Netflix Users Irate, But Are Higher Fees Really That Unreasonable? Discussion

Thousands of Netflix users are voicing furious complaints over new changes to Netflix fees with lots of them threatening to dump Netflix entirely. Yet, even in a tough economy, would life as a Netflix customer really be all that hard, in light of paying less than $16 per month for both DVD rental and video streaming services?

Read the full content of this Article: Netflix Users Irate, But Are Higher Fees Really That Unreasonable?

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Unreasonable? No.

But from $10 to $16 for the same service. Makes you think twice whether you need it or not.

Personally I canceled HBO, and HDTV from my cable and got Netflix because it was cheaper (HBO + HDTV = $20 and I'll get Starz for free). Netflix was $10, now going to $16. Still cheaper, but not by much. Might go back to HDTV (I miss) and the good series on HBO (which I also miss).

 

A six dollar price increase is reasonable (go stuff one less burger in your face each month). At least they still keep the same plans, unlike Blockbuster that actually ELIMINATED the super-convenient Total Access deal where you could return as many DVD's as you wanted in store for an exchange.

Netflix is still around, while 5 Blockbuster stores in my area have all vanished.

I do wish, however, that Netflix had more streaming titles. Of the 40 or so movies in my queue, maybe a handful were available for instant viewing.

 

Then what am I suppose to eat while streaming my movies 0.0?

 

An out of the blue 60% increase (on the 1 DVD plan) is not what I'd call reasonable or justified.

It should've been done in increments, over a set amount of time. Done like this, you're basically saying "deal with it", which is terrible customer relation.

I already pay $2 extra, for Blu-ray access. An extra $6, with no explanation, hits hard, and I've been given little time to think it over.

 

It would only be reasonable if they said
"We need to pay for better servers/load!" or
"We're adding more new releases!" or
"We have a better application to deliver the content to your mobile!"

But did they say any of this? No...

They just said 'You know that service that you enjoy, but kinda has things that irk you, but it's only 10 bucks a month so you'll pay for it anyway and deal with these small things? Oh yea, we're gonna charge you 60% more for that with 0% more content or service. We planned on losing customers with our statistical analysis, so GTFO if you want'

 

Ok, after thinking about WaterWizards points, I decided to lookup Netflix 2011 Q1 fiscal report.

http://www.bgr.com/2011/04/26/netflix-reports-subscriber-growth-revenue-spike-in-q1-2011-earnings/
http://files.shareholder.com/downloads/NFLX/1323993448x0x461760/11046ba9-7ea4-4b77-b1bd-a3035fc913d5/Q1%2011%20Letter%20to%20shareholders.pdf

Hmm.. I guess Netflix wants more revenue. I smell something similar to the "Pizza Delivery Fee". Increase revenue, and ensure all competitors do it so there's no alternatives for the consumer.

For now, I will be going from the $10/month 1 DVD + Streaming, to $7.99/month 1 DVD only.

Saves money for me

 

If so many netflix users are "irate", then why aren't many more jumping ship? They get upset and complain, but in the end just stick with it. WHY??! I guess logic does not apply in this scenario.

 

they've got the subscription base as it is. i'm sure netflix sees the risk of people dumping them altogether as insignificant. horrible mentality in my opinion. people need to choose and voice their complaints with their money.

 

I read somewhere that netflix actually wanted to move almost entirely with streaming, but that the move to streaming from DVD went a lot slower than expected (but from what I read, streaming has smaller selection).

 

Say there are 100 customers today paying $9.99. That's 100 * 9.99 = $999

After the price hike, 10% ditch Netflix, that leaves 90 customers. Out of the 90 remaining, say 60% choose streaming or DVD only and the remaining 40% stay with both due to intertia or because they are addicted.

35 * $15.98 = $560.9
55 * $7.99 = $438.7
Total = $999.6

They break even.. and this is not considering reduced costs in serving 10% fewer customers, and not counting the number of people who choose streaming only and paying the same rate as the DVD subscribers for less choice.

 

Jump ship to what though?

Netflix is doing this because they know there's nowhere to go.

 

Don't worry Kevin, there will always be more services. I read through the entire post and one user said he would move to "Amazon Prime's instant streaming." I've never been a Netflix user nor will I ever be one but I certainly think Netflix will lose a lot of their member base. The price spike is not reasonable to me as Netflix is not implementing any additional services/options. However, I have seen an increase in Netflix free trials since the beginning of July.

