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Should Netflix Be Worried About Losing Customers?

Report: Brand perception drops drastically since recent announcements

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During the first half of the year, things were looking really good for Netflix subscribers. The company made announcements like: “Miramax Content Deal,” “More MTV Content,” “Glee Available to Watch Instantly,” “More Anime Coming to Netflix,” “Marvel Content Coming to Netflix,” and “Netflix Launch on Android.” The company was making deals to bring users more streaming content, and making it available on more devices. It even announced forthcoming exclusive content with House of Cards, which would presumably be just the beginning.

Is Netflix headed in the right direction? Share your thoughts in the comments.

Their streaming catalog has certainly improved a great deal over the past year or so. No question. It’s got a long way to go to match their DVD catalog, but the company has certainly given people more reasons to use its streaming service.

In June, the announcements were things like: “New Look and Feel for the Netflix Website,” and “Temporary Removal of Sony Movies through StarzPlay.” In July, while the company did announce expansion into Latin America, came the big announcement of price changes, where members signed up for the popular unlimited streaming and unlimited DVDs (one at a time) plan have to pay 60% more to keep the same service (which is actually turning into two separate plans).

Backing up to June, the Netflix redesign turned into a PR nightmare on its own. Though Steve Swasey, VP of Corporate Communications was quoted as saying, “We know the vast, vast majority of people like this,” regarding the design changes, it was clear by reading comments all over the web that if that was indeed the case, the vast, vast majority wasn’t speaking up nearly as much as those that loathed or even slightly disliked the design.

It didn’t take long for users to max out the comments section of Netflix’s original announcement, mostly with harsh criticism of the design changes. We ran several stories related to the design here at WebProNews and received hundreds more. The comments on the removal of Sony movies reached into the thousands as well, though many of them were simply more complaints about that redesign.

Just before Netflix announced the price hike, they did cave a little bit on some of the complaints about the design. They said they’d bring sortable lists back. Then they dropped the price bomb effectively smashing what little love that may have earned back from the users who were upset about that.

Of course when Netflix announced the price hike, the negative comments poured in again on Netflix’s blog, once again maxing out. Again, we got hundreds more on our own coverage. Any guesses as to how many comments their Facebook update about it got?

Just shy of 80,000.

Of course Netflix knew there would be plenty of backlash. According to CNET, they had extra customer service reps working when they announced it. “We knew what the reaction would be,” Swasey told the publication. “We are not surprised. We knew that there would be some people upset by the service and with the price being adjusted.”

Since then, Netflix has just been pushing on, likely hoping the fury would die down.

This past week, Netflix announced that its Android app could support more devices, as previously it had only supported a few. Now it supports 22. The reviews for the app are overwhelmingly positive. At the time of this writing, it has 32,072 five-star ratings and 6,921 four-star ratings. Only 4,882 gave it a one-star rating, and you have to wonder how many of those are just bitter about recent events. Some of them were simply rated low because of the app’s incompatibility with some devices.

NetflixAndroid abound! You can now instantly stream movies & TV shows from Netflix on-the-go using your HTC Evo 3D, Droid 3, Galaxy S, HTC Thunderbolt, or Motorola Atrix phone — plus many others that are now supported. Check it out in the Android Market http://bit.ly/nfxandroid, and more info on our blog: http://bit.ly/NfxAdrd

Of course if you look at the comments on Netflix’s announcement about this, you’ll quickly find more jabs at the company’s decision to raise prices. “Perhaps you should spend more time on keeping current services working instead of setting up new services,” said Mitch Snyder, commenting on the Netflix Facebook post.

In afternoon trading on the day before the price hike was announced, Netflix stock was priced at 290.15. At the time of this writing, though up from yesterday, is still down at 277.30.

Many users have said they’d quit the service. They were saying that before the price hikes even – just because of the redesign. Many more indicated they would do so after the price announcement. An outage last weekend probably didn’t help too much, though Netflix is crediting 3% of users’ bill for the inconvenience.

“Netflix’s July 12th price change announcement hammered the company’s consumer perception down below its competitors where it still remains today,” a representative for YouGov BrandIndex tells WebProNews. “Two weeks after the Netflix price structure notice on DVD rentals and streaming, the Los Gatos-based company saw its consumer perception with adults sink rapidly below competitors Redbox, DirecTV and even bottom-score dweller Blockbuster, which resides in widely-held negative opinion territory.”

