in Business

Netflix.

February 2013 Update

I felt like I should update since I originally wrote this in 2011… I am back as a happy Netflix customer now (for a few months now). I’m working to drop using Dish Network for TV and switch entirely to OTA, web and my home library for entertainment and news. Netflix is really a key piece of that and I’ve always liked their service. I really only had a falling out because I didn’t appreciate the way they handled the business shift. Ironically, I’ve always felt they were very forward looking and moving in the right direction. Hopefully, they won’t do this again… <3 Netflix.

September Update

Netflix just released this video talking about their changes, included more recent changes about splitting the company. Qwikster is the name of the DVD-by-mail service now. They’ve acknowledged the fact that their original communication of their changes was poor and apologized for that. I commend Netflix/Qwikster for putting this video up.

Netflix Pricing

Whether you’re subscribed or considering a subscription to Netflix, you’ve probably heard about their recent price increases by now. Sorry Netflix, but let’s turn off the marketing spin cycle and be real for a minute. If people stay with their existing plans, they’ll end up paying more and as far as I know, there wasn’t an uprising of people asking for streaming only and DVD only plans. There was, however, an uprising of people protesting your new price changes.

The price changes mean that my plan will increase by 60% come September. It has made me seriously reevaluate my subscription and what I could get for $7.99, $9.99 and $15.98 a month instead of keeping Netflix.

  • $7.99 represents the new pricing for either a streaming or the lowest DVD plan.
  • $9.99 represents my current plan and current rate which ends soon.
  • $15.98 represents the new pricing for my current plan comes September.

Alternatives to Netflix

Blockbuster

Blockbuster by Mail is something a lot of people will immediately disregard. Despite Blockbuster’s many changes over the years, some people are still sore at the company for late fee charges and payment collection practices. If you’re still reading and haven’t skipped this section, you’ll be pleased to know that they offer pricing at $11.99, $16.99 and $19.99. While they don’t have a streaming service yet, the extra cost for these plans could be overlooked for a few reasons.

  • First, they claim that many new releases available 28 days before Netflix and Redbox.
  • Second (to me this is the real bonus), game rentals are available with no extra fees.
  • Third, they offer in-store exchanges.

I used to subscribe prior to their addition of games, but it seems like Blockbuster is doing a good job of serving this market. See http://www.blockbuster.com/gamesbymail for all the details. When I used to subscribe, I really felt like the exchanging in-store was a huge benefit. However, it did grow tiresome to actually have to go out to the store on occasion. Selection in the actual store is also an issue at times not to mention that they have fewer stores now as well.

Redbox

If you don’t want to be tied to a monthly fee, Redbox could be a great alternative. While Redbox means driving to pick up and drop off a disc, it also means getting your content exactly when you plan on using it. It’s not as convenient as simply getting a disc in the mail or streaming it on a large number of devices, but the price is right. I could rent between 7 and 15 DVDs a month via Redbox for less than the several Netflix options. Redbox also provides the option of Blu-ray’s for $1.50 instead of the $1 DVD and game rentals for $2 all out of the same machine. Unfortunately, these are not DVDs, Blu-rays or games that you can keep all to yourself for any amount of time. You must return them promptly or get charged extra.

The Public Library

Many public libraries offer DVDs for rent. Much like Netflix streaming, you can find some real hidden gems that you missed when they were first released. Surprisingly, it’s even possible to find newer releases at the library as well. Best of all, you’re already paying for it as a tax payer. In other words, it’s free!

Buying a Physical DVD/Blu-ray

Despite the fact that I rarely re-watch movies and love renting for this very reason, there’s something to be said for how many DVDs I could buy for $15.98/month. I could easily do one a month. Maybe one Blu-ray every two months — maybe more. If it’s a comedy, I might revisit the movie a few times a year. If it’s a good movie, but it’s not exactly something that stands up to repeated viewing, I might loan it out. If all else fails and I’d rather it not collect dust, I could sell it on Amazon, eBay or a garage sale and make some of my money back. I’ve really moved away from buying up my own collection due to low rental prices, but there is something special about having a collection and pride in ownership.

Digital Renting/Buying Options

Amazon and Apple iTunes both offer rental/purchasing options as well. As of this writing it seems that many rentals on both services are about $3.99 for a rental and $14.99 for a downloadable purchase. This really makes Amazon’s Instant Video and iTunes a good option, but the ownership option isn’t quite as good as a real tangible disc if you ask me. The price difference doesn’t seem to be very significant either. The rental costs are still more than Redbox, but more affordable than several other alternatives including on-demand renting from Comcast or Dish Network. Unfortunately, it’s not quite as easy to use in my opinion. This isn’t a huge deal for a techie, but not exactly a solution that just works with most peoples average TV setup.

The Real Problem

At the end of the day, Netflix isn’t really pricing their services that badly. They are still a good value for your money, but what’s really disappointing is the sudden and dramatic change as well as the treatment of existing customers. It’s really customer service 101 here. I’ve been a subscriber for a few years and this isn’t the first time Netflix has randomly changed things. The Blu-ray access option used to be a free option when it was first introduced. Then they charged $1 a month extra regardless of your plan. At some point this was raised to $2.

I’m pretty sure that Netflix has done some research and is prepared to lose a percentage of their customers due to this change. Instead of feeling that any lost customer is a bad thing, they’ve decided to accept a certain amount of loss. The price hike will help them to pay for new licensing contracts and help the bottom line. However, I just feel like this lack of respect for their customer base could be a bigger problem for Netflix than they expect. This type of behavior places a stigma against Netflix similar to the type of stigma that Blockbuster has had for many years. Netflix has acted as a faceless corporate entity. A change to the execution of the price hikes and a change to the communication could have helped Netflix a great deal. Instead, they’ve come off as greedy and disrespectful.