When consumers love your entertainment product or service, money is only a small hurdle for them. For evidence, one only needs to look at the popularity of products like the iPhone and iPad.
Netflix will raise its DVD mailing and video streaming package 60% over last fall's $9.99 price, to $15.99. Netflix's streaming-only package remains at $7.99.
Already there is much negative reaction from the Netflix faithful. But brand love for the service, which started as a DVD rental-by-mail company, continues to go a long way. Apple gets much of the
same kind of love for its products.
Positive sentiment for Netflix had reached high enough levels that a price rise was seemingly doable. And despite some immediate reaction, longterm
consumers might believe Netflix"s value is still strong versus monthly cable service with premium movie channels.
Now at 22.5 million subscribers, Netflix -- as most movie/TV content
owners know -- has decent clout in the entertainment distribution marketplace. Netflix says it's raising its rates because of "underlying costs."
Still, Netflix looks to test
the business and consumer markets. It put its foot in the water of original programming by spending a reported $100 million on the U.K.-based series "House of Cards" starring Kevin Spacey.
It would seem that if Netflix moves further in this direction, we might get another price hike because of "underlying costs."
Netflix hasn't taken a major brand/marketing step
in the wrong direction yet. But continued price increases could send it into the same camp as cable companies.
To many, Netflix is the anti-cable brand right now. Hulu and Hulu Plus are
also anti-cable, to a lesser extent. (A decade or so ago, this label might have been put on DirecTV). The "cord-cutting" tag for Netflix goes a long way for consumers when considering the
seemingly non-stop rate hikes bigtime cable operators have imposed over the past two and half decades.
Cable would also say its price moves are because of costs -- higher "programming
costs." Right now, Netflix, which mostly has a library of not-so-recent movies, doesn't have that problem. Down the road, all this might change if it gets in the race for ever bigger
programming deals.
Then Netflix looks to walk that tightrope with consumers where its brand perception may change.