Et tu, Netflix? Besides offering a great product with enormous selection, Netflix has gained legions of loyal customers over the years because of the perception this company was different. It was fair. It didn’t nickel and dime customers with late fees or hidden charges. It addressed problems quickly when customers complained. It wasn’t like other companies that suddenly jacked up prices to exorbitant new heights. Was this perception wrong?
Yep. At least in terms of the price hikes, that is. A few years ago, when few people could stream movies and before Netflix became a juggernaut, the company unexpectedly lowered the cost of its DVD-by-mail plans by $1 a month. It was this kind of genuinely customer-friendly move that gave consumers the impression that Netflix was different. Given the way most business treat customers, Netflix’s behavior was shockingly refreshing.
But yesterday, Netflix introduced new plans and prices on its blog, and most customers aren’t remotely happy about them. So far, there have been more than
27,000 40,000 comments on Netflix’s Facebook page reacting to the news, with most of the comments voicing outrage and disappointment, betrayal even. Here’s a fairly typical example:
Lets see…Todays to-do list: #1. Cancel Netflix service. #2. Sell Netflix stock. #3. Call/email/write everyone I know and tell them to do the same.
Again and again, commenters say they’ll soon be cutting Netflix loose and getting their movie fix from Redbox, Amazon’s Instant Video, or other services. Perhaps people will also devote renewed interest in the hundreds of cable channels they pay for but rarely watch, or they’ll use the cheapest source of movies anywhere: the library.
Let’s examine Netflix’s plan changes, though, which don’t equate to a price hike for everybody. Actually, some customers will wind up paying less.
Right now, most customers pay $9.99 a month for a plan that allows unlimited streaming movies and one DVD out at a time by mail. Starting September 1 (and immediately for new customers), Netflix is splitting up the package deal, and charging $7.99 a month for each component of the popular combo.
The result is that customers who want to keep watching movies via streaming and DVD-by-mail will have to pay $15.98 a month—60% more than the $9.99 they’re paying now.
On the other hand, customers who don’t fully take advantage of the current combo deal—those who rarely or never stream movies and only watch DVDs when a new one comes in the mail—are looking at a price break. Until now, there hasn’t been a plan for unlimited, one-at-time DVDs, so customers who wanted that option had to pay $9.99 monthly, even if they never streamed a movie and wouldn’t know how to do so if their lives depended on it. Now, these customers can get the service they want for $2 less a month ($7.99).
In today’s age of abundant packages and bundles, it seems odd that Netflix is making its own combo disappear. But that’s what’s happening, and Netflix seems to have only weak hope that customers will continue opting for both parts of its now-separated package. From the announcement at its blog, Netflix states:
We think $7.99 is a terrific value for our unlimited streaming plan and $7.99 a terrific value for our unlimited DVD plan. We hope one, or both, of these plans makes sense for our members and their entertainment needs.
Consumers, on the other hand, are accustomed to getting discounts when giving a company more business. As one commenter on the Facebook page writes:
I like the split but I think charging full price for both is going to lose y’all a few customers. I love having the option for both streaming and DVD but I’m not willing to cough up $16 a month for it. Maybe reduce the price to $12 or $13 for both streaming and DVD.
Many others say the streaming-only option would be worth it if Netflix’s entire catalogue was available in that format. Right now, the selection for streaming is puny compared to what’s available on DVD.
Overall, what’s gotten so many long-time customers steamed is that the changes clue them in that Netflix is, alas, just another business that actually (what nerve!) wants to make profits. Hence, comments like this:
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.
This is the sort of comment you’d expect in relation to a bank or a cable or wireless company, not Netflix. Netflix was supposed to be different.