Netflix: We Thought You Would Be More Upset About The Price Hike

    July 26, 2011
    Josh Wolford

The public reaction to the recent Netflix price change has calmed a bit, and although the interwebs are far from tranquil, we aren’t seeing the level of pure blinding rage directed at the company now that the announcement has had time to sink in.

If you’ve been living under a rock for the past couple of weeks, a rock that is not located on the internet landscape, here’s a brief recap of the Netflix hullabaloo:

The company announced earlier this month that they were doing away with the unlimited streaming / DVD combo plan in favor of separate plans for streaming and DVDs. Each will cost $7.99. Users that were paying $9.99 for unlimited streaming and 1-DVD-at-a-time rental will now pay $15.98 for the same service.

It should come as no surprise that people were a bit incensed after hearing this news.

But according to Netflix CEO Reed Hastings, people weren’t as pissed off as he thought they would be.

During Netflix’s earning call yesterday, Hastings had this to say about the backlash from the price hike –

Believe it or not, the noise level was actually less than we expected, given a 60 percent price increase for some subscribers. We knew what we were getting into, we tried to be as straightforward as we could, and that has worked out very well for us.

So Hastings knows that it was a huge change. That fact isn’t lost on him. But he seems to think that they can weather the storm. Maybe so – Netflix has a loyal following. But how loyal? Could people possibly jump ship to Redbox, cable providers or Blockbuster? A recent report shows a plunging brand perception following the price hike. Should they be worried?

To this writer, it seems as though Hastings knows that the price change was necessary in order to achieve a long-term goal: to phase out physical DVDs altogether. Here’s some more from the earnings report, where they discuss declining DVD interest and their focus on streaming –

We’ve spoken frequently of how we are directing savings generated from declining DVD demand into additional streaming content and marketing. During the quarter, we substantially increased sequential spending on streaming content as titles from our new content deals (discussed below) became available for streaming. At the same time, though, we maintained a disciplined approach to what content we license and at what price, spending somewhat less on streaming content than we budgeted for in the quarter. Also, DVD shipments came in even lower than forecasted, in part due to the popularity of our streaming only plan.

I plan to deal with the Netflix price change by dropping my DVD plan entirely and going streaming only. Netflix doesn’t even get most new releases until a month after they come out anyways. Any DVDs i need I can grab from Redbox. I’m sure many others share my decision.

Streaming is the future. Do you agree? Let us know in the comments.


Josh Wolford
Josh Wolford is a writer for WebProNews. He likes beer, Japanese food, and movies that make him feel weird afterward. Mostly beer. Follow him on Twitter: @joshgwolf Instagram: @joshgwolf Google+: Joshua Wolford StumbleUpon: joshgwolf