Back in July, Netflix announced that it was changing its plans to offer “the lowest prices ever.” They did this by raising my membership price by 60% per month. How did this make sense? By unbundling the streaming from the DVD services, Netflix could charge $7.99 for each service separately. While I used to get both for $9.99, now I would need to pay $15.98 for the same services I used to receive.
Had Netflix PR not try to spin this price increase as their “lowest prices ever” and characterized it more properly as an increase in the cost of streaming services, I would’ve likely coughed up the extra $6 per month. Instead, somewhat out of spite because Netflix’s bumbling marketing move, I actually evaluated what I was getting for my money. Netflix used to have a sweet spot–direct billing on a recurring basis to my credit card. I never questioned the value of my Netflix account. But instead of confronting the issue on its face and regretfully needing to pass the increased costs to its customers, Netflix was trying to pull one over on me (and the rest of the disgruntled customer base).
Netflix officially denied that the price increases had anything to do with increased costs of streaming rights. I hardly believe that considering a few months later, Netflix streaming’s main content provider Starz Play backed out of its contract, depriving Netflix of the Sony and Disney catalogs. People seem to think that streaming is almost costless to Netflix because it doesn’t have to mail out DVDs. What people usually don’t realize is that copyright laws are different for streaming content and those rights can actually be much more expensive.
As I said, had Netflix just been upfront about the price increase instead of trying to disguise it as a price drop, I probably would’ve just swallowed it whole. But because of the path it took, I had to think critically about what I was getting for my money. The results weren’t good. Netflix streaming had little content that I valued. I couldn’t get any new releases on popular titles, the main purpose for my Netflix account. Come to think of it, I usually get no more than two DVDs per money anyway. So I downgraded my plan to the cheapest option, the limited DVD-only plan for $4.99 per month. I can only get two DVDs per month and have no streaming services.
Netflix has done much to revolutionize the industry. It generated so much consumer loyalty and goodwill. But when it wants to play chicken with its customers and lay down “the only game in town” card, it better be ready for the mass exodus. Netflix is now losing $5 per month from me and I suspect many more former satisfied customers.