The Netflix Price Hike, Day 2

Dave Zatz —  July 13, 2011 — 53 Comments

As most customers have read by now, Netflix announced price hikes yesterday for subscriptions that include both unlimited digital streaming and unlimited DVD/Blu-ray rentals. Realizing my existing Netflix plan would increase by 60% come September, I went ahead and preemptively canceled service. It’s not solely the cost, as there are frequent occasions where I blow more than that $6 differential at a single Starbucks sitting. Yet, it’s the perceived value… which is now significantly diminished. Geoffrey’s comment hits the nail on the head:

I think the main thing that makes this increase hard to swallow is there’s no attempt to show us where the added value is as the consumer. If they were going to announce a massive  increase in the streaming selection, then I could accept the argument that the service needs to be unhooked from the DVD rentals. But, as it stands, Netflix hasn’t attempted to show us any value for us paying around 60% more (in many cases).

Look, we know Netflix’s expenses are rising and it’s their responsibility to deliver value ($) to the shareholders. But the reality seems to be a stagnant or even weakening online streaming service for customers. Netflix can’t afford new releases beyond low definition Starz content… with titles now possibly subject to extended release window delays or downright missing in action. On the DVD front, Netflix’s disc-only plan pricing is not unreasonable. However, Netflix’s physical media customer experience may also be on the downswing, as we see reports that suggest Netflix purchases fewer discs these days resulting in longer waits. Additionally, the $2 Blu-ray surcharge rubs me the wrong way. Again, it’s perceived value. And I’ve got enough alternatives to easily move on when provoked. Who sends out an email saying service can be “easily” canceled? Done!

Unfortunately for Netflix, they’ve probably misread the situation. The heavy users, who incur the most costs, will remain. Whereas the revenue-generating folks like me, who stream very little and have held onto the same DVD for months, will depart.

53 responses to The Netflix Price Hike, Day 2

  1. Yep. We use our Netflix DVDs and streaming on a regular basis but we’re no way near the heaviest of users. We may not watch for a few weeks at a time.

    Make us pay for two services we don’t use to their fullest capacity? A much easier reason to cancel.

  2. Is it time for Amazon to make a sincere move on their streaming customer base with device support? Perhaps Amazon is still dabbling in this market.

    We typically cycle do 4 DVDs/week with the 2-out plan and only occasionally use the streaming but we’ll probably just have to ride the price change out.

  3. So. Much. FAIL.

    In this age of bandwidth caps, people ( including me ) are already weary of streaming stuff for fear of a $100-$250 overage fee. The LAST thing Netflix should be doing is giving us all another reason not to use their service.

    Back to the torrents! :D

  4. “Unfortunately for Netflix, they’ve probably misread the situation. The heavy users, who incur the most costs, will remain. Whereas the revenue-generating folks like me, who stream very little and have held onto the same DVD for probably a year, will depart.”

    Well put.

    I use the DVD function more than streaming these days. I find the whole catalog of VOD and DVDs not so interesting that I would miss much when I cancel in late August.

  5. i’m cancelling the dvd service, but i’m going to keep the streaming service. i never used the dvd service anyway

  6. Lawson Culver July 13, 2011 at 7:48 am

    I cancelled the streaming, because I use it once every six months. The only reason I use it so infrequently is that everything I want to see is apparently DVD-only.

    So, I’m taking my dollar back and sticking with DVD-only rental. If I decide I want to stream for a little while, I’ll send back my DVD, switch my plan to streaming, watch the movie, then switch it back.

  7. Honestly, we make greater use of Amazon’s download service to our TivoHDs. We will also keep the streaming Netflix service, but cancel the physical delivery.

  8. “…….Unfortunately for Netflix, they’ve probably misread the situation. The heavy users, who incur the most costs, will remain. Whereas the revenue-generating folks like me, who stream very little and have held onto the same DVD for probably a year, will depart…….”

    That really sums it up perfectly. This is the category I fall into as well and just cancelled. Amazing that no one at Netflix could see this as a possibility.

  9. Is it really Netflix who has misread the situation? Not to say I saw this coming, but I had a distinct feeling that as Netflix has to renew their streaming media library licenses they would need to raise prices (and their stock would tumble on the resulting sub losses).

    They’re essentially between a rock (the media companies who saw Netflix’s profits and wanted more) and a hard place (the consumer who wants cheap streaming and DVDs).

