AfterDawn: Tech news

Netflix says price hike is having a larger than expected impact

Written by Rich Fiscus (Google+) @ 15 Sep 2011 14:40 User comments (14)

Netflix says price hike is having a larger than expected impact Netflix is lowering projections for subscriber numbers in Q3 by 1 million.
The change is due to customer reaction to the price increase for combined disc rental and streaming plans, which was announced during their Q2 earnings call. The price of Netflix's lowest tier DVD plus streaming plan was doubled from $7.99 per month to $15.98.

Their original prediction of 12 million subscribers to the new combined disc and streaming plan hasn't changed. However, estimates for streaming only and disc only plans have been reduced by 200,000 and 800,000 respectively.

The revised projections were revealed in a letter to shareholders from Netflix CEO Reed Hastings and CFO David Wells.



In the letter, they said:

We know our decision to split our services has upset many of our subscribers, which we dont take lightly, but we believe this split will help us make our services better for subscribers and shareholders for years to come.


Despite the change, they remain confident their strategy is the best one to follow, largely because separating the streaming and disc businesses is important for expanding their international streaming business.

Previous Next  

14 user comments

115.9.2011 15:46

Screw Netflix. There are alternatives to their master plans.
800k and 200k respectively seems to indicate how displeased many customers are. I personally thought the crystal ball numbers would be a lot less than then their revised predictions show.
Surprise!

This message has been edited since its posting. Latest edit was made on 15 Sep 2011 @ 15:47

Cars, Guitars & Radiation.

215.9.2011 16:31

I was going to cancel, but decided to wait, and now it seems the streaming video problem such as stopping unexpectedly and other issues seems to have improved. Not sure the reason, maybe its because so many people dumping Netflix is a benefit to those who stay. I get one DVD at a time, and request the ones that are not streaming. Seem like an OK deal for now. One more price hike or other unexpected negative change and I will have to reconsider.

315.9.2011 17:12

I joined only for streaming anyway, so none of it particularly affected me. But the fact that I usually can't see a difference in two bars vs four and HD has made me want to leave. But apart from torrenting what I want to watch, I haven't seen any high quality alternatives for cheaper or free.


~*Livin' Electronicallly*~

415.9.2011 17:25

As long as they don't hike up the price for stream only subscribers then I'll stay.

515.9.2011 17:44

Originally posted by buxtahuda:
I joined only for streaming anyway, so none of it particularly affected me. But the fact that I usually can't see a difference in two bars vs four and HD has made me want to leave. But apart from torrenting what I want to watch, I haven't seen any high quality alternatives for cheaper or free.
Streaming doesn't do much for me personally. I purchase most Blu-Ray movies or rent them from Red Box a couple times a month.

When I was a Netflix subscriber for umpteen years the disks just sat around collecting dust most of the time. Red box doesn't charge late fees, they just bill you in 24 hour increments which gives me incentive to return them the next day.
Jeff

615.9.2011 22:10

Well...seems like a lot of ISPs have been getting aggressive about capping bandwidth, too. Can't do many HD movies with a 25gb cap on your net service.

A lot of streamers don't like the new Netflix plans because they reduced how many people can stream content at once. If you're single, it's not really an issue...but if you have a family then it becomes a problem.

716.9.2011 0:01

I turned off my 3-at-a-time+bluray plan and went to streaming only; if I have to pay for disks separately, I might as well get them from Blockbuster...blockbuster lets me have blurays and games at no extra charge. I've been using the h**l out of the streaming for a while now and I am almost out of content that I want to watch (and their recommendation system has been broken for months)...if they don't add a whole lot of streaming content soon, I'll turn off netflix all together.

As for the 25gb caps, this is something that you only get with long-term monopolies...and monopolies tend to create (and attract) competition. The local cable co here had a monopoly a few years back...the prices were sky high and the speeds were only a little faster than DSL. As soon as FiOS was available to more than a handful of communities, all the cable speeds went way up and the prices dropped. For those lucky enough to live where FiOS was available, the price dropped a lot...for everyone else, the price dropped a little. They don't even try to hide the fact that they were using their monopoly to exploit people, or that they are still using small pockets of monopoly to exploit small pockets of people! If everyone could get FiOS except for one man, the cable co would probably charge him twice as much as they charge everyone else.



817.9.2011 0:41

Netflix doomed themselves. Goodbye crappy service !

917.9.2011 1:27

In case anyone was wondering, Netflix's stock has fallen almost 50 percent since mid-July, with their market value falling from $16 billion to just over $8 billion. Ouch.


1017.9.2011 9:21

I wonder if the person that unbundled the DVD and streaming service is feeling any heat. I am one of those exiting Netflix customers and there really is life after Netflix. If any other business (gasoline or lights for example) upped your bill by 60% their customers would be up in arms. This was especially painful since they had already increased the cost of the plan less than a year earlier.

Personally, I think Netflix is in trouble. First, by their figures, a million customers have left and now Starz has elected not to renew their contract beginning next year. When that happens then the Disney movies and other content for children will disappear. What you will have left is old movies and old TV shows.

1117.9.2011 16:28

Let Netflix cut their own throat.

1217.9.2011 17:14

Netflix blew it with me. I was already contemplating dumping them but the price hike was the frosting on the cake. That's no way to treat your loyal customers of many years.

1319.9.2011 12:17

I am cancelling my DVD plan next October period. Goodbye Netflix.

1419.9.2011 12:41

One more thing to consider about streaming is service providers are on a roll setting data caps. This may lead to a monthly bill that far exceeds cable or satellite service.

You better believe that huge corporations like AT&T want a piece of the pie.

I dont have a crystal ball and only time will tell. Seems to me things are headed in that direction
Jeff

Comments have been disabled for this article.

News archive