Netflix: Is It Worth the Price Increase?

By: Abby Johnson - August 5, 2011

Before last month, Netflix was loved and praised. Although it wasn’t perfect, it was still considered a great service for a really great price. This dynamic, however, changed when the company announced some major changes to its pricing structure last month.

In summary, the changes did away with the joint streaming and DVD subscription service and made each service its own at a rate of $7.99 apiece per month. For users that had the joint plan, they will have to pay 60 percent more if they want to keep the same services.

Have you decided to drop Netflix or at least part of the service? Let us know.

According to Bryan Gonzalez, the director of Social Media Labs at the Entertainment Technology Center at the University of Southern California, a lot of people are trying to determine whether or not they want to keep both the streaming and the DVD services. Other users have said that they are dropping the Netflix completely.

It seems clear that Netflix’s action was a step toward moving away from DVDs. Although video streaming is still a very young industry, the company didn’t want to get left behind like Blockbuster did. There was also an obvious financial motivation, because, as Gonzalez explained, the company would have to have a lot of cash in order to obtain all the high quality content that it wants distribute.

The user reaction to the news was quite loud, from what we could tell, but Netflix CEO Reed Hastings apparently thought otherwise. In the company’s recent earnings call, he said, “Believe it or not, the noise level was actually less than we expected, given a 60 percent price increase for some subscribers.”

Gonzalez told us that he thinks Hastings was trying to be optimistic about the situation. It is, however, worth noting that a recent report from The Diffusion Group found that even though 70 percent of users were disappointed by Netflix’s price hike, only 12-15 percent would actually cancel their services.

“The fact that there were so many Netflix users that were upset, kind of really proves to you how much Netflix is really loved, or at least used,” Gonzalez said. “Truth be told, Netflix is still a pretty good deal compared to all the other offerings out there.”

If users do decide to jump the Netflix ship, he pointed out that there were other alternatives for them such as Amazon Prime or pay per view models like Apple iTunes or Vudu, Walmart’s new streaming service.

“The positive news for consumers, and everyone, is that there are tons of options out there and maybe this will expose the market or the user to this great market of content,” he said.

Gonzalez believes that there are other players that could benefit from Netflix’s move as well. For instance, any company that is trying to figure out how to distribute content could take this as a learning experience. Additionally, he thinks that consumer electronics manufacturers who have TVs with built-in apps other than Netflix will have more streaming opportunities as a result.

“I think, ultimately, a lot of companies will benefit, not just because it will expose users to more options, but also, users will benefit because they’ll move outside of Netflix and see what else is out there,” he said.

From the entertainment side of the business, it’s no secret that the studios are struggling to establish a business model around streaming. As a result, Gonzalex believes they are pleased to see Netflix and other players experiment with revenue models because “high quality content does demand a certain price.”

Abby Johnson

About the Author

Abby JohnsonAbby Johnson is a reporter for WebProNews. Google: Google+

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  • Toua Vang

    I think if the loyalty of a long time customer such as myself is NOT appreciated, then it would ultimately be hurting them to go forth in this price-hike. Broadband internet already gets expensive. Netflix is just something to pass the time in the last 1 hour or so before going to bed. In some cases, I don’t even want to pay what I’m paying right now. Jack the price up and it’s goodbye Netflix for me and MANY OTHERS WHO I INTEND TO ENCOURAGE NOT TO USE.

    I like Netflix but looks like it’s back to reading books before going to bed.

    • Mike

      Read? Read what? Book?

      I will pay what Netflix wants…… $16/month. What a disaster?!?!? Their content is getting better daily on streaming and whether you realize it or not…. they are being charged in some cases, almost 10x what they were originally when they were talking about “streaming movies RIGHT TO YOUR PC or TV”. Times change; it’s still WAY LESS than 1 movie out.

      Seriously, it’s $16.

      • rayman

        For me its worth more then $10, but not $16. I would stay if the cost was only raised to $12, maybe $14. At most each service is worth $6.99. DVDs are limited to how much you can send back and forth. Streaming while faster, does not have enough selection, although it does keep improving. Streaming could be worth more if they get much more content, but the price of just DVDs not is too high for it’s amount. Maybe someday I will get streaming only, once there are more movies I can watch.

      • Shane D

        lol. u work for them? enjoy

    • Shane D

      lol. u work for them?
      it sucks

  • Monguesto

    I cancelled my Netflix account. They just did not have enough selection, and the price increase pushed it overt the top for me. I would be willing to pay even 30/month if there was enough selection to cancel dish. It’s too bad they don’t have any news service options.