“The brand which seems to have benefited the most appears to be kiosk-based rental chain Redbox, whose perception has moved from a virtual tie with DirecTV to pulling away to higher positive score numbers.”

YouGov BrandIndex Data

What should Netflix do to help its brand perception? Tell us what you think.

Should Netflix Be Worried About Losing Customers?
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  • Michael

    A Morgan Stanley study suggests that Netflix will see a 22 percent decrease in subscription revenue and a 2 percent decrease in revenue per user. I don’t understand why the numbers aren’t higher considering that the streaming subscription is not really a good deal due to the limited selection.

    The limited streaming selection and the lack of any video games makes Netflix a loser in my book anyway.

  • http://HELEVELUP.COM dan

    Once again people are clueless to whya company would raise price.One is shipping cost increase and as we all see prices going up everywhere.For a company to keep pace with high cost they have to raise prices.You cannot stay in business and continue to employ people whne the profit drop from higher cost of the world and business.I think that NetFlix would have been wiser to have smaller increase now and increase ;ater on .

  • http://HELEVELUP.COM dan

    Once again people are clueless to why a company would raise price.One is shipping cost increase and as we all see prices going up everywhere.For a company to keep pace with high cost they have to raise prices.You cannot stay in business and continue to employ people when the profit drop from higher cost of the world and business.I think that NetFlix would have been wiser to have smaller increase now and increase later on .Clueless people also do not comprehend it rich people that give you a job as in employ you.No poor person has ever employed anyone ….

  • Star

    We have been with Netflix for some time now and when the Roku box came out we joined immediately. We have enjoyed our service and not going to drop Netflix for a $5.00 increase to our bill in Sept. of this year.
    We have unlimited Roku and one Dvd at a time for under $20.00. After the price increase it will still be under $20.00. I would like you to know that we were paying over $80.00 a month for cable. There simply is no comparison. Netflix is offering more current movies and there is a wide variety of movies and T.V.series. If we want to see a released movie we go to the theatre or pick it up at Redbox. So what’s the hassle? People upset about design and a $5.00 hike? Go back to cable.

  • Jack McNally

    Cancelled Netflix last week

  • Horace Bunce

    Short Netfix stock. Make your money back.

  • http://www.Profittempestreview.com James | Profit Tempest

    How can they raise the price when they know people can download it for free if they have to! just stupid.

  • http://www.epburke.com Ned

    I, for one, am considering quitting NetFlix. I signed on at $8.99 a month and now they want $15.99 for the same service! Nearly doubling the cost! Come on! And their streaming movie collection is still not that great. And most new DVDs are unavailable for weeks after the release date. I can get the latest DVDs right away at any RedBox for $1. So tell me again why I should stay with NetFlix?

  • Leon

    I still cant believe how naive the public has been with regards to Netflix. Price increases are due to much higher costs for netflix to maintain their library. Sony is asking for ten times the amount of money to renew their library with Sony. The same is true for just about any major provider of content. If anyone thinks any company can bring in the quality of offerings that Netflix has. Stuff costs money and people want to download and steal, they can be dishonest. Sure there are other services, redbox does not offer streaming services and 8 bucks will get you eight movies, however, for 4 hours, go over that and you pay more.

    Anyone that is serious about streaming and movies, will not find a better service than netflix, not for cheaper.

    • Nyguel M

      To some degree, price increase is inevitable. But look what Netflix has done recently, delay in dvd releases, 2 substantial price increase in less than a year. Granted that pricing has gone up in all areas (blame the economy)… Netflix has shown that not only they will provide inferior service, they will increase price beyond what others are doing. Maybe you’re right, they will give in to the Sony’s of the world at the expense of their customers who made them who they are today.

  • http://www.njsparks.com Nance Sparks

    I quit Netflix the day the price changes come out.. completely cancelled my membership that I’d had since 2008! I could go with the price hike in Jan. 2011, but not another one that increased my costs by almost double! They could increase the selection before jacking up prices, that would help preception. Until they lower the prices or add ALOT more content – I won’t be going back!!!

    Nance Sparks

  • http://www.tournatchitocheswithbarbara.com Doyle Bailey

    It will be back tio Redbox for me with the 60% price hike. I could understand and accept an increase but not one of this magnitude.

  • Lesvdavis

    Too many and too frequent outages on its streaming service make Netflix a very random and unpredictable source of entertainment. Poor customer-service representatives compound this deficit by making its customers jump through lengthy and time-consuming trouble-shooting hoops when it is simply their outages and not the users’ equipment. Netflix should concentrate on raising reliability and viewing choices before it raises prices!

