Tuesday, September 20th 2011

Customer Agony over Netflix's Price Rises & New Split Personality

Netflix's CEO, Reed Hastings, has apologized for mishandling a recent price increase that caused customers to fly away in droves. However, that was immediately drowned out by the decision to split the Netflix service into two, one with the odd name of Qwikster. The new streaming service will still be called Netflix and continue to have the same dedicated website as the old physical media one, netflix.com. However, the DVD rental service is now branded Qwikster, which will also have it's own site. Crucially, both sites will operate completely independently, which means separate logins and user profiles for each one, causing significant inconvenience to customers.

To all intents and purposes, Qwikster will operate as a separate entity and even have it's own CEO, while being owned by parent company Netflix. This all appears to be a strategy to wean customers off the old physical media service and onto the new streaming one, although it instead appears to be doing a better job at alienating all its customers, who can find the kind of service they want from places like Amazon and iTunes. Once again, Hastings apologized for the inconvenience and said:
It's hard for me to write this after over 10 years of mailing DVDs with pride, but we think it is necessary and best.
On top of this, the streaming service doesn't have anywhere near the same range of movies as the old DVD one, making customer retention a challenge. Unfortunately for Netflix, all this is taking its toll on the bottom line, with 600K customers fewer at the end of this month than at the end of June, by far the worst downturn the company has ever seen. This has wiped 53% off the company's stock value, which translates to around $8 Billion lost. The fact that Netflix were unable to renew a contract with a major supplier of movies, really isn't helping, either. Hastings has always steadfastly refused to rent video games. However, to help stem the tide, Hastings now wants to start renting these through the Qwikster service.

It remains to be seen how well Netflix does over the next year. However, they are very well established and streaming is the way forward, so I think they'll pull through. They should just remember it's their customers that keeps them in business and treat them well.

A longer version of this story is available over at Yahoo News.Source: Yahoo News
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72 Comments on Customer Agony over Netflix's Price Rises & New Split Personality

#1
H82LUZ73
15th Warlock said:
I can select 5.1 sound from some HD streaming movies on Netflix on my PCs, PS3 and Bluray player, but you can tell they're using a compresed sound source, not even close in quality to what you get from Dolby TrueHD or DTS HD from a BD
I watched THOR last week and it was awesome in DTS Matser HD 7.1 like the third movie this year encoded in 7.1,Seem to me the movie studio`s are taking back and putting the money into their Blu-Ray movies with 7.1,I agree with you that netflix so called 5.1 is a joke compared to Blu-Ray,Why iI liked renting them .I can`t anymore though Blockbuster was the only movie rental place in my town after they drove out the mom n pop ones.Now in a twist of fate they went belly up.
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#2
15th Warlock
suraswami said:
I never see the 5.1 lit up on my receiver even when watching HD movies using my PC (thru Windows media center or thru IE), I watched 'Blitz' yesterday, it said its streaming HD.

How did u get it to work?
On both the PS3 and my Samsung BD player I have to manually select 5.1 audio and both my Onkyo receivers pickup the signal, for my PCs (my HTPC connected to one Onkyo receiver and my rig plugged to surround speakers using optical out) the signal works in surround once HD streaming is enabled, didn't have to use any special settings as far as I remember.

Either way, the sound quality is way bellow par to what you get from a BD uncompressed bitstream, I guess we're still years from getting real time uncompressed streaming over the net here in the US, it would wreak havoc on the current download caps imposed by ISPs, so don't count on Netflix streaming replacing your DVD and much BD collection any time soon :(
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#3
suraswami
15th Warlock said:
On both the PS3 and my Samsung BD player I have to manually select 5.1 audio and both my Onkyo receivers pickup the signal, for my PCs (my HTPC connected to one Onkyo receiver and my rig plugged to surround speakers using optical out) the signal works in surround once HD streaming is enabled, didn't have to use any special settings as far as I remember.

