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The Netflix Exodus Begins As New Prices Take Hold

How hard will it be for Netflix to win customers back?

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The Netflix Exodus Begins As New Prices Take Hold
[ Business]

The tumultuous 2011 for Netflix appears to be taking its toll as subscribers move away from the movie rental business because of dissatisfaction concerning price and subscription changes, alterations that, when announced, rocked the Internet to its core.

While Netflix has been preparing for customer turnover, because it’s apparent people want another option in relation to movie rentals, which is something that undoubtedly sounds great to Redbox. Well, that and their dissatisfaction with the Netflix price hikes. It’s becoming apparent that, until Netflix substantially improves its streaming movie catalog–a difficult proposition as long as content providers keep leaving–the choice between DVD rentals and streaming movies isn’t an easy one. Granted, Netflix’s release schedule for DVDs has also been affected by other content providers, so by the time you get a popular new release in your mailbox, it’s not so new anymore.

With all of that in mind, when Yahoo Finance reports that Netflix expects to lose 600,000 customers in the United States during the month of September, it’s hard to be surprised by this news. It’s also hard to be surprised by the fact that Netflix’s stock to a hit this month as well.

The question is, can Netflix sustain its current business model? While the immediate reaction may be “Netflix is doomed,” a snippet from Yahoo’s article indicates reports of Netflix’s early demise may have been premature:

Even with fewer subscribers, Netflix expects to bring in $10 million to $25 million more from its customers than during the July-September period than it did April-June. Emphasis added.

It stands to reason that some of this revenue will come from customers who forget to change their subscription package, or from the ones who want both streaming and physical DVD delivery, it doesn’t explain the July-to-August periods. Did all that negative press actually help their bottom line?

However, when you look at the potential exodus numbers now that the price changes have taken hold, the two are not congruent. While subscriptions may have increased during the summer, adding to the Netflix bottom line, the outlook does not remain as positive, especially with the news about Netflix’s expected customer loss. So what does this mean for the home movie rental business? Yahoo has more:

Many of the people no longer renting DVDs from Netflix will get their discs elsewhere. That could be a boon for Redbox, which rents DVDs for $1 per night through 33,330 kiosks in supermarkets and other retailers, and Blockbuster, which still has 1,500 U.S. stores after emerging from bankruptcy protection under the ownership of Dish Network Corp. Investors are betting Redbox will be the main beneficiary; the shares of Redbox owner Coinstar surged $3.33, or more than 7 percent, to close at $48.55 on Thursday.

If Amazon can beef up its content on Amazon Instant Video service, it, too could knock Netflix farther down the home movie business totem pole.

What about you? Will stick by Netflix or are you moving on to Redbox and other services that offer streaming movie options?

The Netflix Exodus Begins As New Prices Take Hold
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  • SeeSawYoung

    Price, Price, Price…
    Every article on this issue says that this is the reason everyone canceled Netflix.

    This is inherently inaccurate, and too simplified.

    Netflix customers left due to the way Netflix has acted during this whole process, arbitrarily changing multiple features with no notice often in a confusing and wholly irritating fashion, the price hike, and finally the company has shown complete disregard for the feelings of their once loyal customers concerns, even an arrogance about it all.

    There is no email address to complain to only a phone number which was overloaded constantly when anyone tried to complain.

    Further, the statements to the press have had an amazing “tin ear” and dismissive quality to them.

    It’s never been about price only.

    It is solely the way the customers feel they have been treated/communicated with.

    • Fogo

      It’s all about the price! I can get better price using Hulu plus and Redbox. So why should I use Netflix?

  • snow

    It is about price and all of reasons seesaw mentioned. NetFlix is arrogant if they think they can increase rates 60% without added services, and ignore it loyal customers that helped advertise for them in the past by word of mouth. I quit yesterday, went to blockbuster, and wouldn’t go back yo Netflix unless they gave me free service for a year, fired their decision makers, and apologized for screwing its customers.

  • http://www.unizikforum.com mr. o. Dika

    price matters a lot. i cant go back to netflix if they did not reconsider making a change. and i know some other people think as i do.

  • L Carter

    Waaaaaaa…. Let’s think about this. 16 bucks for all you can eat streaming plus DVD also. At 4 bucks a pop to rent at a video store that’s 4 DVDs. Quit yer bitchin!!!!

  • http://www.weswareonline.com BB Exp

    Found this article on the perfect day! Just subscribed to Netflix two months ago. Before my free trial was even over, they announced the rate hike via email. After some thouht, I concluded that Netflix was still worth the price. Then came the buggy streaming software that required a complete home network re-cycling to actually work. A call to support yielded “it’s not our fault, call Nintendo”. Then, just today, I didn’t receive my movie on time that I really wanted to watch this weekend. Not looking to make this a Netflix help thread or anything; just saying that more money + crappy performance + broken delivery promise = I’m checkin into Redbox!

  • Rick Vaughn

    I was never really big on Netflix, yes when it started it was a little cheaper than Blockbuster, but it wasn’t as good. I get new releases sooner, the option of also renting video games is AMAZING! I work for DISH Network and I got an email the other day stating that they are going to start a Blockbuster streaming option, it should be interesting to check out.

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