Netflix Raises Prices, Customers Revolt, None of it Matters
Jul 18th, 2011 by Carlos
Netflix created a huge stir last week by raising their rates and splitting off their streaming service from their DVD offerings. Netflix subscribers will see their bill go up around 60%.
Right now I get one DVD at a time (as many as I want per month) and as much online streaming as I want. For that, I pay $10.79.
Which is a great deal. Under the new rates, I’ll have to pay $15.98 when the price change takes place in September. At first, I was pissed off just like everyone else is (see the Netflix blog for the full vitriolic barrage). But seriously? This is still within the boundaries of reason.
Why a 60% Price Hike Won’t Matter
Right now things look grim for Netflix because everyone is so worked up about this. Customers claim to have already cancelled their subscriptions and other vow to do the same before the price hike.
The interesting thing is customers know why this is happening: it’s becoming more and more expensive for Netflix to add content to their streaming service. The studios are being hard asses about it and want more money. Customers know this…you can see it on the comments people have left on the Netflix blog: they’re pretty well informed of the realities here.
That means it costs Netflix more, and by default it means we have to pay more (in my case, $5).
Are there cheaper options out there? Sure, tons of sites are posting different ways to “beat” Netflix by signing up only for streaming ($7.99) and then using services like Redbox for newer DVDs. Or iTunes. Or Amazon VOD.
The choices are endless, but I don’t think it matters. Netflix is easy and customers are used to it.
It’s the same reason why Apple dominated the MP3 player game: they made it so even my mother-in-law could go buy music, put in on her iPod, and rock out. Nobody else figured out how to make this easy (and fun, to boot).
Convenience and ease-of-use is going to come into play here. People don’t want to hook up their computers to their TV (unless they already have). They don’t want to go to the grocery store to return a movie to avoid getting charged $1/day. They don’t want to do anything that means they’ll have to do more work.
They just want what they have and if it means paying an extra $5, then that’s what they’ll do.
As soon as I heard about this, I started brainstorming ways to keep my costs from going up. I had all kinds of options I wanted to research and when I told M about them, she shrugged her shoulders and summed up what I believe most customers are thinking right now, “So I guess we’ll just pay the extra $5 then, right?”
And that was that.
Image by Lara604
I agree that the vast majority of customers won’t budge, and for Netflix’s bottom line this is likely an important adjustment – however let’s be honest – this “change” has been planned by Netflix for years – onboard the Streamers and get them used to the convenience they’ll ultimately have to pay for.
For myself – a longtime Netflix customer – I’ll actually be ending my Streaming subscription and going to DVD-only for now. Why? The streaming catalog still doesn’t have nearly the selection I want for the type of movies I watch, and I really don’t mind a two day delay to get a (reasonably) new release. Netflix still hasn’t offered a solution for subtitles for foreign films – of which I watch a lot. (I hate dubbing…it should be a crime.) Watch Instantly was a great bonus for me and my viewing habits as an add-on, but as a service that’s just as costly as my DVDs? No way.
I’m picky with my free-time entertainment – when I thought about my usage of Instant Streaming I found out I was watching something I “kind of” wanted to watch much more often than something I was truly enjoying.
And you know what? That’s EXACTLY the same feeling I used to have after leaving Blockbuster.
I really didn’t use streaming, maybe 4 shows over the last year.
So going to DVD only is no big deal. I’m not upset, I’m watching this like I watched the “new Coke” introduction. Netflix imploding when they didn’t have to. Bad PR