“Reed Hastings sure can’t be accused of sugarcoating anything,” Greg Sandoval reports for CNET. “Yesterday, the Netflix CEO and his company made a few more statements about a planned price increase that has many customers accusing the company of greed and threatening to quit the service.”
“Some had predicted after the company announced the increase on July 12 that the blistering customer response would force Netflix to recognize that it had erred and to re-evaluate its decision,” Sandoval reports. “On the contrary, yesterday the company sounded full of confidence and even cheerful about the financial benefits the price increase would offer Netflix.”
Sandoval reports, “Whether or not Netflix has good reason to raise prices, the company has demonstrated that it doesn’t know much about how to deliver bad news. Two weeks ago, Netflix left it to a little-known Netflix manager to deliver the news that prices were going up. In September, Netflix will do away with a popular subscription plan that offered DVD rentals as well as unlimited access to the company’s streaming-video library for $10. Subscribers will have to pay for streaming and DVDs separately and each costs $7.99 per month, or $15.98 per month for both.”
“The message was a ‘a disaster,’ says Howard Belk, co-CEO and chief creative officer at Siegel + Gale, which advises companies on their brand strategies and customer experience,” Sandoval reports. “‘The tone was wrong, the quantity of information was too little, and it came out of left field. The message didn’t reflect any value to their customer base.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
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And if they don’t get season 6 Dr. Who streaming fast as a jack-rabbit then much fist-shaking will ensue!!
Indeed – fists will be shaking more than the shaking of a wibbly-wobbly timey-wimey thing!
And let’s have some doctor who subtitles!!!
Already down to 3 movies left in my DVD queue.
Then it’s streaming only.
And there’s the point. Streaming is the better option for them. It’s much cheaper than building warehouse, buying discs with which to fill them, and people to work them, not to mention shipping costs. Netflix is betting that most people will choose the streaming option over the DVD option, so they’ll be able to minimize all of that distribution overhead.
Maybe their PR needs a little work, but there is nothing wrong with what they are doing.
And lest we forget than a DVD-only option did not previously exist, so there’s actually more choice available here.
I had DVD service long before the offered streaming as a FREE addition to the service. Since the bandwidth on the USPS is actually higher than my internet connection, I went DVD only, which is all I use anyway.
Netflix was always, until 2-3 years ago, DVD’s by mail only.
Streaming was added after the fact. and free.
Now with the prices they have to pay for content, Part of the problem is not netflix… its the studio’s wanting a fortune.
http://money.cnn.com/2011/07/08/technology/netflix_starz_contract/index.htm
“Pachter predicts Netflix’s streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.”
And i saw a higher figure elsewhere, closer to 3 Billion+
And Netflix is passing the costs onto the customer.. I get it. I just don’t like it.
As for the content people are complaining about, it’s again NOT netflix.. again look at the studio’s.
Streaming may be better but the selection sucks.
Streaming is better for NFLX. We, the customer, are subject to their frequent outages, which have been terrible recently. A lot of people are dumping NFLX altogether – they should hire some PR people.
I find the Blu-Ray service the best part of the pie, especially because the selection is much better, and you can watch in true HD with proper multi-channel audio. When they can stream Blu-Ray, then the disc service can go bye-bye.
I’ve been with Netflix (streaming only) since February and I’ve never encountered an outage. I guess YMMV.
True. This is their misstep in my opinion. Once the streaming selection is on par with the physical DVDs, then they should initiate this. But they have little control over what’s available on streaming. Until the dinosaurs in the movie industry retire or evolve, it will continue to be a problem.
+1
To borrow a phrase from “Angry Mac Bastards”, I see a lot of these complainers as “entitletards”. Seriously, if a company sees that a currently ridiculously generous setup is not financially viable to their bottom line, it doesn’t mean you’re entitled to milk it forever. It’s just as your two sides (yes, this is a bipartisan clusterf**k) in the debt ceiling debate are playing a giant game of chicken with the world’s economy. GROW UP!!
…nor are they entitled to milk me. Upon learning of the 60% increase in their services, I immediately cancelled. I was a customer for five years. Only an idiot for a CEO would raise rates so drastically on such a discretionary service in the Obama Messiah Era of Ecomania.
There really has been a lot of “how DARE they take away my God-given RIGHT to cheap Netflix!” it’s not personal. If you don’t like it, cancel, but don’t think they owe you anything.
I have to disagree. Customers complain about price increases. That has nothing to do with “entitlement” or a “god-given right”, it has to do with how the consumers always operate in an economy. Sellers have the right to set a price. Buyers have the right to decide if they like it or not.
Consumers have every right to those opinions.
Most of my netflix que is DVD’s. And 70% of my most desirable videos are on DVD. So…. If Netflix wants me to stream more and rent fewer DVD’s it will have to provide more of my main choices via streaming. Right now they are only available on DVD.
