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Netflix subjects customers to “price change”; opt-out required to avoid paying 60% more

Yesterday, Netflix sent out an email to its millions of customers disclosing that it has decided to raise its prices, effective immediately for new customers and effective in September for existing customers. The announcement, also posted to Netflix’s blog and its Facebook page around the same time, has since drawn tens of thousands of comments, many from angry and/or dissatisfied customers.

What seems to have many people upset is that Netflix chose to disguise its price increase as a change in plans, rather than explaining why it needs to simply raise prices in the first place. In fact, the email was titled, “Price Change and New Plans.” In reality, Netflix isn’t offering anything new – unless by new it means less.

(To be fair, Netflix’s blog post did provide some background that explained the company’s decision. But the email didn’t. And it should have. )

Quoting from Netflix’s email:

We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.

Your current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
Plan 2: Unlimited DVDs, 1 out at-a-time (no streaming) for $7.99 a month

Your price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). You don’t need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.

In other words, people who want to continue enjoying the same service from Netflix they’re getting now will have to pay sixty percent more per month, or $71.88 more per year. What’s more, Netflix customers are going to be automatically subjected to this price increase. To avoid paying the extra $72 per year beginning in September, they have to opt-out by changing their plan.

The new plans will actually result in a slight savings for people who only want to stream movies, or who only want to rent DVDs.

But for folks who want the best of both worlds, this announcement really sucks. They can’t enjoy the service they enjoy now without paying more. And that’s why Netflix is getting an earful.

One customer summed up my thoughts on the change this way:

Why are you being weasely about the price increase? It takes effect Sept. 1, but I don’t want to take part, so I have to go in and change my service, but that takes effect immediately. So, if I don’t want you to raise my prices in September, I have to turn the streaming off now or remember to log in on August 31. There’s no way to make the change effective with the next billing period. Bad play, Netflix.

Other customers are threatening to defect altogether:

Given the rather large price increase you suffer with the 1 DVD + Streaming plan, I’ll probably just end up switching to Amazon Prime’s instant streaming. A real shame, too, since I’ve always enjoyed Netflix, their selection, and their customer service.

Netflix is leaving many of its loyal customers with the impression that it just doesn’t care about them. The company should act fast to atone for this mistake before it loses any more goodwill… and business.

2 Comments

  1. Posted July 13th, 2011 at 11:18 PM | Permalink

    I cancelled my current service and just went to streaming only. I still have TVDevo website’s service and get movies and TV for cheaper than what Netflix offers. So I’ll do streaming only through Netflix. See how it works out.

  2. Andrew
    Posted July 14th, 2011 at 11:19 AM | Permalink

    That’s one way to go. I’ve heard some folks say they’re cancelling streaming and will make do with Amazon’s Instant Video in addition to a one or two DVD a month plan from Netflix. Instant Video is free for Amazon Prime members.