Update: Netflix Abandons Price Changes / Separates DVD and Streaming Services

[JamesG]

Netflix Once Again Jacking Up Their DVD & Streaming Prices
By Aiden Redmond
Posted Jul 12th 2011


Now you're really gonna hate those unwatched DVDs collecting dust on your kitchen table.

In a move that's got us shaking our heads and muttering "Serenity now!" under our breath, word on the street is that Netflix is completely screwing things up for us frugal movie lovers by creating separate rates for their DVD and instant-streaming options.





Back in November, the powers that be at Netflix went ahead and upped their rates by anywhere from $1–$8 per month both to rent DVDs and have unlimited access to their instant-streaming catalogue.

That was rough in its own right, but now it's going to cost $7.99 per month to rent out one DVD at a time and an extra $7.99 per month to have access to unlimited instant streaming.

Yup, it will now cost you $16 per month to have both services going at the same time, and that is some tough cookies for all of us currently dishing out $10/month for that same level of access.





As to why Netflix made this buzzkill of a move, apparently it was intended to "better reflect the costs" of their services. It would be one thing if their instant-streaming catalogue was expansive enough to render the DVD option obsolete, but with the way things are now, a lot of us are just gonna have to bite the bullet and dish out that dough.

The new prices will take effect on Sept. 1 for existing customers and immediately for new ones, so for all you Netflix devotees out there, looks like you've got yourself two months and change to tackle that instant-streaming queue like there's no tomorrow.

Head on over to Netflix to see their statement about the new rates.

http://blog.moviefone.com/2011/07/12...eaming-prices/

[AKA]

I hardly ever use the streaming option, so as long as I can still rent Blu-rays and DVDs without having to pay the streaming premium, I'm gravy.

[Family Ties Forever!]

That's a lot for those who want both dvds and streaming. I prefer the actual dvds.

link

Netflix Hikes Prices For DVDs Streaming
By Julianne Pepitone

Posted: Tuesday, July 12, 2011 Updated: 3:17 pm CDT July 12, 2011

Brian Snyder/Reuters
New Yorik (CNNMoney) -- Netflix is launching new, unlimited DVD-only plans in the U.S. -- but as a part of that move, it's scrapping unlimited plans that include both physical DVDs and online streaming. Subscription movie rental service Netflix said Tuesday that the changes are meant to "better reflect the costs" of each option. The changes cut prices slightly for customers who only want DVDs, but streaming video will now cost extra. Customers who want both options will essentially have to pay for two plans, raising their overall bill.

Netflix's unlimited streaming-only plan will remain at $7.99 a month, while its "1 DVD at a time" plan will also cost $7.99. That means customers who want both streaming and DVDs will have to shell out at least $15.98 a month. That's a big jump from the $9.99 a month customers currently pay for a plan that offers unlimited streaming plus 1 DVD at a time. The changes will be effective immediately for new customers and will take effect September 1 for existing members, Netflix said. The move comes as Netflix continues to shift its focus toward online streaming video -- an option that, while popular, costs Netflix loads of cash as studios start commanding higher prices for their content.

Netflix's announcement sparked an immediate and loud backlash from customers. By Tuesday afternoon, more than 1,000 comments filled the Netflix blog post announcing the changes -- most overwhelmingly negative. Hundreds of commenters said they would cancel their plan, some in favor of rival streaming offerings from Hulu and Amazon. Others planned to stock up on DVDs from rental kiosk Redbox, which said earlier this year that it is working on its own streaming service to take on Netflix. "The only way that this is terrific for the customer is if you plan to offer your entire collection available for streaming," one respondant wrote on Netflix's blog. "Otherwise this is just yet another way to choke more change out of your customers."

"You've decided to raise customer rates during a period of economic downturn, when people are struggling to pay for basic necessities," another customer wrote. "You're forcing me to pay more for products and services I've paid for loyally for quite a while now. You're really, REALLY making me reconsider this business relationship. Netflix first introduced streaming plans in 2007. Since then, the service's membership has climbed from 6 million to 23 million in the U.S.

Copyright CNN 2011

[Torgo]

That sucks. Use streaming all the time thru Wii, especially because there are some movies available for streaming but not DVD.

