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

[Sheep]

Redbox is pushing for their own streaming service by next year. They're small, but who knows? Now, one of the bigger boys, Dish Network, has purchased Blockbuster and they fully plan on pushing their own streaming service. I'm a Dish Network subscriber, so this could be a serious win/win for me.

Netflix has a bigger market cap than both of those companies. If Netflix can't run their business without increasing subscription costs, those companies won't be able to do so either. Netflix is basically experiencing firsthand what people were criticizing Pandora about regarding its IPO--that they wouldn't be able to sustain growth due to the ever increasing licensing fees from the music industry (or the movie and TV studios in Netflix's case).

I like Netflix, and I have for years. It's just that instead of sitting down with people and going over the details on why they're doing what they're doing, they throw out some corporate doublespeak and ignore people. I understand why they have to raise prices; they are getting gouged by studios seeking to make more money. The problem is that unless you start digging all over the place, you're not going to find that tidbit coming from corporate to the customer.

I've been a Netflix member since 2002 and have never had a problem with their customer service--historically their customer service has been top notch. However they have handled this latest price increase pretty poorly. I hope it's not a sign of things to come but I also don't think it's a continuing trend either.

 

[Amaris]

Netflix has a bigger market cap than both of those companies. If Netflix can't run their business without increasing subscription costs, those companies won't be able to do so either. Netflix is basically experiencing firsthand what people were criticizing Pandora about regarding its IPO--that they wouldn't be able to sustain growth due to the ever increasing licensing fees from the music industry (or the movie and TV studios in Netflix's case).

I'd say Dish Network with Blockbuster can lobby a bit more than Netflix can.

I've been a Netflix member since 2002 and have never had a problem with their customer service--historically their customer service has been top notch. However they have handled this latest price increase pretty poorly. I hope it's not a sign of things to come but I also don't think it's a continuing trend either.

I'm not talking about customer service, I'm talking about the chasm between corporate and customers. Netflix' customer service has always been solid. It's the disconnect the higher up you go, and the willful ignoring of customer complaints.

 

[Scout101]

Thing is, these really aren't 2 separate services they can charge for. Streaming doesn't have new titles, and is also missing TONS of old titles, with more disappearing all the time. Heck Star Trek just showed up the other day, didn't it? I WAS watching Dexter on streaming, but that's now gone. Not Netflix's fault, exactly, but shows that streaming alone won't get it done.

DVDs are fine, but you lose flexibility with what you want to watch. You also get to wait a month after new releases come out, for a reason that's no longer tied to the product you're buying. When it was because you get more streaming options (promised, never actually saw a difference), there was at least a trade-off, but why should I accept the delay on behalf of a streaming customer if I'm a DVD only customer? Isn't it now just Blockbuster or RedBox on a time delay?

Prices to stream media is what's really costing Netflix more, and that's the only price in the structure that didn't increase

My plan renews mid-month, so should be on my current pricing until mid-September. I'm cancelling after Labor Day if the price plan isn't fixed. (How is there not a bundle deal for wanting both plans?!?). Red Box will get me the new releases faster and cheaper than Netflix, and streaming by itself just isn't worth it to me between my large dvd library and the internet...

 

[Scout101]

Re: Oh Netflix, I Knew It Wouldn't Last

Cutting a huge chunk out of their customer base, and all the negative word of mouth ought to really help with that, no? Most customers at a lower price is likely more valuable than fewer customers paying more money. Probably close to same actual $$$, but popularity, good will, and positive word of mouth is worth quite a bit, as it keeps people signing up their friends/family.

Telling me my service is going to cost 60% more, while they are rapidly removing streaming features, doesn't seem like a great move. How does streaming stand alone as a service, if you were watching, for example, Dexter, and it's now gone. If you have both, you just start getting the DVDs and stream something else. Otherwise, you're still paying full price, just either lost ability to watch it, or have to pay for ANOTHER service to continue...

 

[SPCTRE]

I've been a Netflix member since 2002 and have never had a problem with their customer service--historically their customer service has been top notch. However they have handled this latest price increase pretty poorly. I hope it's not a sign of things to come but I also don't think it's a continuing trend either.

I'm not talking about customer service, I'm talking about the chasm between corporate and customers. Netflix' customer service has always been solid. It's the disconnect the higher up you go, and the willful ignoring of customer complaints.

So in essence you are criticizing their corporate communication as an aspect of their CRM, i.e. the way Netflix as a company goes about communicating with its stakeholders in general and their customers in particular.

... What? I don't know. I'm in a pedantic, lecturing kind of mood today.

