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
Easy Rhino said:
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.
Do you have cable internet provider by chance? When I had Netflix Cogeco started charging me an extra $50 more fee for my Internet plus $1 more for every gig I went over my 60 gig cap, So no it is not streaming at all it still counts as downloads they told me, The first month on Netflix I had over 120 gig on my downloads, That is from 3 in the house watching movie, tv all through the Samsung Blu Ray player and not on the PC that are so called streaming....So were is the damn savings in that future .....You get to spend $16 for the membership(a month x12) then your Internet provider takes $150x12 more get real I spent like $58x12 month on rentals ....So which is cheaper .
Posted on Reply
#2
purefun65
xenocide said:
You can say Netflix was undervalued, but the fact that they are losing what little content they have\had 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 movie\television 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.
This is true I have found that the available streaming content has been reduced and the quality of choice has become less than stellar with removals of previous films that have been replaced . example troma movies in the horror section or b movies from the 60's The content is like saturday horror shows like when i was a kid watching doctor shock. If any of you younger posters remember him. lol
Posted on Reply
#3
Mussels
Moderprator
H82LUZ73 said:
Do you have cable internet provider by chance? When I had Netflix Cogeco started charging me an extra $50 more fee for my Internet plus $1 more for every gig I went over my 60 gig cap, So no it is not streaming at all it still counts as downloads they told me, The first month on Netflix I had over 120 gig on my downloads, That is from 3 in the house watching movie, tv all through the Samsung Blu Ray player and not on the PC that are so called streaming....So were is the damn savings in that future .....You get to spend $16 for the membership(a month x12) then your Internet provider takes $150x12 more get real I spent like $58x12 month on rentals ....So which is cheaper .
i think you got something confused there... streaming always has, and always will count as downloads. its just downloads you throw away when you close the window, which is why i hate streaming.
Posted on Reply
#4
DannibusX
I wonder if Starz and other content owners would benefit from charging services like Netflix less money if these companies would stop signing exclusivity deals with content providers. Meaning content providers have the opportunity to make more money by making their content available in more areas and spurring competition amongst Netflix, Hulu, Comcast, etc.
Posted on Reply
#5
Easy Rhino
Linux Advocate
i bet comcast/verizon/et al have told the tv and movie distribution companies that they will pay them less if netflix is awarded reasonable contracts. sorta like what intel did in europe.
Posted on Reply
#6
Kreij
Senior Monkey Moderator
I'm on the "one DVD at a time" plan.
My subscription dropped $2.00/mo. in price when they split off streaming.
I'm good with that.
Posted on Reply
#7
[H]@RD5TUFF
While I understand why it happened I am not happy about it, I am being charged more with no increase in content.:nutkick:
Posted on Reply
#8
newtekie1
Semi-Retired Folder
AsRock said:
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.
In 2010 Streaming was free. You paid for your DVD plan, and got streaming along with it, if you signed up in May, 2010 you got streaming for free. It was only recently that they started charging an extra fee for streaming, and that is why people got pissed.
Posted on Reply
#9
Easy Rhino
Linux Advocate
meh, i don't see the big deal. if you think it is too much money then drop the service because it doesn't sound like they are going to make streaming free again. people should just move on with their lives. i for one will continue to support netflix however. $16 is super cheap for me.
Posted on Reply
#10
Kreij
Senior Monkey Moderator
I agree, it's a great deal for me too.
The local video store charges $3 for a new release.
If you bring it back two days late it costs you $9.
That's more than the monthly fee ($7.99) for my netflix sub which I can usually get 8 or 9 movies per month and don't have to worry about how long I have them.
I've also found the movie DVDs I get from netflix are in far better physical condition than the ones from the local store.
Plus I don't have to drive a 15 mile round trip to the video store.
Posted on Reply
#11
AsRock
TPU addict
newtekie1 said:
In 2010 Streaming was free. You paid for your DVD plan, and got streaming along with it, if you signed up in May, 2010 you got streaming for free. It was only recently that they started charging an extra fee for streaming, and that is why people got pissed.
Well in May 23, 2010 we were paying $17 due to having 2 DVD's ( + bray assess ) sent to us.

You see it as streaming was free due to when you joined. For when we joined we joined on the understanding streaming and a DVD was one package

Aug 23, 2010 VISA *** *** Monthly membership Aug 23, 2010 - Sep 22, 2010
$16.99 (+$1.19 tax) $18.18

Jul 23, 2010 VISA *** Monthly membership Jul 23, 2010 - Aug 22, 2010
$16.99 (+$1.19 tax) $18.18

Jun 23, 2010 VISA *** Monthly membership Jun 23, 2010 - Jul 22, 2010
$16.99 (+$1.19 tax) $18.18

May 23, 2010 VISA *** Monthly membership May 23, 2010 - Jun 22, 2010
$16.99 (+$1.19 tax) $18.18

As from Jan 23, 2011 - Feb 22, 2011 it went up too $17.99 all so excluding tax. Now we pay $7.99 excluding tax but there not charging us tax either.

Now if we had what we had before Streaming 2 DVD and bray access it be $23 + tax
Posted on Reply
#12
EchoMan
People complaining about 8$ a month for streaming video, lol how cheap are you? and what do you expect?