  10. I can understand that the cost of providing quality services and make a profit at the same time probably motivated the new Netflix options. To their credit plenty of warning has been provided to costumors. However, the main concern I have is with the streaming service. In order to keep its customers Netflix will have to provide much better picture quality and variety. I think that an alternative streaming program that provides all films, including new releases, would be a much better plan. Unless I have some assurance that the streaming quality will improve I plan to cancel my subsrcipion.

  11. Netflix has become one of the more user unfriendly movie sites on the net. This is noticeable almost immediately after you decide you want to contact them.

    But, that being what it is, I still like their selection of streaming flix well enough to hold that account until someone else comes along with a better selection at a better price.

    For my DVD needs, I like Hastings rentals for new releases and shopping the yard sales and thrift stores for the home library.

  12. I called customer service yesterday and informed them that should I see any price increase on my bill I would immediately cancel my subscription. The girl informed me that this change was being driven by their “Customers”. Would one of you, if you exist at all , please comment???

  13. I’m sure they did plenty of market research, crunched the numbers, and determined that this was the “sweet spot” for revenue vs. attrition. You have to lose some customers to gain revenue, right?

  14. Michael Burstin July 13, 2011 at 8:34 am

    I’m still up in the air about what to do with my Netflix subscription. Right now, I have the 3 blu-rays option. I rarely use streaming but like the option of having it available on iOS devices when traveling. (I am not a huge fan of streaming in general – between bandwidth caps and nowhere near BluRay quality). Still, I don’t think I use streaming nearly enough to justify it. I may just drop down to 2 at a time BD, but maybe need to look at RedBox to see whether they have enough BD nearby.

    Still, I see why Netflix is raising their prices — its not their fault that the studios are out to screw them. They got a good deal in the beginning because nobody else was competing. Really, I think this is a bad move by the studios – I think that people had accepted reasonably priced Netflix as an alternative to torrents but as prices go up, I think torrent usage will bounce back up as well.

  15. Geoffrey Sperl July 13, 2011 at 8:42 am

    I agree with those of you who state this was coming – it most certainly was, and those of us who paid attention to the situation knew it would.

    However, as both Dave and I are saying, if there’s no increase in value, even if it is only perceived value, then why am I interested in paying 60%/month more for the service? Sure, they may have not been able to increase the streaming selection, but, maybe for $9.99 or $10.99, allow unlimited streaming plus the addition of the limited plan (which is regularly $4.99).

    At this point, I’ve dropped the DVD plan and am going to go to just streaming. There’s plenty in my streaming queue my wife, son, and I are able to watch (while the current DVD I have has been sitting for two weeks). But streaming isn’t where Netflix has an edge on its competition. The edge is actually still in the physical media. No one can match them in terms of selection and (at least for me) speed in delivering the DVDs. I can get streaming through Hulu, Amazon, Apple, Vudu, Crackle, etc. The selection might not be as good as Netflix’s, but it’ll probably do.

    Once I have a chance to really compare the other streaming services and their selections, I might just drop Netflix streaming, too.

  16. They already increased prices once this year. This will be the second increase in less than a year. The claim that DVDs are an add-on to the streaming is garbage. They only just recently made the streaming only plan. Streaming was really an add-on to the DVD plan if anything. They also have not made any improvements to their service for the increases. Streaming is sadly lacking in content, and many that were on streaming are now gone, so it’s like they are going backwards. New DVDs still have a wait of about a month before Netflix gets them, and so many “Very Long Waits” last for months at a time. Blockbuster’s DVD plan also includes Blu Ray and games for no extra cost. I also pay Microsoft for an Xbox Live Gold membership so I can stream Netflix content (I don’t play games online), and one of my requirements for buying my Blu Ray player was that it could stream Netflix. I’ve been a loyal customer and recommended it to so many people, but 2 increases in less than a year, and especially this one which is significantly more, is too much.

  17. Am I the only one not unhappy with the price change? They lowered the price of the streaming only plan, meaning those who want streaming + DVDs are essentially subsidizing the cost of higher licensing fees. That seems perfectly fair to me from a consumer standpoint. Use revenue from the older technology to fund growth for the new.

    Now, whether the move makes financial sense for Netflix is another question.

  18. I think in the end, neflix WILL CAVE A bit, and make a combo offering a bit cheaper. They’ll offer Streaming+DVD combo for say 2-3$ less than both together. At that point, the subscriber losses would be minimal and the stock will rocket even above these somewhat crazy levels. Maybe this was their master plan all along?