  • Dallan Withers

    I am going to cancel both subscriptions by the end of this month so I am not charged the ridiculous price increase. The “Streaming” Videos that Netflix are completely awful, D listed movies and not even worth the $8. The only reason I purchased it was for the movies added in for only $2 more. When Netflix drops their prices, or upgrades Streaming, I may consider coming back.

  • John

    Netflix was nice and I enjoyed the streaming even if the picture wasn’t great for one reason. It automatically adjusted if your speed changed. I also enjoyed getting the one DVD every so often with no late fees all in one plan since not all the videos were available on streaming. All this is now gone now since the price hike for me and I now cancelled my service completely for one reason. In an economy with food and gas going up. I am tired of corporations and the government tugging at my wallet. Especially when I found out netflix was still making a good profit with the old system and then got greedy. Heck I cant even go into a state park anymore with out having to pay now and that used to be free. So you really want me to give you more of my money for the same service in this bad economy when you were already profiting netflix?! Sorry but your not getting anymore from me unless you change back. BTW HAHA on your stocks dropping.

  • Fartman7000

    CANCELING COMPLETELY, IT’S NOT WORTH IT. The streaming selection alone will not cut it and I don’t see any reason why I should have to pay more for new release dvd’s that are really month-old releases. The more frequent dvd renter’s still cannot get the new release as soon as it comes out. Instead the queue will most likely say “Very long wait” if it’s a popular movie. Add that onto a month and you want more money for it? There have also been many streaming quality issues lately. This was just the last straw for me, I feel they have been letting me down a lot this year. It won’t end here, those that aren’t cancelling now probably will after Netflix screws it up again. It’s sad…I had so much hope.

  • Jamey

    I just signed up 6 months ago but will be canceling my account because of the 60% increase.

  • Steve Howell

    I will be dropping them.

  • waarloc

    Already cancelled

  • Nittnay

    I will only continue my subscription if the streaming option includes their entire library.

  • http://Google R.J

    Yes I kept my plan for $ 7.99

  • mondy

    At first i dropped the whole thing but I missed the streaming too much so i took that back. If I want to do a rental I will use Redbox since I rarely do.

  • Bjorn Dancer

    Corporate greed is common denominator of the looming crash. Netflix is just trying to rake in every buck they can before the buck becomes a peso and people are more concerned about eating today that watching a flick. If the elected officials do not grow up and face and fix the real problems the only thing in our future will be day to day crisis managment to stay alive…. Netflix will lose half of their subscriptions but still make the same bottom line. They don’t care about the half who leave because it will be half as much drain on their services and actually lower overhead. It’s all about bottom line. Unless the spoiled pathetic public relearns the principles that made this country great and demand new reasonable boundaries to be mandated by law the people will be returned to slaves and we will have another Civil War with the rich against the poor and it will not be pretty…. Netflix is no longer an important portion of my life and something better will soon replace it. Sell your stock while you can before it is worthless.

    • Tracy

      I agree. Netflix may loose half of its customers and still make big bucks, but the 10 million or so customers will be a great opprotunity for another provider. Once they get started up the other 10 million or so will be fare game. Block buster did this same kind of thing which opened the door for netflix.

  • Jose

    Once I found out about the price hike I dropped my subscription. their selection for video streaming alone is not that extensive to justify paying 7.99 a month.

  • Lauren

    I don’t think that it is really worth it. It seems the price you pay on cable and extra stuff like that you really don’t get the movies that you like. Why keep wasting money, we all need to find ways to save and cut back.

  • Sammy

    I will be canceling my subscription 8/31/11. I’ll consider re-subscribing when streaming content improves. Currently, the streaming content is terrible and limited.

  • Tom

    I dropped Netflix. For $78/yr I can stream from whose library of movies and TV continues to grow. It also lets me get two day shipping for a year at no extra cost. For DVD rental I go to Redbox or Family Video.

    Let the sheeple stay with Netflix.

  • Damaramu

    I dropped our service with Netflix to streaming only. We’ve got a massive dvd/blu-ray collection so I find the content offered through the streaming services more than adequate. Netflix has a surprisingly large amount of MST3K, anime, and Asian cinema.

    If I want to see anything “recent”, I’ll just buy it or Redbox it.

  • Blkcat

    I canceled.

    I could justify $10/month with how little I used the service. Any more, just not worth it.
    Title count for streaming is so poor. Mostly Pre-70’s B rated movies and I typically ended up buying a new release long before it became available thru Netflix.