Netflix will be dead within a year, since every media corp wants their own streaming service. Was good while it lasted. Enjoy paying 10$+ a month for each individual network in the future.
Posted on Reply
#13
Easy Rhino
Linux Advocate
i think a lot of it is just plain bitterness. customers do not like to feel taken advantage of whether they actually are or not.
Posted on Reply
#14
[H]@RD5TUFF
Easy Rhino said:
i think a lot of it is just plain bitterness. customers do not like to feel taken advantage of whether they actually are or not.
Exactly, I understand why it's happening, but that doesn't mean I have to like it, but one should understand why things are happening before rage quiting.
Posted on Reply
#15
purefun65
Kreij said:
I agree, it's a great deal for me too.
The local video store charges $3 for a new release.
If you bring it back two days late it costs you $9.
That's more than the monthly fee ($7.99) for my netflix sub which I can usually get 8 or 9 movies per month and don't have to worry about how long I have them.
I've also found the movie DVDs I get from netflix are in far better physical condition than the ones from the local store.
Plus I don't have to drive a 15 mile round trip to the video store.
red box bluray $1.50 and rip em. no contest!
Posted on Reply
#16
Easy Rhino
Linux Advocate
[H]@RD5TUFF said:
Exactly, I understand why it's happening, but that doesn't mean I have to like it, but one should understand why things are happening before rage quiting.
true. in life i tend not to cry much about these little things. in context of a tech forum sure people will talk seriously about something like this, but i hope in the grand scheme of things a netflix price hike doesnt make them rage life. it sure sounds like it does make them want to rage quit life though judging by their posts.
Posted on Reply
#17
DannibusX
For less than $20 per month, Netflix is still a great deal. It's kind of a crazy situation. Honestly, they should have gradually raised the price on DVD and Streaming package, while offering separate packages for folk that didn't care about one of the services.

The kicker with this story is their alienating their customer a little more by ditching the DVD business in favor of the streaming. Well, not ditching, but spinning off. Profits are still there to be had, but I think the management has handled the situation horribly. Netflix should stay as one company, work on getting content added to their streaming service and if they so chose add a game rental service to Netflix.
Posted on Reply
#18
qubit
Overclocked quantum bit
Easy Rhino said:
true. in life i tend not to cry much about these little things. in context of a tech forum sure people will talk seriously about something like this, but i hope in the grand scheme of things a netflix price hike doesnt make them rage life. it sure sounds like it does make them want to rage quit life though judging by their posts.
I have to agree, things like job security and health are much more important. :)

I think there's just something about the semi-anonymity of an internet forum that encourages people to rage and vent so much.
Posted on Reply
#19
[H]@RD5TUFF
qubit said:
I have to agree, things like job security and health are much more important. :)

I think there's just something about the semi-anonymity of an internet forum that encourages people to rage and vent so much.
Exactly, people seem to forget common sense when anonymity is a factor.

/ontopic

I am convinced netflix won't be around for much longer, as the movie and tv companies seem determined to force them out of business by making them charge more.
Posted on Reply
#20
Kreij
Senior Monkey Moderator
purefun65 said:
red box bluray $1.50 and rip em. no contest!
I don't care if they are blu-ray and I don't want to rip them.

Nearest redbox is about 20 miles one way.
Redbox :
8 movies per month = $12.00
16 miles per movie * 8 movies @ 20mpg with gasoline at $3.65/gallon = ~$24.00
Monthly cost = $36.00

Netflix :
$8.00

No contest? Since it would cost me 4.5x the price of netflix to use a redbox, I suppose that statement would be applicable in my choise of using netflix.
Posted on Reply
#21
Wile E
Power User
Easy Rhino said:
meh, i don't see the big deal. if you think it is too much money then drop the service because it doesn't sound like they are going to make streaming free again. people should just move on with their lives. i for one will continue to support netflix however. $16 is super cheap for me.
I do think it's too much money, and I did drop them. $24/mo is too much for the quality of content they offer on streaming, and the number of discs I am able to process in a month.

I use to be a huge supporter of Netflix. I've been with them for 8 years or more. I didn't complain over the small increases over the years. When I joined I believe 2 at a time was around $10. I didn't complain over the incremental increases, because those are easier to adjust for. I didn't even complain when they wanted to charge a little extra for BD's. Didn't necessarily like it, but thought it wasn't too bad. But going from $17 for 2 bd's + unlimited streaming to $25 is just unacceptable without some sort of additional value added.

My $25/ month will be going to redbox, tyvm.

EchoMan said:
People complaining about 8$ a month for streaming video, lol how cheap are you? and what do you expect?

Netflix will be dead within a year, since every media corp wants their own streaming service. Was good while it lasted. Enjoy paying 10$+ a month for each individual network in the future.
Yes, I'm complaining, when the service was previously free with a DVD plan, and the content is 90% garbage.

I don't know about anyone else, but I actually want something worth my $8/mo. The current selection is not it. If it had a better selection, I'd be all over it. But it doesn't.
Posted on Reply
#22
AsRock
TPU addict
DannibusX said:
I wonder if Starz and other content owners would benefit from charging services like Netflix less money if these companies would stop signing exclusivity deals with content providers. Meaning content providers have the opportunity to make more money by making their content available in more areas and spurring competition amongst Netflix, Hulu, Comcast, etc.
Stars is going over to Blockbuster
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