 

Considering they're now charging the same amount for streaming that they do DVD rentals, and the steaming library is not nearly as good...yeah, that is what I call unreasonable. Pretty sure they aren't offering more content in exchange for that extra $6/mo either.

Not sure where this is going, but I'm sticking with Netflix for now. At least until the next price hike.

 

redbox is a good option (obviously not for streaming) but their prices are pretty fair if you look up coupon codes online. my wife and i have been enjoying blu-ray and dvd movies for $0.50 to $1.50 per flick.

 

hmm well if you can find a service that offers same or better quality for same or lower money then jump on... if you cant you know why they upped their prices.

its all supply and demand (capitalism)

 

If they can keep content providers happy and perhaps add more then it is alright with me.

 

That's sure is a cost increase. Those that like Netflix will stay. Those that don't like it will stray away to competitors like Blockbuster.

I use Netflix for streaming only, and at $7.99 it's good for me.

 

A 60% increase is a 60% increase. Now obviously, it costs a heck of a lot more to mail a DVD and with the current condition of the USPS, it's clear that shipping costs will only increase and service will only decrease over time. On the other hand, while bandwidth is much cheaper than postage, although content licensing makes Netflix much more vulnerable to extortionate studio demands than renting DVDs. After all, hypothetically, Netflix could buy used DVDs from yardsales, and cut out the studios entirely.

So yes, a 60% rate increase is unreasonable, not excusable or inevitable, and while it's far more expensive to mail a DVD than to stream a movie, there are greedy studio execs driving up the costs of streaming as well.

 

Looks like Blockbuster trying to "sway" Netflix customers by offering a:

* Free 30 Day Trial ( 1 disk at a time) on Unlimited movies, TV and games. And, after 30 days, it's $9.99 per month. Or,
* Free 30 Day Trial ( 2 disks at a time) on Unlimited movies, TV and games. And, after 30 days, it's $14.99 per month.

You also get with both plans "Unlimited movies, TV and games". If, you can still find one near you. The deal will go through 9/15/11

Link to get signed up for above:
https://www.blockbuster.com/signup/m/plan/c.helloblockbuster/pt.helloblockbuster

Blockbusters "Press Release":
Press Release: Blockbuster Rescues Furious Netflix Customers

I tried Blockbuster Total Access a while back. I was interested watching all Seasons of House via DVD. I had the DVDs setup to send them following the series order, but what happened is..they were sending me the Series episodes "as they came available". So, watching Season One, and on Episode 3, I would receive "Season Two: Episode 4". Very out of order.. So, I just canceled my membership before the 30 day trial was up.

The have "On Demand" but the pricing is not part of the above plans, and per movie to rent it starts around $2.99, I would rather rent from Amazon.

 

Yeah, thats the key. I think netflix is bleeding retail dvd sales and also cutting into cable subs. As they keep increasing carriages for satellite stations, with ever increasing hikes, more and more will bail. The war is now on ISP's with lower caps and soon they will want more for the limited streaming titles that netflix currently offers. Eventually, I invision no cheap alternatives where the content providers will charge enough in all distribution channels to fatten up their margins. Next they will extend out new releases on red box to 90 days.. And if that does not work 120 days etc.. This would lead to further pirating where the content providers end up with nothing.

 

Been with Netflix since the start but I'm leaving. Even if they offered me so other plan that was cheaper I would still leave. I just don't want to associate with a company that thinks its "ok" screw over their base by 60%. This is one of those all time screw ups that a company makes. I'm pretty sure they didn't realize that their user base more than likely accounts for 50% or more of their referral biz and we are kinda like a cult following. Meaning we all swear by how great the service is and tell our friends. This is shown in the outrage with all the posts on twitter and facebook. Netflix was seen as one of the good guys as opposed to the Sat and cable co. Now there not just the same their worse.