[AKA]

Right now, I'm paying $23.99 for 3 movies out at a time with Blu-ray access. In September, if I jettison the streaming (which I'm almost definitely going to do), it'll go down to $19.99. If I up it to four at a time, my plan will go up to $26.99. Decisions, decisions.

[Schmoopie]

Originally Posted by AKA

I hardly ever use the streaming option, so as long as I can still rent Blu-rays and DVDs without having to pay the streaming premium, I'm gravy.

I'm actually watching a movie on Neflix streaming right now but I hardly ever do. I was a bit disappointed but actually my email said that the DVD only price is $7.99 which is actually cheaper than the $9.99 I'm paying right now. So it works out better for me.

Andrea

[floyd2006]

I'm thrilled about this price change. Before the change, the price was high because of streaming(which I never used) and now the price has dropped(for those who only rent dvds at least) a lot. I think they could have given more warning to their customers who used streaming though.

[JamesG]

Anger Over Netflix Price Hike
13 July 2011


A day after Netflix reported their price changes their website was flooded with complaints. Some analysts noted that currently many subscribers primarily use the streaming service but augment that with one or two newer DVD releases each month.

The new pricing structure, they suggested, will likely result in their subscribing to the streaming service for two dollars less and spending their $2.00 savings at kiosks for newer movies.



The Wall Street Journal quoted Dan Rayburn, an analyst at research firm Frost & Sullivan as saying that the Netflix move “makes no sense.”

He predicts that few people will opt for both plans, leaving Netflix with millions of subscribers who will henceforth be paying $2.00 less per month than they do now.

-IMDB News

[JamesG]

Disgruntled Netflix Subscribers Flood Switchboard
15 Jully 2011


Netflix was apparently unprepared for the deluge of telephone calls from disgruntled subscribers when it announced a new pricing plan that requires them to pay $7.99 for a DVD-only plan, $7.99 for a streaming-only plan or $15.98 for both.

Btig Research analyst Richard Greenfield said that he made 35 calls to Netflix customer service and successfully reached a representative only 15 times.

One customer service representative told Greenfield that at the time he called her monitor showed that 471 persons were waiting to get through. Greenfield observed that the CSRs “did not appear to have a strategy for addressing customer complaints.”



After looking at his usage, one Csr suggested that he switch to the DVR-only plan, while another recommended the streaming-only plan.

Yet, another suggested that he alternate his plans — DVR one month, streaming the next.

“There was literally no rhyme or reason to the responses we got from CSRs, which is surprising, given Netflix’s focus on customer care/service,” he said.

-IMDB News

[Family Ties Forever!]

link

Netflix Addresses Customers 'Upset' With Price Hike
By Julianne Pepitone

Posted: Monday, July 25, 2011
Updated: 5:48 pm CDT July 25, 2011

Brian Snyder/Reuters
New York (CNNMoney) -- When you're a new tech company with a cool product, life is good. But once you become an industry leader, pleasing people is a lot tougher. Just ask Netflix. Netflix enjoyed a strong second quarter, but it wasn't good enough to satisfy investors on Monday. And the company spent much of its earnings release discussing problems -- namely, a recent price hike that launched thousands of online complaints. Although Netflix reported earnings of $1.26 a share, easily topping estimates from analysts polled by Thomson Reuters who expected $1.11 a share, sales missed forecasts.

Revenue rose 52% to almost $789 million. Analysts were predicting sales of $791 million. The stock fell nearly 8.5% in after-hours trading on the news. Customers reacted angrily when Netflix announced earlier this month that it's hiking prices on plans that include DVDs and streaming, in a move that highlights the company's shift from physical discs to online video. "It is expected and unfortunate that our DVD subscribers who also use streaming don't like our price change, which can be as much as a 60% increase," Netflix said in its earnings release. The company acknowledged that "some subscribers will cancel Netflix or downgrade their Netflix plans, [but] we expect most to stay with us."

Analysts asked several questions about the price hike on a post-earnings conference call. One question noted the thousands of comments on Netflix's own blog announcing the new pricing strategy, as well as tweets under the hashtag #DearNetflix. But the social media "noise level was actually less than we expected, given a 60% price increase for some subscribers," said Reed Hastings, the CEO of Netflix. "We knew what we were getting into." Netflix warned that it "will see only the negative impact of the pricing change" in the third quarter. The company expects to earn 72 cents to $1.07 a share next quarter. Analysts had been expecting earnings of $1.09 a share for the quarter.

