Subcribers See Red

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Subscribers See Red

Like its colorful iconic logo, Netflix left subscribers seeing red after announcing price increases and plans to sever its mailed DVD operation from the streaming movie business. Irate consumers inundated the company blog, a forum in which officials tried to explain their actions and consumers vented by the thousands. Netflix touted a new pricing structure as its “lowest ever”: $7.99 a month for its 1 DVD out at a time plan or $11.99 a month for 2 DVDs out at a time. Customers also could opt for unlimited streaming priced at $7.99 a month. At a cost of $15.98, members could combine the two plans – unlimited streaming and unlimited DVDs. Overall, the price hike amounted to 60 percent. Ouch.

The news resulted in unlimited screaming from subscribers and at last count a reported 800,000 customers defected. Their reactions were echoed in a small polling of Netflix subscribers that we took. The price increase struck a sour note here at CAYF.

“What was aggravating, if you know what goes on in the market; it was a greed driven move. I could see it if they were losing money and they had to change it or go bust and that was not the case,” Kimberly Alsup, CAYF Chief Technical Officer, said.

After the July announcement, she wasted little time in canceling her subscription to DVDs, Blu-ray discs and streaming. Under the revised pricing, the Alsup household would have had to shell out nearly $20 a month. Who gets a 60 percent raise, she asked? In the beginning, Netflix predicted some subscribers would leave, and she questioned why the company proceeded anyway.

“My thought on this whole issue is people have to bring things up at a reasonable pace. I’m not getting a 60 percent raise. If I raise my fees 10 percent, that’s reasonable.”

Television and movies offer reasonably priced escapism during these tough economic times but she believes the price hike is unjustified.

Although Jim and Carolyn MacIntosh in Sarasota, Fla., did not cancel their subscription yet, they too were disappointed with the way Netflix handled the matter.

“Customers were treated like stepchildren at a family reunion,” he said. “I follow the market, and Netflix really shot themselves in the foot. They lost thousands [of customers] because they tried to separate the streaming business from the DVDs. The content wasn’t as good,” he said. Splitting the two options, DVDs from streaming, and naming the DVD operation Qwikster have since been abandoned.

Still customers bolted from the video rental company in record numbers resulting in a loss of its stock value from a high of more than $300 a share to most recently $80.

“Here were decisions being corporately made and they didn’t share those decisions with customers. They thought because Blockbuster went belly-up, they could do anything they wanted,” Mr. MacIntosh said.

For the time being, the couple is still with Netflix but is rethinking their options, including Amazon, which offers movies online. He also noted that Redbox, the stand-alone video rental kiosk, is killing Netflix.

Karen Henderson and her family of Wexford, PA., canceled their Netflix subscription in August. Already disappointed with its movie offerings, the price hike was the final straw. In the months leading up to the deal-breaking price increase, the Hendersons increasingly turned to their local Redbox, because it offered more new releases at a cheaper price.

The problem was Netflix was not coming out with new releases as quickly as their competitors, Mrs. Henderson said. Another off-putting policy is that subscribers were placed on a waiting list for popular new releases.

Dissatisfaction with the movie selection also prompted Sandy Reynolds of Bethel Park, PA., to withdraw from Netflix. She was not a fan of mailed DVDs because of the wait time involved. There’s a lot of competition out there, and she questioned, why subscribe to a service she wasn’t using that much? For her, it makes more sense to pay as you go such as she does with Amazon than subscribe to a costly monthly service.

There are those who plan to stay with Netflix, however. That’s the case with Dorothy Davis, in Bluffton, S.C. She has been a member for nearly 4 years and is very satisfied. “I called them. I said I didn’t want the streaming. They said the price would be the same.”

She pays $7.99 for the 1 DVD a month plan. While Netflix is slow to get new releases she does not mind waiting.

If you’re unsure whether your subscription rate remains unchanged, check out your account online or give the company a call at 1-888-811-1933. The company even provides a code for faster phone service and given the bad publicity is up to making amends. When told one customer never used streaming because she had dial-up and had decided to cancel her subscription, now costing $15.98 a month, up from $9.99, the customer service representative offered to refund the streaming fees since the price increase went into effect in September.

Written by: Lynda Taylor, Web Writer/Editor