Netflix price change

[cellio]

So Netflix just raised my subscription fee 60% (effective September 1). They did this by splitting streaming and DVDs into two separate plans, each costing $8/month, instead of bundling streaming with DVD plans as they do now. They argue that the price increase is due to the high cost of (and demand for) streaming (see recent news about them and Sony, for instance), but if so their pricing doesn't make sense. They didn't raise the price of the current streaming-only plan, and they are now asserting that DVDs cost $8/month to support (for one out at a time) instead of the $2/month suggested by the current pricing model. My current plan is $10/month for streaming + one DVD at a time. If streaming is $8 of that, then they have just raised DVD-rental fees 400%. (Ok, less half the overhead of having a customer account -- but I'm betting that's pennies a month.)

I, unlike others, am not looking for an alternate streaming service. Netflix has the largest streaming catalogue out there (though it has many deficiencies) and it already works for me. I want easy DVD rental because of those gaps in the streaming catalogue. What alternatives do I have for that?

Comments

[osewalrus.livejournal.com]

I suspect you're right on fumbling, and there are a lot of other problems. They don't want to disclose their vulnerability to Wall St., for example.

[goldsquare.livejournal.com]

A major portion of their "fumble" was their marketing approach. They seriously said "we're saving you money".

No. They are unbundling into two services, each of which is priced nearly as high as the original bundled service. To tell consumers that "this is good for you" is bogus.

Imagine if, instead, they said "we're now providing unbundled DVD and unbundled streaming" with the new prices, and then 3/6/9 months later bumped the package price a buck or two. That would have been "savings" at first, and boiling a frog for the rest.

[osewalrus.livejournal.com]

But, oddly, I happen to agree that they are saving some of their customers money. We have the reverse problem in cell phone pricing. We eliminate lower volume, less expensive packages for higher volume packages that drop per minute price but which are more effective over all. If you do not increase your use, you are experiencing a price increase, since you are paying more.

Here, Netflix is saving money for one class of customer -- the DVD only class (like my parents). Others experience a price increase. Netflix has handled this rather poorly in the explanation, but if you look at what they have actually said, that is where they claim to be offering a savings.

I agree that Netflix is not communicating it very well, and they should be up front that it is a price increase overall.

[goldsquare.livejournal.com]

One has to wonder how predominant that class of DVD only is. If it is predominant, perhaps the message makes more sense. But my feeling is that DVD only is not only a minority of their business, but not where their future growth is going to come from.

It really is much gnashing of teeth over very little. For other consumables I would happily pay $16 and not think twice.

But the message came across as "we're lying and picking your pocket", and that is not a very forgivable marketing message.

[cellio]

Exactly. If Netflix just cost $16, well, that's still way cheaper than cable. But the way they did it feels slimy and I'm having a visceral reaction to that.

And by the way, they sent individual notices to their customers, and they of course know what plans we have, so they had the opportunity to tailor the message. They didn't; I got the "saving you money" line along with my price hike.