Consumers are reacting to price increases on Netflix the same way Tea Partiers are likely to react if the government raises the debt ceiling. Hysteria over the new subscription plans is off the charts—news outlets have juiced up the story by highlighting the outrage of subscribers and referring to Netflix CEO Reed Hastings as Greed Hastings. (Clever.) On social media, the tone is of course overwhelmingly negative; droves and droves of people have taken to Facebook and Twitter to complain.
Two words of advice: Calm. Down. (Better yet: Stop. Whining.) Changes to Netflix's prices were inevitable, and frankly, not very painful.
Let's start by explaining the changes. Netflix plans start at $7.99 for streaming-only subscriptions, meaning customers will only have access to content online; for only $2 more, members could also have access to DVDs by mail, one out at a time. Soon, these two services (streaming and by-mail) will no longer be bundled together for $9.99. Instead, customers can either purchase a streaming-only plan for $7.99 (the same as before), or a DVD-by-mail plan starting at $7.99 (technically cheaper than before). If you'd like to have access to both services, it will cost you roughly $16—a 60% price hike from the original price, as many have pointed out.
That 60% leap in price only amounts to a $6 increase per month. That's about the same cost as a Starbucks Frappuccino these days. Over the course of the year, that number certainly adds up—to about $190 annually up from $120—but it's still a remarkable value.
If the price tag has become too expensive for those accustomed to paying $9.99, well, feel free to pay less. It costs just $7.99 for either a streaming-only plan or a DVD-by-mail plan. If you want both, you have to pay for it—you can't have your cake and eat it too, in other words.
The truth is it's not Netflix that's being greedy but Netflix's customers. For the original price of $9.99, subscribers had access to streaming for just $7.99 and unlimited DVDs for only $2 per month. That's not sustainable; it's estimated that Netflix spends about $1 roundtrip per DVD mailed. At the same time, customers continuously demand fresher content, and fresher content costs money. Netflix has aggressively inked deals, including with Epix and Relativity Media, and in order to sustain costs of content, Netflix must charge its customers more.
According to data by Crimson Hexagon, the social media analytics firm, an estimated 62% of commentary on Twitter was negative. I'm surprised it wasn't higher; after all, who reacts positively to price increases for anything? (Well, 23% did, according to Crimson's data, while 15% were neutral on word of the news.)
Roughly 11% of Twitter-ers indicated they would leave Netflix, while 20% said they'd leave Netflix for Redbox. Sure, Redbox is another option—but then you're getting neither DVDs by mail nor online streaming—and nothing for low subscription rates. Other options? Switch to Amazon, where you'll gain access to online content for $79 annually, roughly $15 less than Netflix's streaming plan. (However, Amazon does not provide nearly as much online content as Netflix, but no doubt you'll enjoy the benefits of two-day shipping for your Amazon Prime membership, if that's what you value.) How about Apple? Certainly that's a possibility, if you enjoy paying for content on an à la Carte basis. And of course, don't forget about Blockbuster, which smartly capitalized on the hoopla by offering free 30-day trials to consumers who can offer proof of a Netflix account.
(The other option is to not use any of these services, obviously, and go back to good ol' cable.)
My prediction? The negativity will die down, the snark will fade, and consumers will realize Netflix is still a great value, even at a higher monthly price.
[Image: Flickr user spunkinator]