  19. I just had a thought that maybe the problem with long waits is not caused by buying less discs, but by buying the same number of discs as they have in the past when they had a log less customers. There still wouldn’t be enough discs under that scenario.

    Either way, long queue waits are frequently occurring (in addition to the mandatory 30 day wait, 90 days for Starz shows). I guess the only good thing about the price hikes, is that a lot of customers will quit so it will be easier to get discs now. ;)

  20. “Am I the only one not unhappy with the price change?”

    No. It all actually makes pretty good sense to me.

    “Perceived” value aside, actual value still seems pretty decent to me.

    “They lowered the price of the streaming only plan”

    Of course, they did that a few months ago. If they had done that on the same day that they announced the rest of the changes, the PR hit would have been far less negative. Their scheduling of the changes was a bit tone-deaf and short-sighted.

    —–

    Personally, I’ve already gone through the cream of the indie/foreign/doc/TV selection that streams in HD, and was already planning on shortly putting my membership on hiatus for a while. I’m still going to do that, but I remain interested in starting a Blu-Ray plan, and am happy that that is being separated from the streaming plan.

    (Time to make pick through the original Star Trek series and The Larry Sanders Show before going on hiatus.)

  21. Jon the Heretic July 13, 2011 at 9:32 am

    Mari, they already had the $7.99 streaming only plan. That is what I put my mother on when it was first announced.

    I joined Netflix at $8.99 which included Blu Ray and unlimited streaming, on the DAY streaming was added to the overall package. The extra value of streaming actually brought me in as a customer. Now they want double the money for worse service.

    When I first joined, there was no 60-90 day wait period for DVDs or streaming. Starz Play is greatly diminished in value because of that huge delay…might as well wait for the BD which looks soo much better anyway. And sure enough, a lot of Starz original content was moved to Disc only (!) What’s with that? You can watch a couple of episodes of Spartacus but need the discs to complete the series.

    I loved having the streaming as an option but rarely use it. It replaced the VOD that I don’t get on my Tivo Premiere. In terms of hard dollars, I will revert back to DVD plan only, maybe do a month of streaming only for all of the queued content there.

    In the end, Netflix is going to make a lot less money on me but more importantly they have converted an enthusiastic customer into a p.o’d one. Magic! Give those execs another lottery-size bonus!

  22. “Magic! Give those execs another lottery-size bonus!”

    If any execs on the planet deserve mega-bonuses, I’d say the Netflix team are the ones. They’ve done pretty well for the company over the past few years. (Of course, those mega-bonuses should be taxed at a 40% marginal rate like a civilized nation would do, but now we’re getting off-topic.)

    As stated, I think their only real error was in not announcing this price change on the same day they introduced the $7.99 streaming-only plan. If they’d done that, the instant reaction would have had a quite different tenor.

  23. Jon the Heretic July 13, 2011 at 9:55 am

    For past performance, perhaps…not for this boneheaded change. They have seriously damaged their own model and created a lot of enmity. But in the U.S. corporate structure, it is true — seriously damaging your business fundamentals is also grounds for huge executive bonuses. It’s win win for them.

  24. A couple of weeks ago, I dropped down from 1 Blu-Ray to just streaming, as I’ve been letting discs sit around for weeks at a time, but have been streaming regularly (though less so since HBO GO launched on iOS.)

    I wouldn’t mind the price jump at all if the upcharge for blu-ray was figured into the new costs. Because jumping to almost $20/month from $12 is a lot.

  25. Business is business. Let us never forget that.

    That’s one reason I decided to change jobs recently. I got sick of the way business was done at my old employer so I’m going to a new place where I’m sure it has similar issues but at least they’ll be new to me.

    Switch back to Netflix. It is just business–they exist to take our money–but for a while they had goodwill because they were trying to grow the business and knew that enthusiastic customers were key.

    Now growth can happen in other ways, or maybe they don’t care about growth, so they don’t need to throw us a bone anymore. We can fetch it ourselves if we want to, and pay the price.

  26. So, we can deal with it or take our business elsewhere, where things may not be perfect but we haven’t had a perceived slight…yet. :-)

  27. I’m with Andrew, between me, my wife, and daughter we stream 1-2hrs of Netflix a day. I would have kept my 1 Blu-ray plan at $7.99 but they have kept the $2 premium and as Dave said, “that doesn’t sit right”. I went to streaming only this morning and play to Redbox/Amazon/Vudu new releases I’m interested in.