Either way, the sound quality is way bellow par to what you get from a BD uncompressed bitstream, I guess we're still years from getting real time uncompressed streaming over the net here in the US, it would wreak havoc on the current download caps imposed by ISPs, so don't count on Netflix streaming replacing your DVD and much BD collection any time soon :(
That is how I have connected my HTPC to Denon receiver thru optical out from sound card, don't see the 5.1 signal on the receiver, any particular movie you want me to try out?
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#4
15th Warlock
suraswami said:
That is how I have connected my HTPC to Denon receiver thru optical out from sound card, don't see the 5.1 signal on the receiver, any particular movie you want me to try out?
That's weird... Well, we just finished watching the Office, I remember the last episodes in season 6 were encoded in surround, let me think... My son's been watching Toy Story 3 lately, dunno if that one's available on HD though, I'm at my office right now but I can look for more movies as soon as I get back home tonight :)
Posted on Reply
#5
AsRock
TPU addict
newtekie1 said:
I never really cared about the streaming service. However, when they added it for free it was a nice bonus, however it wasn't free to them. It amazes me how many people totally freaked out when they decided to charge for the service. In fact I seem to remember when they first introduced it(I was a member of netflix long before streaming) they said it was only a test and would only be free while they evaluated the idea.

But anyway, the fact is that they added streaming and didn't raise prices, my price for the 2 DVD package remained the same. In fact, they added a 1 DVD package while I was a member that wasn't an option when I joined, and that was cheaper, and they still gave streaming to those customers for free. They also added a 1 DVD limitted package that was even cheaper still, and still gave streaming.

You've been getting the service for free for years, so STFU about finally having to pay for it. It certainly wasn't free for Netflix to implement it and provide it to you, so you should be grateful it went this long for free, and not bitch when you finally have to pay for it.[/rant]
Maybe the long time members have no right to complain then but it was never free for us ( member since May 23, 2010 ), when we joined they charge around $7 per service + $3 per extra disk and + $3 for bluray access.

qubit said:
And yes, who's fault was it I posted this article? :D :toast:

I can see why you stopped subscribing. It's very irritating when a company artificially and arbitrarily limits things in this way, isn't it?
Well we used to get about 2 films a week but started not to watch so often and with the price increase said to happen we though hell with it..

Ahh well there loss right :P :). Still enjoying using there streaming still although i am running out of stuff to watch but there is stuff on there for the kids which ends up better than paying $13 to comcast for basic channels which are crap anyways even more so for kids.


EDIT:
suraswami said:
I never see the 5.1 lit up on my receiver even when watching HD movies using my PC (thru Windows media center or thru IE), I watched 'Blitz' yesterday, it said its streaming HD.

How did u get it to work?
I do as long as i use the the PS3 and on PC but limited to what your watching. Although only the PS3 selects miltichannel not the PC.
Posted on Reply
#6
[H]@RD5TUFF
IMO, I think if they had made these changes slowly rather than making them all at once, no one would have really cared or been upset far less. This has just become a serious mess, and I am weary of keeping my subscription, as I feel this could be the beginning of the end of netflix. On the upside I wonder if this could be the beginning of reasonable pricing for movies and TV series from cable companies.
Posted on Reply
#7
Mussels
Moderprator
suraswami said:
I never see the 5.1 lit up on my receiver even when watching HD movies using my PC (thru Windows media center or thru IE), I watched 'Blitz' yesterday, it said its streaming HD.

How did u get it to work?
its probably analogue 5.1, not digital.
Posted on Reply
#8
Easy Rhino
Linux Advocate
i love netflix streaming. 8 bucks for a wide variety of material. most people who are complaining watch too much tv/movies anyway. go outside and live a little. then you won't care as much.
Posted on Reply
#9
[H]@RD5TUFF
Easy Rhino said:
i love netflix streaming. 8 bucks for a wide variety of material. most people who are complaining watch too much tv/movies anyway. go outside and live a little. then you won't care as much.
Agreed 8 dollars isn't much you spend more than that for 1 movie at the theaters and the majority of new movies suck a fat one anyway.
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#10
Easy Rhino
Linux Advocate
the nice thing about netflix is it is independent from any major company. it started out of nothing and grew into a giant. but it is still very small compared to the cable providers and apple who is another streaming content provider. so if everyone is lame and leaves netflix then we will have crappy apple products to use or continue to get ass raped by the cable companies who are lagging the industry. get with it people, support netflix because it is the future!
Posted on Reply
#11
Wile E
Power User
The streaming service does not offer anything I want for $8/month. I only watched it when I was supremely bored to begin with, as the selection is mostly ass, and the DVD service isn't worth the money without some other value added, as redbox works out to be cheaper for us most of the time. Tis was a horribly stupid move on their part. We cancelled right away.

