Customers Irate Over Netflix' Price Increase
The upside? "You don't need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs." And so, like thousands of others, I immediately went to Google and typed in "Netflix alternatives."
Alas, concludes PC World's Paul Suarez after looking at similar offerings from Amazon Prime, Blockbuster by Mail, CinemaNow (Best Buy's service), GreenCine, Hulu and Redbox: "It's hard to argue with Netflix when it says the new pricing scheme is a bargain. Its prices are cheaper than a lot of the alternatives and offer quite a bit more selection."
Nonetheless, many of the stories about the announcement, which came in both an email to current customers and as a post by marketing vp Jessie Becker on the company's blog, refer to the irate responses by customers like me to the post, as well as on Facebook and Twitter.
Writes the Los Angeles Times' Ben Fritz: "Reactions to Netflix's biggest-ever price increase were swift and overwhelmingly negative. More than 10,000 people had responded to the news on Netflix's Facebook page by late Tuesday, nearly all of them critical."
The real story here may be, as @cenedella put it on Twitter this morning, "#Netflix is totally worth $16/month, but jabbing thru 60% price increase with corporate doublespeak seems even more totally off-brand."
Netflix founder Reed Hastings decided some time ago that the future of his business was in streaming, most stories point out. Initially, the company was able to cut favorable streaming deals with several Hollywood studios but everyone expects negotiations in the future to be tougher. At the same time, perhaps because of the scarcity of recent blockbuster releases through streaming, the DVD business has evidently remained stronger than the company anticipated. So it has reassessed its position of offering the mail service for about a $2 per month "premium."
"Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11-year veteran of Netflix," Becker writes.
The move is "the latest step in a long-term transition toward becoming a next-generation premium television business," Arash Amel, a research director for IHS Screen Digest, tells the New York Times Brian Stelter and Sam Grobart. He believes that monthly prices will go up as Netflix's growth rate slows and licensing fees rise.
But in a story carrying the hed, "Netflix Plays Down DVDs," Frost & Sullivan analyst Dan Rayburn tells the Wall Street Journal's Nick Wingfield that the move "makes no sense." He believes "it will push people like him who pay $9.99 a month for Netflix streaming and DVD services -- often leaving a red DVD envelope from the company unopened for months -- to switch to the company's $7.99 streaming-only plan." Rayburn points outs that customers can rent DVDs from Coinstar's Redbox kiosks for $1 a night when they can't find a title on Netflix's streaming service.
Also of interest to this audience is a comment on Larry Kramer's Vatornews blog Monday: "The networks are also concerned that Netflix' existing model -- which calls for no advertising -- could cause problems for traditional distributors who run ads because consumers could come to prefer programs with no ads. That could drive viewers away from the advertising model. The amount people will pay for that privilege, however, is still unclear and may always be a moving target."
Indeed, lots of people this morning are no doubt saying, "catch us if you can." It will be interesting to see if Netflix, once again, does.