  28. Well said. I use about 2 physical DVDs a month, sometimes 3. That’s worth paying a few extra dollars but it is most certainly not worth paying $8.

    I only stream to my Wii, and some weeks I don’t even watch. Hell, last few months I’ve been out of town much of the time.

    It was a shame to be in the middle of Dexter, go out of town, come home and find out it is no longer available. That’s not worth $8 a month to me either. Especially when the encoding is rather poor, especially in low contrast scenes where I can see big square artifacts all over.

    I wouldn’t object to a price bump, let me pay $12 a month for unlimited stream + up to 3 DVDs. But I won’t pay $16 a month and the content selection in stream alone isn’t worth me paying anything.

  29. Reading comments here and elsewhere have made me realize just how different we all are, Netflix-wise. Lots of different use cases, all happily forking dollars over

    Singing “Kumbayah,” and dropping discs-by-mail,
    ~easement1

  30. Jon the Heretic July 13, 2011 at 10:42 am

    Value is not infinitely elastic. As a consumer, I look for the best value for the buck. In this economy, this is responsible behavior — unless you are the sort who lives off of credit card debt.

    Netflix didn’t move a little out of my value zone–they’ve been doing that a little at a time already—they moved WAY out of it. I guarantee they will now earn less money from me and my friends and family than they did before the change. Still a great business decision? Depends I suppose on whether they can grow despite the inevitable backlash

    Quite honestly — I stopped caring the moment the tremendous value they were providing ended. Netflix is now just one of a sea of mediocre choices, but choice there is plenty of. Until they made this change, I was captive; now I am a free agent. Can I live without the streaming? At $8.99 — my original pricepoint — why would I want to? At double that? It is to laugh. Actually my library has a great selection of DVDs for free and so does Red Box.

    Given a static salary against rising costs in all of those non-core inflation categories that make me feel poorer year to year, I am always looking for things to cut. Netflix just volunteered! I wouldn’t have dreamt of it before.

    Business cuts both ways.

  31. “I would have kept my 1 Blu-ray plan at $7.99 but they have kept the $2 premium and as Dave said, “that doesn’t sit right”

    But what’s the alternative? There are DVD consumers and Blu-Ray consumers. Blu-Rays cost more. If they eliminate the Blu-Ray surcharge, then they’d be screwing over the DVD consumers.

    Everyone seems to find the new pricing scheme “unfair” in some way, or missing in some “perceived” value. But I just don’t get it. It seems exactly like the kind of flexible pricing folks normally claim they want.

    As repeated stated, I continue to think the instant mob reaction would be quite different if they’d held off on offering the lower priced streaming-only plan until the same day they made the current changes. That’s the only real error I see here on their part, and even that’s only a PR error, not a customer service error…

  32. Jon the Heretic July 13, 2011 at 10:56 am

    Chucky, remember when they had BD and HD DVD both? No surcharge. Then they eliminated choice — got rid of HD DVD — and then charged more for what was left. No, that never sat well with me. I almost canceled when they did that. Why did proving Blu ray alone costs them so much more than providing everything in 3 different formats that they suddenly needed a surcharge?

    Choices are actually aplenty: My Red Box has Blu-ray. $2!. And DVDs? Library. I also have lots of movies on my 2TB Tivo I never bothered with. Maybe I will watch a few of them — almost all of them are better than what Netflix streams.

    If Tivo or PS3 gets Instant Prime Video, I may go that way too. I hear Amazon also gives you free 2-day shipping with Prime, not just streaming ;-) Even before they had the instant video, I considered Prime many times. Right now I have a free trial just for the shipping deals. It is looking better all of the time.

    As I said before, with a flat to negative salary when adjusted for real inflation, I am always looking for ways to save money. With the old perceived value package, I wouldn’t of dreamed of it. With the new package value, I wouldn’t dream of anything but a cut of service.

  33. Ah, I remember when Netflix was free, and the executives would come to my house with the shiny shiny new discs, lovingly polished with their ties, make me a cool beverage, and then rub my feet while I enjoyed the movie.

