• by Aaron Baar , July 24, 2011

People are reacting negatively to Netflix's decision to change the way it charges for DVD rentals and Internet streaming.

According to YouGov BrandIndex, in the two weeks since the company announced the new pricing on July 12, the company's perception among consumers has declined rapidly. Once the clear leader of its competitive set, adults' consumer perception of the company dropped below that of Blockbuster, which has been stuck in negative opinion.

"It's a big announcement, and it's gotten a lot of press, so the attention's been magnified," Ted Marzilli, CEO of YouGov BrandIndex, tells Marketing Daily. "When you look at the metrics we track, they've moved in a statistically relevant negative way."

On July 12, Netflix announced a new pricing model that separated content streamed over the Internet and receiving DVDs by mail. The move angered many consumers, who had previously been receiving DVDs along with unlimited streaming at one price.

On the day of that announcement, Netflix had a 39.1 Buzz score (which asks consumers, if they have heard anything about a specific brand over a two-week time frame, and whether what they heard was positive or negative) on YouGov's BrandIndex, but dropped to 14.1 on July 18. As of Friday, its score was a -6, nearly tied with Blockbuster. At the same time, Redbox's perception scores have improved, moving from 12.6 on July 12 to 21.3. DirecTV, another competitor, moved up from 8.2 to 9.4 on the index.

After bottoming out, however, Netflix's scores have been improving recently -- meaning the worst for the company may be over, Marzilli says. "The challenge is, based on the data we've seen over the two weeks is how is this going to stick in people's minds," he says. "You would have assumed they've done their internal homework, and based on what their assumptions are they may be saying they're where they want to be."