Netflix’s new pricing system—which effectively increases monthly rates by 60% for most members—went into effect on Thursday, but subscribers won’t necessarily see the price change yet. Instead, it’ll occur on their next billing date, which could be tomorrow, next week, or sometime later in September. The question is: As subscribers face the choice of higher fees or less viewing options, will a mass Netflix exodus occur?
When Netflix announced its price increase in July, customers were outraged. Instead of paying $10 a month for a program that included one DVD at a time in the mail along with unlimited streaming online, under the new pricing system, each of these services runs $8 a month. So a member who wants to continue receiving the same options he formerly paid $10 monthly for will now have to cough up $16 a month.
In online forums and comment sections following news stories rehashing Netflix’s announcement, tens of thousands of members swore they could cancel their memberships, often in snarky, deeply offended terms. Such as:
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.
While Netflix suffered a lambasting all over the web, its competitors—particularly ubiquitous DVD kiosk operator Redbox—seemed to be emerging as winners by default. A TechCrunch post had the apt headline: “Dear Netflix, Thanks for the Customers! Signed, Redbox.”
(MORE: Is the Era of Buying DVDs Over?)
More recent surveys back up the idea that Netflix’s price changes will result in a hit to membership, and that many subscribers (and many former subscribers) would be taking more of their business to Redbox. According to one survey:
*15% of Netflix subscribers said they would be canceling their membership
*40% of Netflix subscribers said they would switch to the less-expensive streaming-only plan
*24% of Netflix subscribers said they would be using Redbox’s DVD rental service more often once the Netflix price changes went into effect
Now, we’ll have to see whether subscribers do what they said they would do.
If you’re unsure what to do, an AP story does a good job listing the pros and cons of the DVD-only and streaming-only options. Streaming is more convenient and enables the subscriber to watch far more programming than the one-DVD-at-a-time plan, but the number of streaming choices are puny compared to Netflix’s enormous 100,000+ library of DVDs. For good measure, the story makes the case that for some subscribers, sticking with both services is still money well spent, even if it costs substantially more than in the past:
Sure, a 60% increase sounds outrageous, but it’s only $6 more per month to have your DVDs and Internet video, too. Most people could cover that cost by cutting out one or two visits to Starbucks or some other store each month.