    There is still a local Blockbuster store around here, along with Redbox and a few other independent video rental stores. This doesnt even count the amount of content I can find, online, for free, if not legal.

    Sorry Netflix, I see your business model going the same way as your stock price today. Down, Down, Down.

  • Sharon

    I dont know what all the fuss is about, really. My plan includes all and went up $2. I dont think this 2 bucks is going to break me.
    I have been impressed with the streaming quality I have been getting.
    I just noticed that Netflix sent me Green Lantern while blockbuster still has it on my long waiting list. So there you go. I have noticed if you are waiting for a particular movie put in on your list right away, if you have had it on your list longer (before its available) you will be at the top of the mail out list. I often have them mail me something that said long wait and I am surprised to get it.

  • waarloc

    netfools sucks

  • Rob

    I cancelled my Netflix subscription the first day the 60% increase was announced. Goodbye Mr. Greed!!




    I AM OUT..

  • Joe H

    I will keep streaming from Netflix on my Roku box, along with all the other services on Roku, still way cheaper then cable and no commercials.

  • Juan

    I am not happy with the price change and i am going back to BlockBuster.

  • L

    Canceled my streaming-only plan even though my pricing wasn’t affected. I was a 10 year user of Netflix and one of those who wishes I hadn’t gotten friends and family on board so long ago when people didn’t even trust receiving DVDs in the mail, and ordering them on DIALUP on the internet. I quit using Blockbuster completely when Netflix became an option. Blockbuster couldn’t behave as a company, and Netflix can’t either. 10 year loyalty is entirely gone, and it has nothing to do with the price being more than I can afford. Since I canceled my Netflix streaming-only service ON July 12, I have paid more to competitors than I was paying to Netflix per month, and I’m going to keep doing so. I have used Redbox rentals, iTunes rentals, and also subscribed to Amazon Prime. For the first time ever I have seen a LINE at my local Redbox kiosks.

    • Tracy

      I quit block buster for the same reason.

  • Shane D

    If it’s not broke don’t flix it. lol
    It’s BS

  • Shane D

    Why can’t it all be streamed online, save some paper and postage???
    All i can say is Redbox and Hulu

  • Tracy

    I will be going to just streaming or dropping the service completely. I am only considering the streaming because I can get it on my phone now. It is hard to get over the greed and the way they treat customers. I called and mentioned I may cancel their service. the rep responded “No worries”. I asked him to repeat what he said and he again said “No worries”. I asked to talk to a supervisor and he was even more rude.

    I have since tried red box and have been very happy with it.

  • Elise

    I canceled. I signed up for $8 a month before there was streaming and felt I wasn’t getting enough value until the streaming was added. I ate the small increases to $10 because we enjoyed the streaming as a way to catch up on TV series we like watching. On principle alone a 60% increase deserves to met with a clear response — no.

  • Liliana

    I have downgraded to only 1 dvd at a time for now, but will leave it once I get more confortable with redbox. My assistant and her family canceled, and my best friend also canceled it all.

  • Maciej Swieboda

    As for me, I will drop the mail and just keep the stream service. Even thou I am a Netflix customer for a very long time, I will consider changing if a competitive service will show up on the marker. Netflix had price changes in the past and at that point, one cannot be sure what they will come up with next.

  • Lawrence

    I am getting rid of Netflix as soon as the price increase takes effect. It is not worth it now.

  • carlo

    I have just started the Netflix trial.As of now i don’t think i would pay for it.Selection of movies isn’t that great and even worse for TV shows.They don’t have music concerts.And the navigation for browsing is annoying.Way too many sub genres! Romantic Comedy,Action Comedy,Witty Comedy,Independent Comedy….But they really need to broaden their selection.Oh sure they don’t give a rat’s ass right now.But just wait until their customers realize there is better for the same money.They better wise up.

  • John

    Not worth keeping when rates go up 60% and they offer nothing new. I would have accepted a dollar or two, but they are just gouging now.

  • Corina

    I just canceled my subscription. I’ve been a steady member since 2003 and off and on before that, however, when my rate increases THIS much all at once, that’s it for me. I already have Amazon Prime and can watch movies and shows there. And if I want, I may try Hulu Plus for a month or two. Netflix just is not worth the price any longer.

  • eric

    At these new, “improved” prices, it’s much more cost effective for me to run across the street and rent a disk from the Blockbuster machine for $1 a shot. I mean, Netflix has got to be kidding me- at close to $200/year, it’s just not worth it. I don’t watch enough movies to justify that- this is gouging in the finest sense of the word.

  • Bill

    Depends if they can stream better movies not forgien crap!!Like right now!!