  34. 2cents:
    After mulling this over for about 20 hours, I think my initial reaction has changed. At first I was a little irritated as I have been one who saw the streaming as a huge bonus to the 3 at a time Bluray plan. But now I have taken a step back to look at it realizing that Netflix is still awesome and cheap for what you get. I did lower my plan to 2 Bluray & Streaming unlimited for $23/month, and when you think about it, that is a pretty good deal for a monthly luxury expense. I still want the Bluray b/c the streaming library, albeit large, is lacking in quality. Yes, I did enjoy Teen Wolf & Howard the Duck, but would rather see new releases & solid movies, unlike BMX Bandits & knock offs like the Sherlcok Holmes & Battle Los Angeles trickeries.

  35. Not even an attempt to give a combined plan discount or grandfather existing users, even for say six months. These guys dropped the ball big time and I’ll be exiting once my current month ends. Why wait? Slap me once-shame on you. Slap me twice……

  36. “Who sends out an email saying service can be “easily” canceled?”

    This disturbs me, Dave. Are you saying that you would rather Netflix act like AOL and make it impossible for you to cancel? By making it easy to change or cancel your membership, Netflix is showing how much it cares about it’s customers.

  37. As someone who just finished his 30 day free trial with Netflix, and was days away from dropping his Blockbuster by Mail subscription, now I’m on the fence again.

    I like the streaming and there are many devices that’ll stream it to my TV, unlike Amazon. I also believe the quality of many programs just isn’t there yet (5.1 audio is lacking in so many areas). So, for that reason, I like access to Bluray or DVD disks too. Redbox is cheap, but they don’t have 95% of what is in my queues at BB or Netflix.

    If Netflix is going to make it a pain to have both services, I may as well reward BB with my business for disks by mail.

    John

  38. Josh – Agreed, Netflix has largely done a nice job over the years of making it clear and easy to modify, cancel, or renew – and that’s something I appreciate. However, in my opinion, the communication of these imminent and mandatory changes was bungled and I reacted to the increase and phrasing in such a way that, yes, I immediately canceled. Like Geoffrey said, they didn’t sufficiently explain the hikes or soften the blow. Chucky is on to something… Had they made the announcement while also introducing or lowering the streaming-only plan and dropping the Blu-ray surcharge or providing a period of grandfathered pricing, I probably would have responded differently. Regardless, I’m hesitant to go Blu-ray only given recent reports of disc shortages.

  39. I think we will be cancelling also. At $9.99 for the previous 1 out with streaming, we would average 8-9 discs and maybe 2 movies streamed and a couple TV episodes. This isn’t worth $15.98 to us.

    I think Netflix would have been smarter to offer a $2 add on option for a limited number of hours of streaming rather than forcing you to pick all or nothing.

    In the end this leaves us a couple of options.
    -Dump Netflix entirely and go Redbox and Blockbuster both which are about a block away.
    -Keep Netflix DVD 1 out and skip streaming.
    -Keep Netflix DVD 1 out and only sign up for streaming a month at a time and stream everything and constantly during that month.
    -Just dump movies entirely. I have a huge backlog of TV shows that I could watch rather than movies.

  40. “I think Netflix would have been smarter to offer a $2 add on option for a limited number of hours of streaming rather than forcing you to pick all or nothing.”

    Meh. All you can eat is what Netflix streaming does.

    And it’s OK because, unlike many cableco-bundled premium services, Netflix streaming is easy to turn on and off. Shut it off for six months, like I’m about to do. Then go and look and see if there’s some stuff you really want to watch, and if so, turn it on for a couple of months. Lather, rinse, repeat.

    “Dump Netflix entirely and go Redbox and Blockbuster both which are about a block away.”

    I’m likely not the average customer, but as decently stated in Felix Salmon’s post today, the appeal of Netflix physical media delivery to me is all about “the long tail”, which doesn’t get served well by Redbox and Blockbuster.

    But, again, I’m likely not the average customer.

    “Regardless, I’m hesitant to go Blu-ray only given recent reports of disc shortages.”

    Dunno how bad it is, but Netflix physical media delivery has always had problems if you want the same discs that everyone is currently wanting. Which is another reason why Netflix physical media delivery is perfect for long tail customers like me, but less useful than Redbox if you want what is current.

