Netflix shoots itself in the foot... aka no more free streaming

[Temis the Vorta]

Maybe in the sense that there's still an aficionado market for vinyl records, but it won't be a big one. Streaming "should" take over, if you only consider technology, but there are business related obstacles.

The content providers will be throwing up barriers, since the perceived value of streaming is so much lower than alternate methods of consumption - theaters, DVD purchase - and that means people will expect to pay much less for a product whose production costs aren't going to decrease, which threatens the profits of the producers. We can't expect them to acquiesce to this situation easily, or at all, if they have the power to prevent it, which currently they do.

The public perception is that Hollywood is a bunch of greedy dirtbags, so customers are chomping at the bit to pay bottom dollar for movies and TV shows. Movie and TV studios will fight to hold the line against that, and Netflix will continue to get caught in the middle. But at the very least, Netflix cannot continue to act so stupidly that they end up being lumped in with the Hollywood dirtbags.

[Brolan]

No change for me since I had switched to streaming a couple months back, everyone in my household was too lazy to drop the DVDs in the mail once they watched them. They only cycled about once a month.

[Gaith]

A few days late, I know, but Mick Lasalle, lead film critic of the San Francisco Chronicle, delivered an epic smackdown to the online howlers:

In Praise of Netflix

Oh, the whining over a few dollars.

Netflix raised some of their prices yesterday and lowered others. They did the right thing by separating the plans of people who want lots of free movies over the Internet, even if the resolution is miserable, and others willing to wait and to pay to have DVDs delivered.

A lot of people will look at their usage and conclude that they don't need one service or the other. They will make the adjustment and their rates will go down. Others, who download a lot but also get a lot delivered, will find their rates going up slightly, and people in one category -- the ones who download a lot but only rent one movie at a time -- will find the biggest increase. Like five dollars. The outrage. In any case, anyone is free to change plans.

We are living in this weird time in which people think they're entitled to things either for free or almost for free. The other day a guy went up on the site of my ASK MICK column wondering why -- and with an attitude, somewhat incredulous at the stupidity of those serving him -- that the column posted on Sunday was the same as the one he read on Thursday. I didn't have the energy to get on and explain to him that, though the column was apparently posted on Thursday, there is this thing called a newspaper that prints, every Sunday, the actual column that he's reading -- the same newspaper that pays my salary and allows that column to exist -- and that's why the Gate was playing up the column on Sunday. This guy has probably never bought a newspaper in five years but was outraged that this free service was confusing him.

Things cost money, folks. A few extra dollars to get all the movies streamed into your house is either worth it to you or it's not worth it to you. But it's not a moral issue. Netflix has not wronged you. Either pay or don't, but please stop acting like you've been violated. It's childish.

UPDATE: Reading some of the comments, pro and con, I just want to add a two or three things. 1) It wasn't an across the board increase, because some people's rates went DOWN. 2) The most anybody's rates went up is about five bucks. If you don't have five bucks, then why get on the Internet and announce it? I mean, even if it's not your fault, it's an embarrassing position to be in. Also, say you don't have five bucks. That means that, previously, YOU WERE SPENDING YOUR LAST TEN DOLLARS ON NETFLIX, which is even more embarrassing; 3) If you do have five dollars, then what's the big deal? You waste five dollars every time you go buy a coffee -- even if you stiff the coffee maker, you've still wasted $4.25. There's a lot of meanness going on here toward a good company and a wonderful service that has transformed how people rent movies, that has made things remarkably convenient and that has been incredibly reliable.

[J. Allen]

He's way late, and I wouldn't really call that an "epic smackdown". I've heard that argument since the day of the price increases. Way to make it to the party after everyone's gone home and the janitor's cleaning up, Mick.

Most people's issues weren't so much just the price increase, but the way Netflix handled it, which was stupendously shortsighted. It's one of a recent number of poor marketing and PR decisions that is biting Netflix in the ass.

[Mike Ram]

J. Allen is right, a lot of the anger was in response to the way Netflix handled it, as if they were "rewarding" people by splitting the plans (and not offering a combined plan with a discount).

