Netflix Deflects Rage Over Price Increase

oxide7 writes "Netflix provoked an unprecedented outpouring of backlash across the Internet as the company unveiled plans to raise prices on its movie-rental services. The company said it would raise the Internet-plus-DVDs-in-the-mail plan from $9.99 per month to $15.98 per month late Tuesday sparking protests and rage across the subscriber base. Netflix brushed off the criticism however. 'We knew there would be some people who would be upset,' company spokesman Steve Swasey said. 'To most people, it's a latte or two,' he added."

How to destroy your internet based business

[tmosley]

Step 1: Almost double the price. Step 2: ?? Step 3: Bankruptcy!

It is still Cheaper than Cable

[Reverand Dave]

and I don't have to sit through a lot of idiotic commercials.

Latte Defense

[Gr33nJ3ll0]

Why are so many things justified with the already unjustifiable cost of a Latte? Just as two wrongs don't make a right, two prices that are too high, don't make the second any cheaper.

The update does not make sense

[Superken7]

Most people are probably not really angry because of the money increase, as there are few good rivals (not for long, I hope), but because nothing of value was added to the service to justify the increase.

I bet most people would be happy if the price increase would have arrived with a 100% streaming coverage so people can stop relying on DVDs, or maybe some new cool feature.
Instead, the UI has been somewhat degraded for some, and now the service is almost twice the price. It's not just "some people", I'm sure _most_ people are not happy with the "update".

Re:No rage, just a lost customer.

[Jeremiah Cornelius]

Let them drink Latte...

My god! The stunning arrogance of the McMansion aristocracy.

Re:No rage, just a lost customer.

[rwven]

The fact is that shipping through the mail is just really expensive compared to streaming. Netflix needed to make this decision sooner or later, and I don't blame them for doing it. They've been talking about how expensive the mailings are for a long time now.

Re:No rage, just a lost customer.

[neurocutie]

"Simply not worth that much money, especially with competition from Amazon and Google in the works." But the writing is on the wall that the content providers are going to be driving up the prices on ALL such online streaming services. Netflix just happens to be the first and biggest. As articles have said, Netflix USED BE just a "left overs" service, at least from the view point of the content providers (studios, etc). That is, the studios thought that MOST people bought DVDs and saw movies in theaters and Netflix was just there to "mop up" the small fraction of the market that didn't pay through the other channels. But now the studios see that Netflix is rapidly become a MAJOR if not THE predominant channel for customers to view content. So as revenues drop fro DVD sales, the studio EXPECT Netflix, Apple, Amazon, Hulu, Google, etc to raise prices to make up for the shortfall elsewhere. Point is, short of piracy, don't count on finding low cost channels for content from the studios to last forever.

Re:Marie Antoinette

[Anonymous Coward]

A misattributed, misunderstood literary anecdote used to draw a supposed parallel between starving peasants and Netflix users? Ah, Slashdot, you never cease to disappoint me!

Re:The update does not make sense

[Anonymous Coward]

I bet most people would be happy if the price increase would have arrived with a 100% streaming coverage so people can stop relying on DVDs, or maybe some new cool feature.

If you want 100% streaming coverage, $7.99 is way too cheap. Most people are simply being irrational here. The cost of doing business is going up for Netflix, so the cost to pay for the service is going up with it. Netflix gave us all way too good a deal for way too long which has caused most consumers to turn into spoiled little brats.

Re:No rage, just a lost customer.

[Dunbal]

So expensive that they were able to build a huge company on it but now, suddenly, it's not profitable. Wake up and smell the cash grab.

Re:They don't get it

[Nemyst]

If 2/3rds of the user base stays with a 50% price increase, then they've increased revenue while decreasing expenses (less bandwidth usage).

Question is whether it'll stay at just a third leaving.

It's not that the price increase is so great...

[TRACK-YOUR-POSITION]

...it's the non-uniformity of it. If you currently have a streaming-only plan, there's no price increase. If you only watch DVDs and never stream, you could even save yourself $2. But if you do both, you could be paying 60% more. It doesn't really make sense to pay double the price, because the DVDs and streams are competing uses of the customer's time--if I stream a movie this evening, I'm probably not going to also watch a DVD. Ultimately the service isn't that expensive and if they just want to charge more then it's no big deal. But the new scheme seems designed to punish people who only primarily use one half of the service but occasionally use the other. If you most just stream movies but occasionally there's a DVD not available for streaming that you really want to see (and isn't at RedBox), or if you mostly just watch DVDs but someone visits your house and you'd suddenly like to watch a movie without waiting a couple days for it to arrive, then you have to pay a lot of money (relatively) just to dip a toe into the other half of the pool.

