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.
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.
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 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.
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.
You hear it from XBox 360 and Sony PlayStation fans all the time. "If you're spending $60 for a game that's not on a high-end XBox 360, PS3, PSP, or insert-high-end-console-name-here, you're being ripped off." This group feels that the idea of gaming on a PC is crazy. They'll argue that no computer comes with game pads or joysticks and you'll have to buy those too. They'll say that PC's cost twice as much as a console -- or even more! The idea of using a mouse and keyboard for an FPS (First Person Shooter) is like asking them to play on the console with one hand tied behind their back. But what's the real argument against PC gaming here? Will the casual gaming market be the end of the $60 PC game? My answer is no. I'd pay $60 for a PC game. I'd pay because of the specs, the convenience, and the price would only depend on the games lasting value and quality.
PC's can easily be higher-end systems than consoles. The drawback is that you just pay for it up front or as you go by upgrading your video card and adding in more hard drive space and RAM. The good news is that a good PC has historically still had more options in their games than the console counterparts. For example, you can run UT3 on a PS3 or XBOX 360, but it'll run at the native resolution of 720p. A PC version of the game gives you the controls to run at a much higher resolution if you have the hardware to support it. You'll also get access to user-created levels or complete mods on the PC without dealing with the censoring of that content on a console.
However, I can respect the "console gaming > pc gaming" sentiment and I sit happily on the fence between both worlds. It's become harder and harder to justify the hundreds of dollars you can easily pour into building a good gaming PC vs. the prices of consoles for somewhat similar performance and features. The game selection and ease of use of the consoles has always been their appeal and it's just gotten better. The PC world (and especially the Apple world) have been unable to match the consoles in the ease of use for gaming department.
For quite a while now, there's been a new market evolving in both the console and PC worlds. It's a market where you can just download smaller titles at much lower prices. They typically have a little less flare, but pack in just as much fun. In the PC world, these are casual games that don't require any high-end systems. Most people at least have a low end PC. A PC of some sort is almost required for daily living in today's day and age, whether it's a necessary evil to the user or something they love. These casual games will usually work the same on the low end $500 laptops as they would on the $5000 gaming PC. There's even a market for completely free titles where you just pay for additional upgrades in game rather than paying for the gaming experience up front. These casual games that cost less than 10 bucks are perfect for people that don't want to build a high-end gaming rig or just want some new experiences. Facebook and other web-based games have become successful with this market as well. Since everyone has a computer, the convenience of these titles and the ease of paying for them and downloading instantly means there's no reason not to try it out.
Overall though, I don't understand how you can complain about a games price if you're willing to buy a 2 hour movie on DVD or Blu-ray at $10-$30 that you may only watch once or twice. It seems like getting 10+ hours of game play should be worth paying a premium for depending on the production quality and enjoyability of those hours of game play. I'd pay $60 for a PC game. I'd pay $60 for a console game. I am ecstatic that there are companies also making games for under ten bucks, but games cost a lot to make and you're probably not going to get the same quality or lasting power with a $10 game vs. a $60 game. This is why the free and cheap games are really just a new segment and not a replacement for games with those higher prices and higher production costs. The price I'd be willing to pay only depends on the experience that's being offered and the quality of that experience.
I paid $80 for Street Fighter 2 the day it was released on the Super NES. It was the most expensive title ever and there was a lot of debate surrounding the price point. The price quickly dropped, but the few of us that rushed out to get the game despite the price got to enjoy playing many more hours and saved some quarters from playing in the arcades. The debate over the pricing or games and gaming on PC's vs. consoles will not end any time soon, but hopefully the markets won't just take the development of these for granted either.
As a result of being born in 1979, I've had the pleasure of seeing many of the ups and downs of video games over the last 30 years. I was in Jr. High School during the early 90s and was always thinking about how I'd get rich. Spending less of my lunch money and saving just wasn't going to cut it. I remember having a subscription to Nintendo Power and receiving the special Nintendo Power Strategy Guides as part of the subscription. These guides sold in retail stores for $10-$15 if I remember correctly. As a result, I remember reading them and then showing them off at school and selling them. It was like free money to me and I could usually get around the same price as retail for them.
I knew how to market this stuff to the kids at school and would even have kids in bidding wars on occasion. My money was in their pockets and I just had to figure out how to get it. Was I popular? Not at all. I often think that if Facebook, Twitter and MySpace had existed when I was in grades K-12, things may have been different, but I had enough close friends that being the most popular kid in school never really concerned me. When I wasn't rollerblading or playing football or basketball with my friends, my free time growing up was spent in front of a computer monitor. I started a BBS in Jr. High and I learned quickly that I was great at talking my way around the net in the days of IRC.
The tools have evolved now and the computer is no longer just something geeks use. Now companies are just using these new tools as ways to reach their audience and make more sales. The process is still the same. Resale and consignment is still a huge business and companies like Amazon and eBay have proven that they can deliver. It seems that making buying easier for the consumer is a key business strategy as well. Amazon and Apple have devices on the market that connect you right to their stores so you can purchase items on the go. The eBay Apple iPhone app allows you to be in a bidding war while you're relaxing at the beach.
Making it convenient for people to buy your product is the key thing that 7-11 and other convenience stores learned long ago. It's what online companies have learned and it's what I learned in Jr. High. A good balance of being in the right place at the right time, having a product with good margins and as little inventory as possible is what makes the perfect resale company. Being a middle man of sales like eBay is also a good solution. Everyone has something to sell and eBay helps facilitate that connection to a wide audience. How will your company combine the power of resale and convenience?