I would bet its some ivy grade new higher that came up with the idea. Someone that has no clue on how things really work out here in the "real world". Guess my DVR and sling box will be getting alot more action now.

ym

 

I completely agree. This isn't about whether or not it's worth the new prices...it's about how they did it and the principles involved. They're doing it because they have calculated that they can get away with it. And honestly, if they had just done this in smaller increments and taken the time to give a reasonable explanation things would be fine. They are doing this in a down economy when times are tough for many people. I believe in free enterprise...and it goes both ways. I'm going to give them a call (already tried but lines were busy) and then I'm going to start off by putting my account on hold. If enough people do this they will lose revenue and rethink their position. And by putting your account on hold you don't pay....but your account doesn't close and you still keep your history and queue. In the end I will not pay the increase...I will drop streaming. Ironic since they seemed to want to move people towards streaming. They can shove it.

 

Netflix is a bait and switch company,

i signed up through x box at 8.99 a month later it jumped to 9.99 without my permission and or knowledge.

later, i find they were charging me 12.99 for a few months.

Finally, they did me a favor and stopped sending me their videos on my cue list.
And saved me half price and now gave me a discount to $7.99 for streaming movies.

I did notice something that was a sign of change coming from this all coming down, and that was when they had sent out free trial codes to give to friends and family for a month, and they also advertised on this about two months before they had made this latest announcement of change to cover the loss of people who would leave for the high cost of comparable cost to basic cable channel package to their own charge of limited use of dvd use as only one dvd per week use..
because it takes two days to get it, and one day to see it, and two days to get it back and another to have one on the way once they receive it back.

they lost my business.... they like many other corps, dont understand, the consumer may start boycotting them if the govt does not do its job or the conservies keep cutting their ability and funds to protect the consumers , not to mention give the corps the upper hand to screw the consumer with no right to petition or redress of grievance etc;

I say put corporations on a budget to live within their means like everyone else and make them pay their fair share, then raise their taxes like they worry about having to pay .

 

We don't have this service in Canada, just the streaming version for 8$/month. I will definitively considered the 'extended plan' with the DVD rental if it was proposed in Canada simply because the streaming movies selection is very frustrating and limited. When you read the netflix blog that is amazing the number of people that complain about the service provided by netflix... personally I hope that a rival arrive very soon on the streaming movies market.

 

Some people myself will be going back to premium cable [HBO, Starz, HDTV]. Netflix went from cheaper, to "almost" the same price.

 

I'm not free for a year May cancel at that point if streaming selection does not get better with these price increases. Don't mind extra but you need to give me something to justify it. This isn't like gas where you have to take it one way or the other no matter what the cost.

 

I read somewhere that 2million users had cancelled their accounts. That is just stupid. It's still pretty dang cheap. with the new prices.

 

I didn't give it up completely, but changed my subscription to streaming only. I've had the same three disks sitting next to my TV for about 2 months, but have streamed a lot of programming during that same time. The price changed gave me a chance to think about how I consume content through Netflix. It's not really the cost, per se.

And for those who are really feeling the pain caused by Netflix, don't worry, Help Is On The Way (thanks, Jamison!).

 

LOL. I saw that Jason Alexander clip. Pretty funny.

But I plan on sticking with Netflix streaming + 1 DVD/Blu-Ray amonth. I can't find a better deal especially one as convenient. I watch probably 2-3 blu-rays a month, usually new releases that you can't get on streaming, and prefer blu-ray quality over streaming HD anyhow.

I considered Comcast on-demand, but those movies are like $4-$6 each!

 

Ditto, I've been using their streaming + 2 DVD/BR's a month, and gaining access to Blu-Rays, uncompressed and not at $4-6/ea via Comcast or purchasing them at $18-30/ea makes it a great deal. I've been catching up on a lot of streaming TV shows and older movies and supplement that with new release Blu-Rays along with sometimes older movies/shows not available via streaming at a rate of about 8-10/month.

Even with the price hike, it is well worth the $$.

 

Yeah, good point too, I do watch a lot of older TV shows that I never got a chance to see. Problem is that their licensing for some are quite short. I started watching Babylon 5, got through the first season, a couple episodes into Season 2 then they were pulled. I would go all digital though if Netflix's entire library was on there, but it's not and I still prefer physical blu-ray HD quality for the big action flicks especially.

 

Optical disks are dead.....long live streaming!

In all seriousness, the only weakness of streaming delivery is the limited catalog of new and even recent release. On the plus side, this limited streaming catalog, which features more recent indie flicks and few cookie cutter Hollywood blockbusters, might really help independent filmmakers, as far a generating awareness and even meaningful revenues. If the big studios refuse to license high boxoffice superhero films, TV show remakes and endless sequels, they risk a long term loss of rental revenues and even a shift in consumer preferences. Subscription based streaming represents the future.