 

[Scout101]

Re: Oh Netflix, I Knew It Wouldn't Last

The other fun part is you can GUARANTEE that there's another big price increase coming. This is in advance of the huge rise in licensing fees that Netflix will be hit with in a little while when the old contracts expire, but when they get a huge bill, no way in hell they're not passing that on to whoever's still a customer. And because it's now 2 plans instead of 1, they can play innocent and pretend the raise in price isn't a big deal. "Gee, we only raised prices a dollar", and because you've got streaming and DVD plans, you just got a $2 bump.

That, or this is the way they can bump most people to the streaming-only plans (like they've wanted for a while), and then they can have the drastic price increases there because streaming costs is what's going to raise the most.

Either way, pretty much on principle, I'm done with Netflix. I was a loyal Blockbuster customer for years (their dvd by mail plan was just as good, IMO), and after a bunch of price increases and decrease in what that money got you, I jumped to Netflix. Saved like $2 a month, and the streaming service was nice for catching up on TV shows a little faster than the DVD service. In the 8 months or so I've been with Netflix, this will be the 2nd price increase (representing about 85% increase on the plan i signed up for), and the 'bonus' streaming service has less of what I want than when I started...

 

[1001001]

I need to check my bill. Isn't the 2x DVD rental more than $12/month now? If so, I'm in luck since I've never bothered with streaming and don't really plan to anytime soon. I dislike watching anything longer than 10 minutes on my PC.

We have the 2-Disc/Streaming service now. We use a router with our Blu-Ray machine in one room and the Wii in another, so we can stream directly to our TV's. We use that all the time.

The price increase is a bummer, but our pattern of use is such that it's still a great deal for us. $16.00 a month is nothing compared to what we're actually using. The kids watch TV shows, we have Voyager and Next Generation permanently in our instant queue. Our daughter watches Spartacus whenever she can, and is working her way through every horror movie ever made.

Plus, our local Blockbuster went belly-up a couple of months ago, so it's not like we have a great deal of choice...

I agree with others though, I hope this increase leads to more selection in streaming, and quicker new releases for DVDs.

 

[Robert Maxwell]

I get that they are increasing because of the rising fees and studio costs and all that. But the stock was up, expansion and clientele was growing. Twice as many people at the old rates would make the same money as half as many people on the new rates. Netflix has the power to make the studios play ball but instead they are joining the screw the little man. I liked them much better when they were small or underground, like vampires, Christian Bale, Gerard Butler. Bigger is not always better.

Although there are a lot of posts I could respond to, this one seems to distill the "conventional wisdom" about the issue. And it's just incorrect, sadly.

Twice as many customers means they have to scale their infrastructure more, which means more overhead, which means they are making less money per customer.

Netflix does NOT have leverage over the studios. It would be nice if they did, but they don't. The studios own the material--they can pull it anytime they like. They don't have to let Netflix license any of it. If they think Netflix streaming is cannibalizing DVD sales (and it's quite likely that it is), it makes sense for them to demand higher licensing fees from Netflix.

I do think it sucks that some people have to pay more for what they're already getting or choose to give up part of the service, or even just walk away entirely. But that's the reality. In this economy, everyone is looking for ways to save money and methods to generate additional revenue. Netflix is just trying to scale, keep their customers happy, and keep things available for people to watch. It's a tough balance. I've never gotten the impression that Netflix is out to screw their customers--in fact, customer service would appear to be their entire purpose, considering you could go out and get the same TV shows and movies anywhere else.

I just don't see them doing these kinds of rate hikes unless they had to, because they have to know it will hurt their customer base. When your overhead costs go up (like licensing), you have to make it up somewhere, and I don't see where else Netflix would make it up except by raising prices. They are a company and have to make a profit, after all, and it wouldn't make a lot of sense for them to deliberately slash profits for the sake of growing the customer base. Over time, this produces a negative profit curve and the company would not survive.

People are free to use Netflix or go elsewhere, I just don't think it's fair to accuse them of being money-grubbing bastards trying to squeeze a few more bucks out of loyal customers. The studios, as usual, seem to be the real bad guys here.

 

[RoJoHen]

Re: Oh Netflix, I Knew It Wouldn't Last

Has there streaming library really gotten smaller like you people are saying? Because I have noticed the complete opposite. Just these last few weeks I have gotten really excited by all the new stuff available.

 

[Frontier]

Re: Oh Netflix, I Knew It Wouldn't Last

I'm thrilled with this change! It's about damned time! I've been with Netflix since January of 2005, and when this streaming nonsense began to get popular, I saw a price hike and was not pleased. I was paying for something I had no interest in all these years.

Now, finally, I can stop paying for something I don't use. I've just set my plan to what I want -- discs only -- and I'm going to be saving $5 a month now!