  • Nyguel M

    I will cancel on the 27th for one reason only. Netflix proved to me that they don’t care if they lose customers. I called 2 days ago to ask when is the best time to cancel and the customer service rep that handled my call just simply said “you can cancel anytime but the best date is the day before your next bill comes out.” There was no effort to keep me as their customer, the same way their price increase shows they don’t care about their customers but only care about their profit.

  • AR

    To the guy who brought up Netflix’s additional costs…it is true that they will have to pay more for content. But I don’t think this price increase was intended to pay for that or the hike would have been gradual, like the one in January. They want to get out of the DVD by mail business, and so they are punishing you for wanting to keep it. They already had a $7.99 streaming only deal, and it is still there. If they had made an announcement and told us that hey, Sony is charging us 10 times the amount, so we are going to charge you a little more to keep the content, I’m sure most of us would have gone with it. But as you read in the different quotes coming from their higher up, they show a complete lack of care for the customers. If they had handled this correctly, we would all be ranting about Sony’s greed right now, not Netflix.

  • http://www.enovabiz.com Enovabiz | Web Design

    Hi,

    Is 6$ increase such a big amount? Is there another provider which can match NetFlix in terms of Library & prices?

  • Sean

    I agree with the past comments-Netflix wants to go streaming only thus trying to push consumers in that direction. Bad PR though-not handled well at all. If that is what they really are shooting for then they should increase their streaming library to match their DVD library and fix the glitches. (Poor picture quality, sounds drops, signal drops, etc.)

  • http://www.spidergourmet.com ct seo

    I’m just glad to see subtitles become increasingly available. The lack of subtitles on 99% of DVD-sourced content makes no sense to me. To the subject of the article, customers are by definition fickle, some will move away and pay more for a cable solution, or perhaps reduce their plan which is already in addition to cable. For myself, who got netflix as an alternative to cable, I’ll eat the extra $4 per month for 2 dvds and streaming as just another example of inflation.

  • Doctor Cream

    Netflix rocks. Smart decision to move towards dumping their under utilized dvd service and sharpen up on the streaming for the future. Sure they will lose 5-8% of current customers. But they will double up their capabilities and future customer base by focusing on streaming. It will also give them a better foundation for negotiation conversion titles to further move streaming into the future. Remember – these groups are pioneers at an unusual transition period. Cut them some slack, as they have proven they are supercharged and committed to vastly expanding their offerings through streaming. They are already grossly underpriced for their service offering.

  • Fozzy

    All I can say about the Netflix thing is that the reaction of the people towards the effective cost increase is just idiotically staggering. But it’s also a sign of the Entitlement mentality.

    Seriously, I saw comments such as “I can’t afford to live if I have to pay Netflix $6 more!”. You’ve got other problems if $6/month more will break your bank. Or, you know, choose one service and save $1.

    And I see comments such as “Netflix has handled this poorly”. I call bull on that too. Netflix’s blog, where they reported this change was very candid and pretty much straight to the point. It basically said “we’re raising costs to cover increases in our costs and licensing deal. Sorry.”

    Sure, I’m not happy that I will have to pay $16 instead of $10/month for the same service, but I’m not entrenched enough to to think $16/month is an unfair deal for that level of entertainment. And I think about seeing a movie at the cinema this weekend. $13/ticket. $13 for a sandwich and drink. The cost of the ticket alone, was almost as much as a whole month of movie watching.

    Netflix is still beyond a deal.

    I say let the immature audience have their rage on social media. It’s about akin to World of Warcraft forums which members threaten to “ragequite” over every reasonable change because they feel they have the right to control the company because “they pay them money”.

    As everyone will see, those complaining about Netflix will still be Netflix members tomorrow because it’s still a great service at a great price. And the exaggerations and hyperbole will die away and burn out quickly. That is, until WPN and other media outlets continue to try and keep the story alive as if it’s even meaningful outside of driving some traffic hits.

  • David

    I always thought Netflix was priced too low for what they give the consumer. With the new pricing structure, I will drop the DVD mailings but stick with streaming. I just love the convenience of streaming, and the Netflix quality is fantastic. They have a great streaming service that leads me toward dropping my Dish Network service, replacing it with Netflix.