There's no doubt that optical disks are going to disappear in the next few years, and that Blu-Ray might even go away before the ubiquitous DVD. The Blu-Ray format just doesn't make sense on a technical or business level. Yes, Sony won the war against the HD-DVD, but what's the point of an HD optical disk in 2011? It made sense 10 years ago, but not today. Of course, you could say the same thing about Sony.

 

Before optical discs disappear, lots of stuff has to happen.

First, eliminate compression, or come up with the best compression with no noticeable loss. We're going backwards in technology if we stream. HD streaming is no better than DVD quality.

Second, bandwidth limitations need to be lifted. Not everyone has unlimited bandwidth. Heck some places limit 50-100GB per month. Comcast has 250GB per month. Most of the ISP's which are also cable TV providers, want to limit bandwidth so users will use their on demand type services instead.

Thirdly, worldwide adoption of fast internet. Heck even in USA there's lots of places that can't get any better than dial-up or satellite internet still. So you're going to isolate a lot of people. Just because you have a service doesn't mean everyone else can afford it or has access to it.

Fourth, brick and mortar stores won't let this go down easily. They would have to adopt some way to buy or rent streaming media from them. It's a big source of revenue from them. People thought CD's would disappear, but they're still around and sales are pretty good.

Fifth, ownership. If we stream everything, we have no ownership of anything. The big companies decide if and when we can view certain movies and other video content. Because companies don't want to bother with licensing of certain titles means we can't watch it. They're trying to do the same thing with video games. I have a vast libarary of old games. In the future if companies only offer it through streaming services like onlive, again, you can lose out on classics.

I don't see optical discs going away for these reasons, among many more.

 

Heck, there are still a lot of people in my neighborhood using VCRs, so we're a very long way from the end of optical discs. Of course, I live one step out of the woods.

 

Unless they add more recent movies, then it is obviously unreasonable to high jack the price up! But it seems like it is depend on which equipments you use to see netflix. Apple TV and Xbox 360 are showing different amount of movies.

 

$16 a month for a huge library?

No....not a big deal.

Then again, I don't pay the bills so...I can't speak for everyone.

Mr. Mysterious

 

OH, so your llama pays the bills? Impressive!

 

Where can I get me one of those bill paying llamas? And if necessay, I'll even accept a bill paying alpaca or guanico.

 

Think of it like this, it's a whole month of a huge library of movies and tv shows to watch, or the cost of 3 people going to McDonalds, or barely the cost of an entree at a semi-respectable restaurant. I'd say it's an amazing deal.

 

I agree. People don't flinch at $15/mo for MMORPG's. $16/mo gives you a huge selection of movies and TV. If you don't use it that much then maybe consider local video rentals. But for me, even the 3-4 blu-rays a month I rent are worth it. Do I want to pay more? No. But I can't find anything better to be honest, and it's not that horribly priced.

I still don't like how they approached it though. It's just stating a significant cost increase because they can.

Heck, if it's gonna pay my bills I don't care if it's Pizza the HUT!

 

Just an update...

Higher Netflix prices equals fewer subscribers
Horror show: Netflix losing more customers than expected on price hike, stock plunges 19 pct


SAN FRANCISCO (AP) -- Netflix's decision to raise prices by as much as 60 percent is turning into a horror show.

The customer backlash against the higher rates, kicking in this month, has been much harsher than Netflix Inc. anticipated. That prompted management to predict Thursday that the company --the largest U.S. video subscription service-- will end September with 600,000 fewer U.S. customers than it had in June.

The Rest of the Story

 

I saw that article this morning. I think there is something unsaid related to the Starz negotiations. Is it possible Netflix can't reach the $$$ value requests from their content providers and this was the underlying reason for the extreme price hike? If so, it could be that the reason they have been so mysterious about the hike because they were worried that blaming their suppliers would hurt ongoing negotiations. After all, Netflix needs Starz and similar entities more than they need Netflix. They could just as easily set up subscription outlets for their content and completely control the revenue stream.