  41. I was onto something in my comment on the “Day 1″ post. Engadget’s editorial is also suggesting Netflix dropped the ball by not providing a streaming+DVD bundle to pacify those who mostly stream but want a back-up of a few DVDs per month — http://www.engadget.com/2011/07/13/editorial-netflix-was-too-cheap-before-but-now-its-just-wrong/

    Having a $10-12 option to sit in between $8 and $16 choices would’ve been very, very smart for Netflix. Sure, some people would’ve still been ticked off, but many would probably would be fine with a small increase.

  42. Dave – I agree that Netflix get’s an “F” in PR. What they should of said is, “If you have questions about why we are raising membership prices, please contact the Hollywood studios, your internet provider, and the post office.”

  43. HBO has been so good lately that it has been at least 50% of my non-sports viewing lately and I have a backlog of HBO movies leftover. I just canceled Netflix since the streaming titles are too limited and I haven’t gotten to their DVDs in a while. I may be back but for now I won’t be supplementing cable/HBO with Netflix or any other streaming service. I’ll catch an occasional new release via Amazon or ITunes.

  44. One thing to be aware of, if you try to use a tool like FeedFliks to see how much your average usage is costing you, is they don’t always accurately report instant watch. The problem is Netflix unlike iTunes counts every Instant Watch program whether you watch 1 minute or 2 hours. As a result it can throw your counts off.

    For example on mine it says I watched 40 shows when it is more like 12. A bunch of those were ones where they were trying to find something for my nephew while others were ones I started accidentally while playing with the TiVo search.

  45. I went streaming-only this morning and that’s because my son enjoys the anime offerings — I view it as an alternative to the Anime Network on Cox Cable.

    I also saw the price increase coming and see more in the future. I read somewhere that Netflix’s content costs will go from $180 million in 2010 to nearly $2 billion in 2012. And, as Dave Zatz and others have pointed out, they still won’t get new releases until after a window and you will still have to wait a long time for BD releases, if you can get them at all.

    My greatest interest in this is Netflix’s share price: nearly $300 a share. This is a company that has pretty much picked all the low-hanging fruit: they caught Blockbuster and the content providers by surprise. Now, it gets hard: bandwidth caps and ISPs, many of them cable companies who see NF as a threat, are ready to come between NF and its subscribers; studios, who also have to deliver shareholder value, poised to drive a hard bargain; and vending machines dispensing discs at the supermarket.

    None of these existed during Netflix’s meteoric rise. $300 a share/80-plus times earnings? Really?

  46. I’m downgrading. We were on 2-out, unlimited streaming. The streaming we almost never use because their selection is poor (thanks to the studios). We keep the same DVDs for weeks when we’re too busy to watch so a $5/month (~30%) is just not worth it to us.
    For now we’re downgrading to the 1 DVD plan with no streaming, and I expect to review in a few months…

  47. “Unfortunately for Netflix, they’ve probably misread the situation. The heavy users, who incur the most costs, will remain. Whereas the revenue-generating folks like me, who stream very little and have held onto the same DVD for months, will depart.”

    Dave makes a point here, but I’m betting that the accountants have been over the numbers several ways, and this is not what they are anticipating. But herds do turn unexpectedly sometimes. We’ll see.

    Remain calm, people! Think clearly about your priorities, convenience or depth of content. Pick and keep these guys in business for another season or two.

    The Media demi-gods and the cable-lobby are putting the squeeze to NetFlix… This is an awesome company that will weather this storm, and the value of rented movies will be right-sized, unless the demi-gods win, and we’ll all be paying (if we decide to consume legally) way-way too much for content, regardless of delivery/distribution transport.

    The states are looking to force these guys to pay sales tax too, if they operate a distribution center in your state… So the squeeze is on, from more than one angle…

  48. Jon the Heretic July 14, 2011 at 10:30 am

    As a consumer, I really don’t care about all of the reasons Netflix has for jacking prices up 60%. Last I heard, their stock was on a roll and they were fantastically profitable. The rich man’s son pleads poverty. The reality is that they probably can’t sustain the huge executive bonuses and huge profit margins now that Big Media smells there is more money to be made. Well golly, that’s just too bad but if striking the right deals with the media companies was easy, just anybody could have done this years ago. If they need to make excuses for this then it just means their business model wasn’t sustainable after all.

    Netflix has just volunteered to become the next “MySpace” of video distribution. The internet is a fickle place; slip up, and we’ll turn on you on a dime and someone else will gladly take your place. They are fundamentally an online/mail “cable company” without the benefit of a monopoly to give them an unfair advantage.

