Netflix? How About Notflix?   7 comments

Today Netflix announced on their blog and through emails to customers that the price structure for watching DVDs and streaming videos would be changing. Significantly. As in more than a 60% difference in price. Netflix customers everywhere, including myself, are PISSED.

Since the post went up this morning, and at the time of this blog post, 4,700 comments (and rising) have already been made, mostly from angry customers. The first comment alone has more than 7,500 “likes.” That’s a LOT of bad social media juju for one company to handle. Did Netflix expect this backlash? Are they prepared to deal with it? Judging by their post (which comes across as well thought out, yet still egregious in content), I’d say not.

 

[UPDATE, July 14th – Yesterday Netflix spokesperson Steve Swasey talked to AdAge about the situation. You can read the full article here – If it’s TL;DR, let me summarize: Netflix took a business approach to the changes, but didn’t create a communication plan to announce the changes and deal with inevitable customer backlash (in other news, Netflix is now hiring a team of dedicated public relations and social media experts to handle…a…situation…that has emerged). The article’s discussion about the Netflix customer service hotline is especially curious.]

Some people who have been loyal Netflix customers for longer than a decade are irate at being taken for granted. I have to agree with them. Yes, the problem is likely with movie studios hiking their prices for streaming rights, which forces Netflix to charge its customers more, but it doesn’t explain why Netflix is imposing a more than 60% price increase and such imbalanced options. Especially in this economy.

Here’s the first comment to the blog post from a Mr Scotty Fagaly, who sums up how I feel very nicely:

“the only way that this is terrific for the customer is if you plan to offer your entire collection available for streaming…. otherwise this is just yet another way to choke more change out of your customers…. I mean… are you guys really that strapped for cash? or are you just greedy? ALSO, what a great way to treat you long term customers, we REALLY appreciate it…i can understand you applying it to new customers… but please, explain to me who’s brilliant idea this was… I hear it going like this ” Hey I have an idea of how we can show appreciation to our long term valued customers…. let’s take MORE of their money, that way they REALLY feel valued!”….IDIOTS.”

Right now I pay just over $10 per month for Netflix (including taxes), which gets me one DVD at a time, and all the streaming content I want. Netflix is going to change the price structure so I can continue with the combined service I have for $15.98 (plus tax) per month, or I can choose EITHER streaming OR one DVD at a time for $7.99. I can’t have both. Netflix thinks this is a “deal.” Netflix is wrong. Here’s why:

Streaming:

The streaming content is very limited and changes frequently because Netflix doesn’t have 100% streaming distribution rights from all the various movie studios. When they do have streaming rights, the streaming is only licensed for a certain amount of time. Streaming rights are rarely in perpetuity. So if you’re half way through season 3 of Breaking Bad and the streaming contract runs out, Netflix will remove the episodes from streaming faster than you can say “Heisenberg.” No more Walter White. No more Blue Sky. No more gripping plot twists. Just a frustrated viewer that now has to rent or purchase the DVDs to finish the season.

DVD’s:

Netflix’s DVD library is vast, but as you know, DVDs take time to arrive in the mail. Mine actually get delivered pretty quickly – within two days (we have a Netflix hub here in Knoxville). But still, that’s 48 whole hours slower than turning on the telly and choosing to instantly stream a movie.

The alternative:

Cancel Netflix entirely and switch to a mix of Amazon.com streaming and Hulu Plus. In addition, many convenience stores and supermarkets these days have RedBox or Blockbuster rental boxes where DVDs can be rented for $1 per day. Pretty cheap, but you still have to walk/ride/drive to get the damn things.

The biggest question people are asking…

Why should people have to choose between two services that are the same price, yet offer such stunningly different service? And why isn’t Netflix offering a discount for customers who want the choice of both viewing options? Many irate customers feel Netflix should only impose this new price structure on new customers, not the existing ones. So what does one do? I must say, it’s a tough decision that I haven’t made yet.

If Netflix actually decides to move ahead with this ridiculous plan, it goes into effect September 1, 2011. As a current Netflix customer, I will be watching attentively as this story unfolds. If the social media world has anything to do with it, Netflix will have to pay attention and respond carefully if they want to retain their loyal customer base while also adding new, willing customers.

If you’re a Netflix subscriber, what do you think about all of this? Are you frustrated by this impending change? Did you see the price hike coming? Are you going to take the plunge and cancel your service?

~C

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7 responses to “Netflix? How About Notflix?

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  1. I downgraded my account from 2 DVDs at a time to 1 DVD because they mostly sit next to the TV for weeks.

    I like that they also offer blu-ray, but for extra cost (an extra $2 for the first discs out per month plus and addition $1 per disc out). Also, word has it they will start renting game discs later in the year. w00t!

    As you mentioned, I did get hit with a streaming license being pulled of a series I was watching. We were watching Dexter via streaming and got through Season 1, then after the first episode of Season 2 the show disappeared from the streaming queue. 😦 So we are doing the discs for season 2.

    All and all, I feel Netflix is a great service, with quality streaming and amazingly fast disc shipping and returns. They also go above-and-beyond at times – for example, if a disc is going to take longer than a day to get to my house because it isn’t available to ship out locally, they will send it AND the next disc in my queue as a bonus. I always felt the quality of service and product was much higher than what I was paying for. Now their pricing is going to be more in line with what a company with quality service is charging, which is a little painful for those of us who enjoyed the bargain for so long, but it doesn’t bother me enough to cancel.

  2. Hey Dave, thanks for your thoughts, I absolutely agree with you – Netflix is a great service. I’ve also experienced the exciting bonus DVD by mail, which I think is a very nice touch. Their proprietary streaming technology is also very high quality, which I definitely appreciate.

    I guess my point of contention is with their decision to simply double the price of both streaming & DVD services and call it a “deal.” Streaming is convenient, but their streaming library is woefully lacking compared to the DVD library they have. I personally don’t think the two services are comparable. So if they’re going to offer both, why not give existing customers a couple dollars off? Netflix will still make a profit across the board, and existing customers won’t feel like they’re being slapped across the face.

    But yes, the conundrum to keep, cancel or downgrade my service still persists….!

  3. I, personally, have already downgraded my service. I’m very disappointed with Netflix at the moment. Netflix stands against ISPs who impose bandwidth caps and assess overage fees, saying it is not for network management but for monetary gain. In the same month they turn around and hike our prices 60% while offering no additional benefit to customers. If that’s not the definition of ‘hypocritical’, then I’m not sure what is.

  4. Great post. Everyone is pissed. Is Netflix in crisis mode yet, or are they still denying one exists?

    • You’d think Netflix would be in crisis mode, wouldn’t you?! But they haven’t posted anything new to their blog (by the way, they capped the number of comments to that article at 5,000 – lame!), AND, their last tweet was from 2 days ago and it was about the price change. Nothing new. It’s been all quiet on the Netflix front. So I am going to go ahead and say they’re ignoring their customers and denying a crisis situation exists. IMHO.

      In a day and age where the most popular communication methods are in social media, it’s stunning that Netflix announced the change in the way they did, and even worse that two days later, they still haven’t responded. It’s such a pity too – Netflix has great customer service (as Dave mentioned above), and a price hike is inevitable…but their handling of this situation is really sad.

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