Nearly 75% of Netflix's new customers during the quarter signed up for streaming-only plans. Netflix now has 25.6 million subscribers across the globe, up from 15 million customers a year ago. It has about 24.6 million in the U.S. alone. But the company said that domestic subscriber growth in the third quarter will be relatively sluggish. Netflix expects to finish the quarter with between 24.6 million and 25.4 million U.S. subscribers -- close to flat from the current figure. Netflix said DVD shipments have likely peaked already, but it's still setting up "a dedicated DVD division" with "no intention of selling it." The company will resume marketing its DVD-by-mail service in the fourth quarter, something it hasn't done in several quarters.

Content costs and new competitors: As streaming video gets more popular, Netflix is facing two headwinds: studios and potential rivals. Netflix was able to score comparatively cheap streaming deals when the service first launched, but now content providers want to be paid more for the content they're providing. One analyst predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012. Google and Amazon have launched their own streaming video services, and Netflix's most direct competitor, Hulu, is on the selling block. Walt Disney Co. Chief Executive Robert Iger said at a conference earlier this month that Hulu's owners -- who include Disney -- are "committed to selling" it.

The list of interested potential Hulu buyers includes Google, Apple, Amazon and Yahoo plus telecoms AT&T and Verizon. Landing Hulu would give any of them a strong foothold in challenging Netflix. But Netflix said in a letter to shareholders Monday that it will not bid on Hulu. Netflix cited the fact that "most of [Hulu's] revenue is from providing free ad-supported streaming of current season TV shows, which is not our focus."

Copyright CNN 2011

[comedyfreak]

I'm downgrading my service to dvd only. I'm not about to try and run a cable wire from my bedroom, which is where my computer is all the way to the living room just to stream movies to watch on my bigscreen tv.

[JamesG]

Netflix Price Increase Causes Bigger Subscriber Loss Than Expected
AP / The Huffington Post
Sept. 15, 2011


The exodus from Netflix has officially begun.

Netflix, in a note to investors, has said that they are set to lose about one million more subscribers than they thought they would following the big price change of July 2011.





The revised estimate breaks down like this:


On July 25th, Netflix expected to have 10 million streaming-only customers, 3 million DVD-only customers and 12 million with both.

Now they expect to have 9.8 million with streaming, 2.2 million with DVD only and (still) 12 million with both.

Effectively, Netflix had projected 25 million users at the end of this month; now they think they'll have 24 million users.

http://www.huffingtonpost.com/2011/0...3_lnk1%7C95981

[JamesG]

Humbled Netflix Separates DVD And Streaming Businesses, Abandons Price Changes
9/19/2011
by Etan Vessing


Netflix CEO Reed Hastings has offered a rare mea culpa: “I messed up. I owe everyone an explanation.”

A humbled Netflix co-founder, facing a consumer backlash over his decision to separate his DVD and streaming businesses and raise prices, has renamed his disc-by-mail business Qwikster.



But while continuing to call the streaming business Netflix, Hastings on his company’s blog site apologized for any slight to his subscribers, who have dwindled in number of late.

“It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes,” he wrote.

“That was certainly not our intent, and I offer my sincere apology. I’ll try to explain how this happened,” Hastings added.









The Netflix boss insisted the company was evolving with the times. He just got that messaging thing wrong.

“In hindsight, I slid into arrogance based upon past success. We have done very well for a long time by steadily improving our service, without doing much CEO communication,” Hastings wrote.



To repair the damage to his company’s credibility, Hastings said Netflix will do more to market its DVD service, and improve its streaming technologies and offerings.

“So we realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently,” he continued, explaining the decision to separate the two businesses.

And the Qwikster business will add video games.









Oh, and a repentant Hastings is done with price changes.

“Members who subscribe to both services will have two entries on their credit card statements, one for Qwikster and one for Netflix. The total will be the same as the current charges,” he said.

http://www.hollywoodreporter.com/new...reaming-237116

[robyrob]

if they were smart they should have just raised the price maringally, and then separated the two services but given people a discounted lower price (equal to what they were paying before) for using both.