Exactly. And that is why I am going to an all DVD/Blu Ray plan. I understand the business decision but it’s flawed in one major aspect – if you want people to go streaming only – then you need to provide them a comparable library of titles. Anyone who relies on their hard disc service for viewing what they wish is unlikely, in my estimation, to choose a streaming only plan. Believe me, I would LOVE to only have a streaming plan – but that library is very sparse and only offers a sliver of what they have available on disc.
I recently discovered this unique invention called a library, wherein I can rent DVDs for free.
Okay, so it’s not a solution for everyone, and certainly not for those without a decent library or who have a penchant for new releases. But my library system does have the complete Battlestar Galactica new series, so I’m set for a while 🙂
it’s not Netflix that limits the streaming choices… it’s the studio’s wanting a small fortune to stream it.
Netflix got the deals, and their costs skyrocketed… and in order for Netflix to make money and stay alive… the customer has to pay higher prices.
It’s no longer worth it to get the DVD’s for me.. so i’m staying with stream only.
I cancelled my Netflix account, and joined big u movies, 20 bucks for a lifetime membership. Of course you need to be jailbroken. And did I mention you can stream from your phone directly to you apple tv( with all stream)
Blockbuster for Blu Rays, netflix for streaming.
Blockbuster went out of business
Funny the Blockbuster down the street is open everyday! There are many different types of bankruptcy not all of them many business has closed.
No. Blockbuster went bankrupt in 2010 and was sold off. As of mid-April they are part of Dish Network, Inc.
Blockbuster Inc. @ Wikipedia
I get the rising costs of service. I get how there is cost benefit to having separate plans and how that could potentially benefit a customer. Quite frankly, netflix’s streaming collection is sparse and the quality isn’t very good. So if there’s lower overhead for the streaming service, how do they justify equal pricing with the DVD plan.
And has everyone already forgotten that not too long ago both services could be had for $7.99 total. There’s nothing generous about fiscal irresponsibility that becomes a burden that the consumer has to carry (much like what’s going on in D.C.). Idiotic maybe…
I’m canceling since I don’t rent or stream enough to justify the price.
August 2nd, one day prior to the next billing cycle and Netsucks is HISTORY. The beginning of the end. iCal that.
the billing cycle is different for everyone. mine is the 15th.
But, everyone should go check their billing cycle and plan accordingly.
The challenge for Netflix is that the company will have to spend significantly more to acquire content for streaming. The content holders (the studios and TV networks) hold the cards. Many of their original deals were predicated on a limited quantity of DVDs being distributed via Netflix. With streaming, the same terms do not apply.
Sony, for example, yanked its titles from Netflix. And other studios are demanding higher royalties in exchange for streaming rights, often holding back popular titles because of that. As a result, Netflix will see a huge jump in the company’s operating costs, which will be a drag on profits. Adding to this, HBO to Go and Hulu (which is now the most popular girl at the prom, given that the company is in play) and other sources will compete with Netflix for streaming.
I think the company will succeed, but their easy days appear to be over. The botched handling of the pricing announcement shows that the management of Netflix have much to learn in terms of PR and positioning. It will be interesting to see how things shake out in the next year for them.
Do you work for Netflix, are you not being effected by the bad economy, do you wish to see other service go up 60% every 7 months like Netflix has.
Listen up, it’s a bad move and it will hit them hard, I have been with Netflix for more the 5 years, I have seen the service get worse and will not support it anymore.
I will use the 20.00 monthly that goes to Netflix and use it to purchase and rent off of my Apple Tv2.
I am a Amazom prime customer and get it streaming service for free, it is more difficult to use, But not to difficult.
See, Netflix is getting greedy, if streaming cost more then the upper management needs to take a pay cut to compensate for the difference, but don’t do it on the backs of your loyal customers, and not after a rate hike just 7 months prior.
Maybe you should learn to read a little more.
http://money.cnn.com/2011/07/08/technology/netflix_starz_contract/index.htm
“Pachter predicts Netflix’s streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.”
180 million to 2 billion per year in licensing fees….
nah, that would NEVER have any effect on your monthly cost.
but go ahead, blame Netflix for the studio’s requiring so much money to stream the content.
If streaming is a better option for Netflix, then it would appear that they (like Apple) are betting against the growing trend of ISP capping/throttling.
Unless there is an unknown factor somewhere, IMO this is going to be a big mistake.
All the latest tech moves seem to all point at how difficult it is for companies to get a handle on their customers. The tech industry naturally appealing to geeks and Apple has made it sexy and appealing to Joe Consumer.
Not even the mighty Apple, with all of it’s success is getting it right. Their latest efforts, FCP X and Lion seemed to have a big slam toward removing the geekery from technology and protecting consumers from themselves.
