorry, I'll do something else instead, even if it's nothing.

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