NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate provides the Northwest Progressive Institute's uplifting perspective on world, national, and local politics.

Wednesday, July 13th, 2011

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.

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  1. 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.

    # by Jacklyn - Chicago :: July 13th, 2011 at 11:18 PM
    • 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.

      # by Andrew :: July 14th, 2011 at 11:19 AM
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