I'm willing to bet most of the people complaining had a combined plan and wouldn't have minded a dollar or two increase if the company had given a concrete reason as to why it had to raise the rates. But this will be a $6 (60%) increase for people who enjoyed a service which seemed like a perk, yet is now a large additional cost with no discernible increase in quality.

[J. Allen]

Mike Ram wrote:

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J. Allen is right, a lot of the anger was in response to the way Netflix handled it, as if they were "rewarding" people by splitting the plans (and not offering a combined plan with a discount).

I'm willing to bet most of the people complaining had a combined plan and wouldn't have minded a dollar or two increase if the company had given a concrete reason as to why it had to raise the rates. But this will be a $6 (60%) increase for people who enjoyed a service which seemed like a perk, yet is now a large additional cost with no discernible increase in quality.

Exactly. In fact, Netflix's handling of this reminds me of one of my favorite scenes in Robin Hood: Men in Tights:

[Gaith]

J. Allen wrote:

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He's way late

No, the post was from the 14th; I was late. Coulda been clearer there.

Mike Ram wrote:

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J. Allen is right, a lot of the anger was in response to the way Netflix handled it, as if they were "rewarding" people by splitting the plans (and not offering a combined plan with a discount).

I don't get that last part at all. Let's assume, for the sake of argument, that Netflix currently charges as low a price as they can, but it's a combined service, which many people don't want. So they split the services into two maximally-cheap services. By wanting a discount for the combined package, you're either telling them to lower their previous earning baseline or to charge the single-service people more in order to make the double-service deal look a tad better by comparison.

Huh?

Mike Ram wrote:

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This will be a $6 (60%) increase for people who enjoyed a service which seemed like a perk, yet is now a large additional cost with no discernible increase in quality.

See what you said there? "Seemed like a perk." That's exactly what Lasalle was talking about. The studios want in on the action, and Netflix's expenses go up. They're not going to badmouth the studios for it to the public, though, because they want to keep cutting the best deals they can with them - so that they can save their customers money.


To summarize: the complainers wanted a discount on the combined package, and thus for the single-service people to pay more for no good reason, and they wanted Netflix to risk making us all pay even more by antagonizing the studios - and all because they've gotten used to their "perks".


Well, sometimes perks go away. That's just life.

[Scout101]

But if perks go away, your PR department should probably tell you to lead with something other than "Great news, everybody!"

[Broccoli]

Gasp! A company wants to make money! Boycott!!

Seriously, I don't get the big deal. I haven't read the past 11 pages, so perhaps this has been covered, but this was coming for a long time. Was the unlimited streaming service ever free or was it was just part of the combo-package? Now, they split the packages. Given the fact that the postage is included in the monthly pricing, more and more users are signing up, and that people return discs in a frequent rate, a price change was inevitable. Spitting it was a good way to solve the issue as I bet there is a larger percentage of people who do one or other as opposed of doing both equally. If they kept the combo package, I bet the price would have gone up dramatically, or more frequently.

This shouldn't surprise anyone as Netflix's long-term goal is go ditch the discs completely and go purely streaming. This is just the next step towards that.

[Skywalker]

You probably should have read the past 11 pages, since most of the complaints were in regards to Netflix's handling of the situation, not the price change.

[Broccoli]

Skywalker wrote:

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You probably should have read the past 11 pages, since most of the complaints were in regards to Netflix's handling of the situation, not the price change.

Allow me to amend my statement. I did read the first couple of posts, which were complaining about the changes in the plans, before I posted. And if you had read my post instead of delivering snark, you would have noticed that I wasn't defending a price change (though I did touch on it), but was defending Netflix's business decision (which seemed to be where the thread was heading given this current page).

[Skywalker]

But I like delivering snark.

[J. Allen]

Skywalker wrote:

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But I like delivering snark.

Yeah, but in this economy, who can afford to?!

[Snaploud]

On the plus side, they added back some of the site's functionality.

[J. Allen]

I don't worry about that, now. A very ingenious person made a Firefox & Chrome extension that reverts the Instant Watch page to it's previous layout.