 

To be honest though, I still don't see where people can find similar content for less money. $16/mo I can get unlimited blu-rays and unlimited streaming which covers pretty much any released movie or TV show available. Even though it's 60%, it's still only $6. I'm on a budget and $6 is less than a McDonald's meal a month. I'll sit and eat Ramen noodles instead while watching a movie.

 

Check out Netflix fiscals reports, you'll see they've been very profitable for many years now. Example: their stock price prior to this story was over $150/share.



I actually forgot to cancel the streaming side
Thanks for reminding me doing it now

 

Netflix CEO apologizes. (But he's not sorry, lol)

Netflix to separate to two companies: Netflix for online streaming and Qwikster for DVD and Blu-Ray. There will be two charges from each company $10 DVD and $6 Streaming (I think).

Personally I think it sucks because you will have to manage your DVD's/Blu-Rays and Streaming from two different companies. Now with that, I will definitely shop around for another DVD by mail service. For a couple bucks a month more, the convenience would have been fine with me, but now since it's just another service, I'll try to find better. Blockbuster again? Blech.

Netflix to Break Business in Two - NYTimes.com

http://blog.netflix.com/2011/09/explanation-and-some-reflections.html

for the lazy, here's the NY Times article in its entirety:

------------------------

In a letter posted on the Netflix Web site late Sunday night, the company’s chief executive, Reed Hastings, apologized for the way he handled recent changes in pricing and subscription services, and announced that the company would split into two businesses, with the DVD-by-mail service to be renamed Qwikster.

The pricing changes were announced this past summer and have since caused Netflix customers to walk away in droves. “I messed up,” Mr. Hastings said. “I owe everyone an explanation.”

He said the DVD-by-mail service, where the company began, will become the Qwikster brand with its own management team. The name Netflix will remain for movie streaming, according to the company’s statement, which was posted around 9 p.m. Pacific time. Qwikster and Netflix will now appear as separate lines on customers’ credit card bills.

The price of the company’s services will not change.

“We’re done with that!” Mr. Hastings said.

It was, after all, just that kind of change that prompted outrage among Netflix customers this summer, when the cost of a subscription that included unlimited online movie streaming plus one DVD-by-mail at a time went from $10 per month to $16 per month. That 60 percent increase has cost the company about 1 million of its 25 million customers, a greater exodus than they expected, company representatives have said.

But Mr. Hastings did not apologize for increasing subscription fees, or for asking customers to think about the two services separately. Instead, he blamed his own “arrogance based upon past success” for a failure to communicate in the face of a fast-changing business model.

“We realized we should have communicated better in July when we announced the price change,” said Steve Swasey, company spokesman. “That’s a mea culpa on that.”

 

I don't mind the price hike actually. I thought Netflix was too cheap to begin with because I was on Blockbuster before and they cost around $15 WITHOUT the streaming.

I don't think I've watched a DVD/BD for 6 months so I'm dropping that option and just going streaming. For kids, the different shows they have is enormous... many of the Disney Channel series, Nickelodeon and as much cartoons as you can find... and they can watch on ANY TV (we have 2 PS3s and a Wii), any of our tablets or our iPhone or Android phone. You can't do that with cable or optical discs.

We watch most movies in the theater (Costco tickets) or a discount theater so any fringe movie that wasn't good enough for that will usually end up on Netflix streaming. Most of our TV shows are DVR'ed or available via our cable company's free on-demand service.

Maybe the way they announced the price hike was wrong, but if you are going to need revenue to boost your streaming content, dividing the services is a logical decision.

 

I canceled my DVD plan because I never used it, really.

This Qwikster thing seems like a mistake. Seems like all they're doing is making it more difficult for customers to get at the content. I mean, it makes sense to have a separate management team to oversee two very different business models, but it just seems like instead of acknowledging that people hate change, they made yet another change that people won't like very much.

http://venturebeat.com/2011/09/19/netflix-qwixter-communication/

This article pretty much nails it. There is no upside to this Qwikster announcement from a customer standpoint.

 

Just a spin to justify the price increase.
It's a psychological trick to make people think they are dealing with 2 separate companies when in reality it's the same Netflix.

I'm sure they had different managements for each side prior, and I'm sure they will continue to take orders and report to the same board of directors. IE: Nothing will/has changed.

BTW: with this new marketing plan, the price of the DVD only plan will increase by $2/month.

 

Precisely my thinking.