Anyway, I think the Oatmeal sums this up pretty nicely:

http://theoatmeal.com/comics/netflix
Posted on Reply
#12
[H]@RD5TUFF
Wile E said:
The streaming service does not offer anything I want for $8/month. I only watched it when I was supremely bored to begin with, as the selection is mostly ass, and the DVD service isn't worth the money without some other value added, as redbox works out to be cheaper for us most of the time. Tis was a horribly stupid move on their part. We cancelled right away.

Anyway, I think the Oatmeal sums this up pretty nicely:

http://theoatmeal.com/comics/netflix
They had to raise their prices because the movie studios were demanding more money.
Posted on Reply
#13
Wile E
Power User
[H]@RD5TUFF said:
They had to raise their prices because the movie studios were demanding more money.
They had more bargaining power than they let on, they just used it poorly. And that still doesn't justify the split.

Either way, 60% is too much, and they lost my business. It just isn't worth these prices, period. Redbox and the free streaming services have most of the content I'm after, and ends up way cheaper for me than the new rates, at the cost of being slightly more inconvenient.
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#14
ColdRush
I've watched all of topgear, and all of the breaking bad episodes they have. Nothing is really up to date so I'm going to cancel towards the end of the month.

It's been fun Netflix :shadedshu
Posted on Reply
#15
Cold Storm
Battosai
Steaming is the future due to tablets/smartphones. They don't have the tech yet to have steaming hurt them. $8 for even streaming is good. I know you gotta start somewhere.. I just assume that with profited years, they would work on the things needed.. Not think that if they raise pricing, they'll use that to do what they should of.. Instead of lining pockets..
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#16
Easy Rhino
Linux Advocate
my guess is that most people who are canceling pirate their tv shows and movies anyway. now more ammo for the mpaa and their ilk to come after everyday citizens and put down even harder DRM on their discs. netflix is a way out of this entire mess. if they go away you think a new start up will fill the void and do a better job? i certainly don't. not with net neutrality around the corner...
Posted on Reply
#17
Wile E
Power User
Easy Rhino said:
my guess is that most people who are canceling pirate their tv shows and movies anyway. now more ammo for the mpaa and their ilk to come after everyday citizens and put down even harder DRM on their discs. netflix is a way out of this entire mess. if they go away you think a new start up will fill the void and do a better job? i certainly don't. not with net neutrality around the corner...
Not me. I'm cancelling because they priced themselves out of my market. I do not pirate any shows. Redbox+Hulu+individual network streaming sites+DVR = cheaper for me, and gives me the vast majority of the content I watched on Netflix, at a much lower cost.

Netflix isn't some savior of the free world. The pirating argument is weak and pathetic as well. They pirate specifically because they don't have to pay for it. How in the hell is a paid service supposed to deter that? They pirate because it is FREE. Unless Netflix magically becomes free, you can forget about that entire demographic. That has always presented problems, and Netflix does not change that one iota.

And if they go under, yes, another service will take their place. Blockbuster, Vudu (very good for PPV, btw.) Amazon, and a whole slew of others are gearing up their streaming services. Some are PPV, and I'm sure some will become monthly soon to compete with Netflix.

And if they do go under, it's nobody's fault but their own.
Posted on Reply
#18
Easy Rhino
Linux Advocate
i'm not canceling because $8 is super cheap for unlimited streaming and $16 is super cheap for that plus the dvd option and there are no other alternatives as close without commercials. i dont see how that can price anyone out of the market. just buy one less donut per day.
Posted on Reply
#19
Mussels
Moderprator
a lot of people i know pirate because its easier.

want to take a TV series to a friends house to watch it? 8GB flash drive to their divX compatible DVD player is a shitton easier than taking boxes of DVD's and watching them get ruined.


stream/download it? hah, not on australian internet with bandwidth limits. i have to download freaking youtube files and watch them in MPC-HC, since thats faster than streaming them (for some reason, streaming speeds get slowed, direct downloads dont)


