July 13, 2011 at 12:48 pm #437353
I joined Netflix five years when it was just a DVD service and have enjoyed the streaming services the company has introduced. But one of the reasons I subscribe is how affordable it is, much better than shelling out for overpriced movie tickets for a new release.
Now Netflix has announced a new and wildly unpopular plan to separate their streaming and DVD subscriptions and effectively bumping the price of my plan (one DVD + streaming) 60%. They’re spinning this as giving customers more options, but clearly they’re giving us less, trying to force our hands to suit a company working hard to get out of the DVD business and focus on streaming, despite customers whose most frequent (and obvious) protest is that Netflix doesn’t stream films and TV comprehensively enough to start dumping its DVD service. Oh they stream tons, but it’s still merely a fraction of what’s available on disc.
So what’s a subscriber to do? If I drop their DVD service and stick with streaming only for $7.99, I lose too many possible titles for it to be worth the cost, in addition to playing right into their hands. And if I get rid of streaming, I lose hours and hours of possible viewing time while I wait for Netflix to receive and ship out new discs in the mail. If I keep both, my rate goes up to $15.98 per month from $9.99, and while that’s still a bargain against comparable movie ticket and cable subscription options, it’s an immediate 60% hike and the second rate hike in six months. With the costs of licensing going up, we can be sure this won’t be the last significant rate hike.
But that seems to be precisely the problem: licensing. Netflix wants to do more and more streaming, and so does everyone. From what I’ve read, studios are taking advantage of the sudden increase of competition by making it more and more expensive to license their content for streaming. So the studios make more money from the subscriptions services, and the subscription services pass the cost to us, meaning the ultimate loser is, as always, the consumer. Everyone up the food chain makes more money and we get to keep less of it. Welcome to the world.
But what is the upshot of all these increased costs and competition? DVDs are far more comprehensive, but with so many major companies competing for streaming rights (Hulu Plus, Amazon, and maybe Google at some point), it seems impossible that any one company’s streaming library will be comprehensive. Netflix will get a piece. Amazon will get a piece. And so on. Very few consumers will be willing to subscribe to all of them to get a comprehensive selection of titles, and very few of the most recent releases are available to stream at all.
Streaming seems to be the wave of the future, but I wonder if it’s premature to pursue streaming so aggressively at the expense of DVD. And of course studios know they can make a mint from licensing deals, which will drive up prices and perhaps make streaming less desirable to consumers. An instantaneous 60% price increase from Netflix is unreasonable, possibly just the tip of the iceberg, and perhaps evidence that the company is unable to balance its operating costs with maintaining stable rates for customers.
I wonder why Netflix didn’t expand the available options instead of forcing their customers’ hands. Why not separate streaming and DVD plans, but provide a discount to those who subscribe to both? That’s very common; most companies that sell multiple products or services give you a discount for bundling (one for 50 cents, three for a dollar!).
Why not offer ad-supported options? Nobody likes ads, but I’d rather watch a minute of commercials before streaming a title than eat a 60% rate hike. Even Amazon’s Kindle offers a discounted version supported by advertising. A lot of apps do the same: free with ads, pay subscription rates to get rid of the ads. Netflix has millions of customers; surely advertisers would be willing to pay to reach them.
Netflix has made a risky bet. Instead of offering more subscription options, they’re assuming subscribers are too attached to the service to actually cancel their accounts, but there are more than 35,000 angry comments on Netflix’s Facebook wall, many of them pledging to cancel the service altogether. Netflix will probably survive this round, but the frustration of the customers that stick around probably won’t go away anytime soon, and if the ballooning licensing costs lead to further price hikes, Netflix could be toast.
What to do, what to do? The problem is that Netflix doesn’t leave any good options. Cancelling entirely won’t make me happy. Cancelling either DVDs or streaming won’t make me happy. Shelling out a lot more money without getting more in return won’t make me happy. Damned if I do, damned if I don’t, damned if I do but don’t, and damned if I don’t but do.
Damn.July 13, 2011 at 7:39 pm #437355
Yea the price hike is annoying but it is still a very good deal. I have the streaming & 1 DVD option as well and plan on keeping it.
I have heard the ad idea floated around before. I don’t think Netflix will try that until House of Cards is released (which will probably come with another price hike).September 21, 2011 at 3:00 pm #437356
I’m surprised this thread didn’t get more replies. The topic certainly got a lot of news coverage recently. I wish the event display booths company I work at was getting that much publicity (but good publicity, of course) 🙂
Anyway, I dropped streaming and stuck with the DVDs. Not enough content on the streaming. I guess you can call me “old school”.