Talk about backlash. I’ve yet to see one comment anywhere supporting Netflix’s price hikes and for good reason. Netflix announced a new pricing scheme yesterday that effectively raised the price of a popular subscription plan by 60%. Instead of costing $9.99 for streaming and DVD rental, Netflix separated the services and priced them each $7.99, which results in a combined cost of $16.
But it’s not the $6 people are ranting about. Most of us would spend half of that amount on one silly coffee drink every day if we weren’t lactose intolerant. It’s that Netflix raised the prices without adding any value. There simply isn’t any way of spinning this as a benefit to the consumer and backlash is the result.
We all know the history of Netflix: The rent-by-mail DVD company morphed into the leader in streaming video and did so slightly ahead of the curve. VOD and streaming technology hit the big time a few years back, and Netflix embraced it from the start, producing apps for nearly every hardware platform available. There was suddenly less of an interest to wait for their DVDs when some of the content was available instantly.
But the DVDs still served an important function for some consumers as Netflix’s DVD library is about 5 times larger than its streaming library. In other words, the DVD served as a back-up device in case Netflix didn’t have a particular title available for streaming. It was worth the $2 per month additional cost — at least to me.
Then yesterday Netflix announced its new plans. Suddenly the cost to rent a DVD shot up, going from a nearly unnoticeable charge to almost double the cost. It didn’t make sense to keep the option and so I canceled it right away. Netflix’s own announcement email and blog post noted it’s easy to cancel, which, while honest, doesn’t inspire confidence in their pricing.
Instead, I believe I’ll be waiting in line up at Krogers to use Redbox’s DVD rental service the few times a year I need a particular DVD. I just wish I could see Netflix’s internal numbers. No doubt Netflix’s dedicated DVD customers will stick with them and continue to suck Netflix dry by renting countless DVDs every month. But I wasn’t costing Netflix any money; it was probably quite the opposite. Consumers like me — consumers who probably rented 2 DVDs last year — should have been valued by Netflix for paying for a service they rarely use. But instead they’ve drove us away. Oh well. Redbox is just as cheap and convenient and that’s all I care about anyway.