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:
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.
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.
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?