Consumers have reacted swiftly — and negatively – to Netflix’s new, higher prices.
“It’s been a 95% negative reaction,” says Dan Rayburn, a principal analyst with Frost & Sullivan. That’s no surprise, considering that many subscribers stand to pay an extra $72 per year under the new plans, without any change in service.
Pay Dirt heard from plenty of readers who have already cancelled their subscriptions, or said they planned to scale back their plans. “It’s been great Netflix, but I think it is time we see other people,” wrote one reader.
That’s actually not a bad idea.
It’s time to reassess your movie rental options.
Netflix users who use the service to watch DVDs and stream video will pay an extra $72 per year starting in September, according to an announcement on the company’s blog today. That additional $6 per month stems from the site’s new policy to split DVD rentals and unlimited streaming into two separate plans. Instead of $9.99 for both unlimited streaming and unlimited one-at-a-time DVD rentals, subscribers will pay $7.99 per month for the DVD portion (more if they want to have multiple DVDs out at one time) and another $7.99 for the streaming. Even people who don’t watch streaming video and DVDs could end up paying that higher rate — Netflix has yet to email subscribers about the change, and the new plans kick in September 1. Consumers who don’t change their account to eliminate one component will end up paying for both plans. Prices are effective immediately for new members and subscribers who change their plan.
Adding salt to the wound, Netflix presented the changes as “our lowest prices ever for unlimited DVDs.” Though its claim is technically true — $7.99 is less than $9.99 — consumers are getting less for their money. Later in the announcement, the company says in its most recent plans DVDs by mail “was treated as a $2 add on to our unlimited streaming plan.” By that measure, DVDs are now quadruple the price. Netflix did not respond to requests for comment. Michael Pachter, an analyst for equity research firm Wedbush, said the move was likely done to cover the cost of adding more movies and TV shows, but that Netflix would have benefited more from simply raising prices. “The hybrid plans don’t make any sense,” he says. Many consumers will likely just rent their DVDs from another source, losing Netflix not just that extra $72 but also the $24 it was getting when DVD/streaming plans cost $9.99.
Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to firstname.lastname@example.org or tweet @SMPayDirt.