Netflix Users Irate, But Are Higher Fees Really That Unreasonable?

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Thousands of Netflix users are voicing furious complaints over newly announced changes to Netflix fees. with lots of them threatening to cancel the service entirely. Yet even in a tough economy, would life as a Netflix customer really be all that hard in light of paying less than $16 per month for ongoing access to DVD rentals plus unlimited video streaming?

Somewhat sneakily, Netflix unveiled the hikes in a blog post on Tuesday. By Wednesday evening, more than 8,000 users had put in their two cents through comments to the blog, in some cases accusing the publicly traded entertainment empire of disloyalty to customers.

“Pretty stupid, Netflix. I love how you’re slapping current, long-time supporters in the face b/c you’re realized a mistake on your parts will result in lost revenue,” according to one of the irate users.

Under the new plan, Netflix will charge $7.99 per month for accessing its streaming video service and a separate fee for DVD rentals by mail ($7.99 for one DVD out at a time, $11.99 for two out at a time, etc.) The monthly fee for streaming plus one DVD will leap to $15.98, from its previous level of $9.99.

“For new members, these changes are effective immediately; for existing members, the new pricing will start for charges on or after September 1, 2011,” intoned Jessie Becker of Netflix, in the announcement via blog.

At a time when jobs are precious hard to find, and wage scales seem to keep falling farther beyond the cost of living, users responded to the blog with comments blasting the amount of extra money they’ll be forced to pay for keeping both services, going forward.

Many of the outraged legions insisted they’ll just dump Netflix, period. “Given the rather large price increase you suffer with the 1DVD + 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,” wrote April King.

“Boo! You’re raising my price by 33 percent and giving me nothing more? I won’t pay it,” retorted another user.

Reasons still mystifying

Just about a year ago. Netflix claimed almost exactly 15 million customers, up 42 percent from the 9.4 million reported in July of 2009, according to a financial filing. The question of why the company would risk losing so many of these millions is more than a bit mystifying, particularly in light of the new competition that keeps descending in the video entertainment industry. Maybe Netflix’s next quarterly financial results, set for release on July 25 0f 2011, will shed more light.

A year ago, 60 percent of all Netflix customers were using streaming video, said Netflix financial results made known in July of 2010. This means, of course, that only a minority were renting DVDs only, a statistic that kind of flies in the face of Becker’s explanation for the changes in fees.

“Last November when we launched our $7.99 unlimited streaming plan, DVDs by mail was treated as a $2 add on to our unlimited streaming plan. At the time, we didn’t anticipate offering DVD only plans. Since then, we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. Given the long life we think DVDs by mail will have, treating DVDs as a $2 add-on to our unlimited streaming plan neither makes great financial sense, nor satisfies people who just want DVDs,” according to the Netflix blogger.

“Reflecting our confidence that DVDs by mail is a long-term business for us, we are also establishing a separate and distinct management team solely focused on DVDs by mail, led by Andy Rendich, our Chief Service and Operations Officer and an 11 year veteran of Netflix, Becker added. Yet Becker didn’t really say whether Netflix seeks to remain in the streaming video business. 

Customers attack others for ‘whining’

Meanwhile, not all of the content on Netflix DVDs is available in streaming mode, so that customers wanting access to the whole shebang will now need to buy both services. This reality hasn’t exactly gone unnoticed by customers, either.

“Currently my family uses streaming and 1 DVD at a time since not everything we want to watch through streaming is available. Some streams (Colombo) have DVD only viewings stuck in the middle,” explained Mike.

“If Netfix goes with this change, I will be cancelling our account. Going from $10 to $16/month is not something I am willing to pay for. Please reconsider this change,” he pleaded.

Still, though, while prices of gasoline, movie theater tickets, and so many other items continue to soar, the same can’t be said for home-based movie entertainment, on the whole.

Some might remember back to the days, not all that long ago, when renting a movie from BlockBuster called for going to a store, shelling out $3 to $5 per flick, and then trudging back to the same store a few days later just to meet the return deadline, at the risk of incurring late fees otherwise.

Evidently, not everyone in Netflix customerland is all that unhappy over the fee hikes. At least one user accused the others of too much whining.

“Sounds great to me! The amount of use I get out of my Netflix account means I’d be willing to pay more (sorry whiners, but $16 is ridiculously cheap for unlimited anything, you can’t get a good cable package for that price),” according to Natalie. “I hope this means much more streaming content in the future.”




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