  • Mike McFarland

    in the last couple of weeks, there was a Netflix outtage for about 5 hrs one day, no announcements were made officially by Netflix. There were no apologies either, yet they had one, How can you justify a price hike when you can’t even keep the service up and you’re not being honest with customers.

  • http://www.andeanlifeperu.com/ incatrail67

    Many more indicated they would do so after the price announcement. An outage last weekend probably didn’t help too much, though Netflix is crediting 3% of users’ bill for the inconvenience.

  • Dan

    My family has been Netflix users for over 2 years. We bought new Blu-Ray players specifically to access the content for our TV instead of using the Wii all the time. Now we intend to cancel our subscription and use Redbox for our general rentals, and possibly Vudu, Blockbuster or Amazon for anything special not at Redbox, supplemented by going back to using our local video store. Too bad for Netflix that they feel the need to be this greedy and hurt their loyal subscriber base by nearly doubling the price so soon after raising it the first time. But in the other end, better for the community since now more people will go back to using video store rentals.

  • http://www.pleasurevalleymarketplace.com Lisa

    I am so sorry that I started my trial after getting my high speed internet and dvr. I already canceled my parents account and when my trial is up I also will cancel. There are free sources out there. All you need is interent and a computer with an hdmi cable that hooks up to your tv.

  • http://digitalproductsorderpoint.weebly.com Jesus Olvera

    Netflix should rescind their price increase and leave things as they were. People liked and enjoyed the way it was, that’s why they continued to stay with Netlix. Now, if the price increase goes thru, many customers will flee to other programs…like Redbox.

  • http://www.reedsbuiltins.com Utah Home Automation

    While I’m sure Netflix’s accountants have gone over their books I wonder how much they’re paying attention to Redbox – for $1 I can pick up a brand new release while I’m grocery shopping.

  • jc

    double the price for a service that started at below $7.00 when I joined. still can’t watch dexter or 6ft. under in streaming. discs are always scratched and so i’m sending them back a few times. $7.99 x2 close to $20/mo w/tax. I’m not feeling the love! I’ll probably drop the discs and go to redbox for movies.

    • sky

      My neighbors also complained of defective DVD’s from Netflix. However what I discovered, since I sent a few back myself, was that they are often just dirty. Usually fingerprints and when thoroughly wiped off, they play just fine. When I have problems, I take them out and you can see smudges on the play side. You might have to use a little soapy water and soft cloth, if there are greasy smudges. Since doing that, I have had to return only one in the last year.

      I was thinking of just using the streaming, as I only get one movie at a time along with streaming now. But I don’t have home delivery of mail where I live, so I have to drive to the post office to pick up and send my DVDs, an added expense. Town is to far for RedBox.

      But I found alternative internet movie sources. I can’t watch the these movies on my large screen TV, only on my 20″ computer screen (unless I can figure out how to stream these as well), but the movies are free and more up to date than the streaming ones on Netflix.

      Sorry Netflix – it was nice while it lasted! After September I will have to say buh-bye.

  • Rick

    If Netflix ix trying to get people out of renting DVDs and on to streaming, it didn’t work that way with me. I had the 1 DVD plan with the streaming before. I decided to just drop the streaming and go to a 2 DVD plan instead. I pay about the same as before and see more first run movies. I don’t have time to watch much more than 5 or 6 movies a month anyway. If they improve the streaming to include more new movies, I might re-consider. I will admit, my first thought was to cancel it all, but they still have the best deal for the convenience. Although I probably would have if I had a Redbox nearby.

  • http://www.PrecisionBluing.com Jennifer Smith

    We will definitely be dropping the streaming just prior to the price change going into effect. Everything that is streaming can be gotten on DVD anyways~ Boo Netflix!

  • http://www.csknet.net Craig S. Kiessling

    “SHOULD” they be? Yes.
    “WILL” they? No.
    Look at the thousands of negative complaints on their blog and all the comments that say they’re already splitting; and look at the zero amount of response by Netflix to their huge moronic marketing move.

  • joe sousa

    I will be canceling my account in September this is a 60% increase its highway robbery.
    I use to brag about netflx now I’m discussed!!!!!
    it looks like i’ll going back to red box and cable.

  • Wendy

    Netflix started to seem like a real solution to overpriced cable networks and satellite tv. However, after their price hike to keep the same services, I believe they are in danger of getting too comfortable in their current situation. To appease their current customers ((prior to the price hike) they should have offered a modified price increase to show they valued their current customer base. People want to know customer loyalty has it’s advantages.

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