    They can’t continue to act as arrogant as Apple, milk their customers for all their worth, and expect them to come back for more. Unlike Apple, they do not have a unique product or even the best product; until this change in rates they had the best combination of features for the buck, and it was such a good deal, you would remain a subscriber even if you didn’t use it. You didn’t even have to think about it. Netflix has forced millions of customers to reevaluate the value proposition of Netflix: “Do I REALLY need this?” and millions are finding, “No, I guess not. It simply isn’t worth the cost”. Netflix has been rewarded with an all time high in cancellations and people downgrading their service.

    Honestly, I don’t care if Big Media is giving them a hard time; if they can’t work out deals that don’t preserve the overall value of their product of which price is a HUGE part, they will FAIL and consumers will just move on. Other companies may work out better deals, as RedBox already has.

  49. “They can’t continue to act as arrogant as Apple, milk their customers for all their worth, and expect them to come back for more.”

    Y’know, you are entirely correct that Netflix business issues are none of your concern as a consumer. You’ve got to make decisions based on what works best on your end for your purposes.

    But I don’t agree with the comparison of Netflix to Apple.

    Netflix is in the customer service business, and they do it in a top-notch manner. They’ve created a physical media delivery side with good customer service. And they’ve created an electronic delivery with good customer service. The terms are always clear for the customer, and account changes are simple.

    I think of Netflix in the same way as a do Amazon in that way. It’s a company I’m generally happy to do business with. (That doesn’t mean all of those companies products and services are ones I want. I just means that when I’m in the market for their products and services, I like doing business with them.) Note that both of those companies, as you correctly note, “do not have a unique product”, which is why they’ve distinguished themselves with customer service.

    Apple, OTOH, as it moves from being just a gear supplier to something more octopus-like with a laser beam focus on lock-in, doesn’t really do customer service on anything but the gear. Apple is genuinely arrogant and looking to milk their customers in ways as hidden as possible, for as long as possible. (Note how opaque Apple’s terms and account management tend to be, and that’s only the tip of the iceberg.) Netflix is just doing a re-pricing (with adequate notice) that raises rates on customers who want both discs and streaming.

    Businesses are in the business of making money. But the ones that focus on their customer service are the ones that are most pleasant to do business with. And I’m always pleased to deal with Netflix and Amazon.

  50. I will say I’ve had good experiences in the Apple Store – rescuing a laptop on Easter Sunday and replacing and out-of-warranty iPhone with a damaged/stuck power button. Also, the few times I’ve reached out to the iTunes or App Store reps via email, I’ve gotten decent help and at least two refunds I can recall.

  51. “I will say I’ve had good experiences in the Apple Store – rescuing a laptop on Easter Sunday and replacing and out-of-warranty iPhone with a damaged/stuck power button.”

    I tried to briefly touch on above that Apple is quite good with customer service on the physical gear it sells. I’ve never had any problems with that, and still don’t. I actually sometimes buy their extended warranty on their laptops, and I generally never buy extended warranties.

    “Also, the few times I’ve reached out to the iTunes or App Store reps via email, I’ve gotten decent help and at least two refunds I can recall.”

    The problems ‘beyond the box’ go far deeper than that.

    Again, note how opaque the terms and account management on various Apple ID services tend to be, compared to Netflix or Amazon. That’s for a reason.

    Unlike Netflix and Amazon, Apple really does have a unique product, and they’re leveraging their bid into e-commerce via that advantage, rather via a customer service focus.

    Microsoft was offering lousy customer service in the late 90′s when it was more interested in strategic lock-in than it was in serving customers. And that was true even though Microsoft was willing to replace a Windows 98 CD if it was scratched.

    Apple ID commerce is somewhat like Verizon FIOS. You do business with them for lack of alternatives, not out of love for the customer service.

  52. Here’s one way to think of it, Dave, (among many). Apple’s attempted take of 30% of 3rd party commerce done on their gear is bad customer service. It’s well hidden, and intentionally designed not to cause a furor among consumers, but over time, a good chunk of that 30% ends up coming out of its customers’ pockets.

  53. What Netflix ultimately should have done was raise their prices *more* but make a commitment to dramatically improve the streaming library. I’d happily pay $15 or $20 a month for streaming if the library was 40-50,000 titles instead of 20. But I have no interest in paying $8 when all I can find to watch is repackaged content from BBC2.

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