Geeks don nit no stinkin’ protection, mang! We like getting under the hood of our complex Final Cut 7 and making it do what we need it to do how we want it done.
You can’t not figure-in the needs of geeks in pros in your marketing and development plan-especially once you already have in previous revs–in the bastardly hopes of selling more hardware and licenses.
YOU MUST SERVE ALL OF YOUR CUSTOMERS ALL OF THE TIME!
i disagree for the most part on your Lion rant.
I do agree that for whatever reason People Hate Change.
But facts are that once you use lion, it has more power under the hood then any other Appe OS Release, and with a understanding of unix, Lion is easy to manipulate they way you would like, but why mess with something when it is tuned and runs exceptionally smooth.
Sure some new teething pains are normal but Lion is fast and has more going for it then any other OS.
Now if you want to tinker get Linux or windows, but as we have all seen you start messing with Windows you end up with Blue screens and a more unstable OS then what Microsoft released, and that not saying much.
They way of tinkering is going by the way side, you don’t need to do it anymore, but options are open to allow this if you wish.
Problem is some people see progress as a bad thing and limiting and others will embrass it, you can fight all you want, but progress will happen with or without an individual.
I agree. Final cut should have “progressed” toward something I could use NOW. It just ain’t gonna work for me and the other editors I collaborate with in it’s current state.
CHANGE IS GOOD–when it’s good.
I’m afraid what we have here is a new Coke situation, my friends. We could use a refresh on the Koop-aid too–it’s getting’ a little watered down my friend.
DVD ‘rental’ via the local library, where I can order what I like in advance, and then rip. Netflix streaming requires Silverlight, so, gee, I’ll never have that.
It’s still an option and better than driving to a video store. I’ll be opting for the lower rate and then actually using iTunes for those rare times I just have to rent a movie.
Netflix offers great customer service and I really appreciate their efforts. It’s sad they can’t continue to offer the same low price but it’s their company and their rules.
I admit that such action would seem to be a mistake but these people aren’t idiots. If it is a bad decision they’ll change course soon enough.
Intuit made a choice, then we made a choice. (I’m going with See Finance there.)
This is no different except that I’m not angry at Netflix. They’ve been nothing short of first rate with me. They tend to go out of their way to resolve any issues as quickly as possible. I’d rather keep the old plan but I won’t walk away from them over this.
3rd-world-living, Netflix-unexperienced person is confused here. Why the hell would people complain about a $2 price drop? You’d have to be a dinosaur to miss the DVDs.
Because the selection of Netflix streaming is terrible. It’s a tiny fraction of the total DVDs you can rent.
Well that really seems to blow it up…
I have been a streaming only subscriber for some time so this increase doesn’t affect me. With that said, the selection does suck and I’d gladly pay more to stream ‘more’ recent releases.
I like Netflix mainly for old tv shows. I have never watched 30 Rock and enjoy being able to watch it with NO commercial interruptions. I can run up to a blockbuster kiosk grab a disk for 1$ and be home in 5 minutes. I can rip it in 25 minutes and return the disc the same day. I missed a couple decades of SNL that are nice to watch except for the music being cut out. They should have split the8$ monthly to say 5 or 6$ for each and maybe 9.95$ for both. That allows a reasonable amount of choice and price options. Unfortunately they chose to gouge us with 100% increase. I gave up the DVD s which I don’t think can ever be a cost effective way to make them viable long term. I am considering dropping Netflix but can’t justify over say HULU (commercials) and HBOgo (smaller selection with time limits) . They still have a pretty good product for the price, for many people.
Some stuff is only available on DVD.
Other stuff is only available on streaming.
Paying for both is too much.
Fall is my busy season anyway, so I’ll be dropping Netflix before my August 13 renewal date.
I don’t know about the rest of you, but I have the 3 DVD plan and my cost will go DOWN if I don’t sign up for streaming. If I keep it as is — DVD and streaming — my cost will go up $4. But if I get rid of the streaming and go back to the way it used to be, my cost will go down $4. Since their streaming selection really sucks, I rarely use it. So I come out ahead with this new plan.
“The message didn’t reflect any value to their customer base.”
Which of course is The Spirit Of The Age.
This is why companies drop dead. Disrespect the customer and darn, you killed your company. Witness the desperation of the thoroughly disrespectful music industry.
In my case, Netflix lost $2 per month of income due to their price gouging. I’m also eyeing their competition for deals. After all, they aren’t a cable TV company. Dickheads.
if studio demand more money and Netflix caved in, if this result in subscriber lost is no a good business model, I am Netflix subscriber for long time, I will cancel service in Sep. I am already testing blockbuster, why should I wait 28 days for movies from Netflix when it is available from blockbuster same days, the online content is very poor, it is mostly tv stuff, studio wanted $15 for CDs too look what happened there, Netflix service is addition to cab/sat service for most people, don’t make it so high, it will be easy decision to drop it.