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.