Scout101 - on the topic of price changes, it's very unusual for them to do such so frequently like this. As I said, customer since 2005 and I've only seen two price switches -- and this benefits me, so I'm keen on it.

As for Blockbuster V Netflix, you get more content from Netflix. Before you cancel, rent "This Film Has Not Yet Been Rated" -- you can't rent it from Blockbuster, so do it with Netflix while you can. You'll find out how Blockbuster won't make certain films available, will edit the content of the films they do. Netflix is not owned by a big global congolmerate like BB. They're much less restrained. Plus... if you where a 1990s customer of theirs, remember all those nasty late fees? That's why I abandoned them. Bastards.

 

[Christopher]

Re: Oh Netflix, I Knew It Wouldn't Last

Has there streaming library really gotten smaller like you people are saying? Because I have noticed the complete opposite. Just these last few weeks I have gotten really excited by all the new stuff available.

I don't think anyone's said their streaming library is smaller than it used to be, just that it's still considerably smaller than their DVD library. Most of the items in my DVD queue at the moment are unavailable for streaming. But as far as I know, most or all of what they have for streaming is also on DVD, except for the new Starz stuff, I guess. If I were forced to choose only one of the two options, I'd choose DVDs. I'd lose a bit of convenience, but better than losing a huge amount of the available content by going to a streaming-only plan.

 

[RoJoHen]

People are free to use Netflix or go elsewhere, I just don't think it's fair to accuse them of being money-grubbing bastards trying to squeeze a few more bucks out of loyal customers. The studios, as usual, seem to be the real bad guys here.

I agree with this. Price increases were inevitable, and I don't think Netflix is doing it maliciously. The studios forced them to. Netflix may have had an awesome, cheap service, but they still need to maintain a profit margin.

The biggest thing really is the way they're dealing with these changes. The way they handled the complaints to the streaming interface was just embarrassing. "Oh, but we tested it. It's the perfect interface and totally not worse than the previous version. You naysayers don't know what you're talking about."

 

[SPCTRE]

People are free to use Netflix or go elsewhere, I just don't think it's fair to accuse them of being money-grubbing bastards trying to squeeze a few more bucks out of loyal customers. The studios, as usual, seem to be the real bad guys here.

I think some people - including a vocal minority on the internet - misunderstand the old customer service mantra of "the customer is always right".

Yes, you people are customers, and yes, the underlying philosophy is paramount to any organization's successful customer relationships - but no, you are not, by definition, "right", nor are you entitled to anything beyond what is legally or contractually agreed upon prior to any kind of transaction.

 

[Captain Craig]

Interesting about the Facebook page.
I'm not "friends" with them and I'm struggling with if or how I'll still be a customer with them.

They still are going to have a "one disc at a time" plan right, for under $10?

 

[RoJoHen]

The customer is always right, so long as it is still convenient and profitable for the company.

 

[RoJoHen]

They still are going to have a "one disc at a time" plan right, for under $10?

$7.99

 

[Robert Maxwell]

The customer is always right, so long as it is still convenient and profitable for the company.

Yup. Some people think "the customer is always right" means "I should be able to get whatever I want at whatever price I'm willing to pay, or even for free." Doesn't really work that way.

 

[bigdaddy]

We all get why they are doing this, studios are greedy. However Netflix should see that if people drop the streaming then there are less eyes watching it and the studio shouldnt get as much. Netflix also should have made better deals to get more things on streaming before anouncing this. Something like "We are increasing our prices, but you can get both a DVD and streaming for $14 a month combo and we are also adding 10,000 new movies to instant streaming.

 

[Stone_Cold_Sisko]

wtf... my plan jumped up 6 bucks... WITH NO CHANCE IN VALUE/SERVICE. If they had, say, vastly increased the amount of "Watch Instantly" titles, or even dropped the Blu-Ray fee with this jump in plan prices, I could swallow it a lot easier. But wow.

I would be REALLY interested in getting a good look at their profit numbers under the old pricing system.

 

[Robert Maxwell]

wtf... my plan jumped up 6 bucks... WITH NO CHANCE IN VALUE/SERVICE. If they had, say, vastly increased the amount of "Watch Instantly" titles, or even dropped the Blu-Ray fee with this jump in plan prices, I could swallow it a lot easier. But wow.

I would be REALLY interested in getting a good look at their profit numbers under the old pricing system.

Netflix is a public company, such numbers are freely available if you bother to look.

Last year, they made profits of $320M on revenues of $1.2B--about a 15% margin, which is pretty respectable. By comparison, Comcast made $15B in profit on revenues of $40B, or about 38% margin.