$8 for unlimited streaming is only worth it if they stock the shows you want in the quality you want, and you're already coughing up for the unlimited internet to go with it...
Posted on Reply
#20
Easy Rhino
Linux Advocate
my guess is most people pay $$$ for cable and never complain that they continuously raise their prices. hating netflix is what the cool kids do.
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#21
garyinhere
Here's my conspiracy theory: People made money on records/tapes/cd's then that money was jeopardized by digital online media, whether is was torrented or gained in a legal way. Money was lost and lawsuits ensued. Apple mainstreamed "deals" to get the digital rights to the media but some artists still refuse? The price of a song has increased even though money has been saved by not having to produce or store physical media. Some might say that it's caused by illegal downloads ect. but I think it is a healthy mix of that and corporate greed.(Apple has more money than the U.S.)
Now we have physical movie media problems: Most people would prefer to be able to download or stream movies straight to there house instead of going to a theater or to a rental place. All that equals is a customer demand that is not being filled. Netflix started to fill this demand at a very cheap price that is hurting A LOT of company's. Company's like Blockbuster or any theater. The demand is that a movie should be simultaneously released at a theater, and a rental store, and available for downloading/steaming at the same time. I heard rumor about a year or two ago that a movie was trying to do this but it didn't go through.What has blocked this from happening? People would pay for it. Physical media would suffer though, and so would theaters, and cable companies as well as company's that make or invest in blu rays and dvd's. Theater's and rental companies produce figures for the film industry so they can gauge how well a movie did. Plus the profit is insane from those places. I believe popcorn cost more per once than gold at a theater. So why would they block or attempt to stop that lol? The companies that Netflix had arrangements with saw that the did not charge Netflix nearly enough money for digital streaming rights and they had to be renewed. I doubt Netflix wanted us to pay for it but I imagine that the price for renewal was insane high. Starz stepped away from the table because Netflix would probably had to increase pricing again just to afford that and refused to pay what Starz demanded. You can thank the Lobbyists that are sent to Washington to block forward progress on this issue as they tried to do on the music industry as well. Which is also why site's like The PirateBay, Demoinoid and others thrive! :pimp:
Posted on Reply
#22
Wile E
Power User
I complain at ANYTHING that raises it's price by 60% in one shot. You'd have to be mentally handicapped not to be upset at a 60% price increase for anything you subscribe to. If myDtv bill went from $75 to $120, I'd sure as hell drop them too.

And, again, redbox + the alternatives ends up cheaper per month for me. I can get more redbox movies a month than I was able to with the 2 at a time plan with Netflix. And the free alternative streaming sites offer everything I wanted off of Netflix streaming anyway. So why the hell should I keep it?
Posted on Reply
#23
Easy Rhino
Linux Advocate
what price hike would you have found acceptable? to me, netflix was massively underpriced so I actually expected a hefty price hike to come along. cost means nothing to me though. the difference between netflix and your other content providers like the cable company is netflix raised your price all at once while the others nickle and dime you over the course of years and call it inflation. sure, your cable or sat provider offers more content, but most of it is shit. i would argue that given the 700+ channels available these days you watch a smaller percentage of that then you do streaming netflix or getting their DVDs.
Posted on Reply
#24
purefun65
Easy Rhino said:
the nice thing about netflix is it is independent from any major company. it started out of nothing and grew into a giant. but it is still very small compared to the cable providers and apple who is another streaming content provider. so if everyone is lame and leaves netflix then we will have crappy apple products to use or continue to get ass raped by the cable companies who are lagging the industry. get with it people, support netflix because it is the future!
netflix is going the way of AOL. studios want the money for the reason that cinema theatres are also dying and are becoming cost prohibitive. With households having hdtvs more commonplace and family's with ever tightening disposable income. it makes sense for studios to stream their latest releases straight to you same day release. Online retailers have proven this is profitable. meaning cut out the middle man such as b&m stores. kill netflix and stream your media. cutting out theaters which is a less than pleasant experience theses days. cell phones, people talking, overpriced concessions and poor picture and sound quality. Do any of you under thirty remember the drive in? dead and gone as will be netflix. isp providers saw this coming years ago. that is why on demand is lucrative. studios are already working deals with your cable providers.
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#25
xenocide
You can say Netflix was undervalued, but the fact that they are losing what little content they havehad from Studios most likely means anything I'm interested in is on its way out. I buy plenty of Movies and when possible watch them on TV or Hulu, but there are just so many arbitrary restrictions these days it's ridiculous. It's just like the music industry was 10 years ago. Something comes out that threatens their business model that leaves the customer with little option but to suffer, and they immediately attack it.

If all the movietelevision studios embraced Netflix and Netflix then charged $15-20 a month but you could Stream ANYTHING, I would happily pay it. Instead, we got a million B-or-worse Movies, and a handful of seasons of good TV shows. It's currently at the point where Netflix was ahead of its time and will suffer because the support-structure for it's business are unwilling to change. Cable companies make infinitely more money from Advertising on their networks than they do through offering their content to Netflix, regardless of the price Netflix sets.
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