Anti-competitive behavior

[digitalderbs]

What irks me about the price increase has nothing to do with the price of lattes or the fact that we're not necessarily getting anything more in return. It's the anti-competitive behavior. I suspect that the margins on their current pricing were set to be small enough to snuff out Blockbuster. Now, without real competition (incl Amazon's service), they can reap the fruits of their 'sacrifices.'

Re:The update does not make sense

[gorzek]

Yeah, $8 a month for unlimited streaming is a fucking steal. Assuming you watch only an hour a night, you are paying all of 26 cents an hour for your entertainment, a better deal than just about anything else out there.

Re:No rage, just a lost customer.

[OldeTimeGeek]

The cash grab is coming from the content providers. Netflix has become a major player so they want a bigger share of the pie [cnn.com].

Re:No rage, just a lost customer.

[alostpacket]

Part of me wonders how much of the cash grab is coming from the content providers/movie studios though. Now that they see netflix is the path to the customer they decided to try and play a bit more hardball. That's just my speculation though, impossible to say for sure.

Re:You're just a consumer ...

[royallthefourth]

Oh grow up, it's just garbage entertainment. When you're really abused is when your food prices start going up, or the bank charges a mysterious fee, or you suddenly can't find work. Or, for that matter, when your wages stagnate while the cost of living continues to increase over the course of decades.
That's when the real overlords laugh the hardest, knowing that your children will consider it a privilege to serve them their own siblings' flesh after you're gone. Netflix is just a sideshow.

Re:No rage, just a lost customer.

[Maestro4k]

From what I've read, NF is going to get pounded by renegotiated contracts with the studios next year. So this move appears to be preparation for "paying the piper". I don't think it was a cash grab.

Netflix is still handling this atrociously from a PR standpoint. If it's due to the studios demanding more money (reports are it'll be considerably more, not a small amount more) then they need to tell their customers that. "Sorry, but licensing costs are going up as we have to renegotiate streaming deals with the various studios so this price increase has been forced on us from outside." Then consumers will direct their anger more at the studios, instead of Netflix. Saying something idiotic about the price increase being "a latte or two" is more or less guaranteed to make the PR situation WORSE. Much, much worse.

Re:The Thank You Economy... NOT!

[Anonymous Coward]

I cancelled basic cable three years ago, cancelled my phone last month and had my slow 5 mbps cable modem downgraded to 2mbps to save even more.

Only rich pricks can afford to waste $3 on a fucking drink in 2011. That Netflix guy is completely out of touch with reality.

Just Bizarre

[pavon]

$7.99 is way too cheap.

To me that is the most bizarre aspect of this price change. If what you want is just streaming or just DVD, the new plan is very inexpensive. AFAIK, it is the lowest price that Netflix has ever offered. But if you primarily use one and occasionally supplement it with the other, having to pay double the price isn't worth it. So the natural reaction of everyone I know personally, and the vast majority of posts I have seen on the internet is to drop one of the two. It is like Netflix is begging us to give them less money, and presenting it an a manner that is pissing everyone off.

What is even more mind-boggling, is that this ability to supplement one with the other is the one of the biggest advantages that Netflix has over it's competitors, and they just completely threw it out the window.

I understand that the price for streaming would have to increase over time as Netflix renegotiates deals, and the selection increases. I never expected it to be included as a freebee with the DVD service forever, just during it's teething years. But I can't believe that the average person who signs up for both DVD and streaming would use both just as much as the average person who only signs up for one or the other.

If they really believed that the majority of people would keep both plans at the higher price, then their market research people need to be fired.

Re:No rage, just a lost customer.

[jojoba_oil]

My god! The stunning arrogance of the McMansion aristocracy.

I don't know if it's arrogance or just plain ignorance. They figure that since they drink a latte every morning, everybody does... "Right? Right guys?"

Remember the /. story about how 'most people love our new website redesign'?

If I was a Netflix customer, I'd drop them. If I was a Netflix shareholder, I'd drop them -- not because of the price increase, but because of the sweeping generalizations that seem completely untrue "most people this" and "most people that". There's a serious case of out-of-touch-with-consumers there. Maybe someone who runs a marketing/consumer-research firm has a jackpot just waiting for them...

Re:The Thank You Economy... NOT!

[Danse]

If I'm ever in a position again to review job applicants, and I see a significant stint at Netflix on someone's job history, I'm going to have assume that they didn't know how to do their job, either.

Just what we need, yet another retarded manager. If you can't be bothered to evaluate the person rather than jumping to conclusions based on extremely tenuous circumstantial evidence, your company would be stupid to have you reviewing any applicant.