Netflix, the popular entertainment service with hefty price increase is in the receiving end of customer ire. Numerous consumers turned to company’s Facebook page to pour out their outrage and dismay over Netflix’s newly planned move.
Reports show that Netflix plans to increase 60 per cent of the price of its cheapest movie rental plan which includes unlimited streaming and DVD rentals. At present the streaming and DVDs rentals are offered at $9.99 but according to the newly proposed plan, the company is opting for $7.99 for unlimited streaming (no DVDs) and $7.99 for unlimited DVDs. Moving forward, that is almost $15.98 a month from $9.99.
For prospective customers, the new pricing structure went into effect on Tuesday. For current subscribers, the rates will change on September 1.
A straw poll conducted on Business Insider indicated that one third of the consumers will leave as a result of $6 price hike. Also, the online poll of USA TODAY readers with nearly 7212 respondents revealed that 73 percent plans to quite Netflix. Similar trend was noticed in CNET poll, out of 14237 votes, 56 percent are in thought of cancelling the subscription if Netflix does not change their mind before September 1. That said Netflix Facebook page is flooded with more than 55,000 comments, with most of them pitting against the proposed plan whereas Twitter saw “Dear Netflix” climbing the chart of most talked about topics.
In contrast, the investors cheered at the price hike as Netflix stock rose $7.46, or 2.6 percent, to close at $298.73. But, shares reversed course in after-hours trading.
Netflix streaming program is available on many electronic devices which includes computers, video game systems, television set up boxes, smartphones and tablets where more than 23 million subscribers have signed up with them.
The increase in price came shortly after Sony Pictures Entertainment pulled its films from Netflix's streaming program last month. Meanwhile, Netflix and NBC Universal have renewed and expanded their live video streaming deal bringing more content to Netflix. The deal ensures that the shows like Saturday Night Live and The Office along with additional shows Leave it to Beaver and Psych and Law and Order: SVU are here to stay in Netflix. Certain reports reveal that the deal could be worth as much as $300 million per year, up from just $25 million. Due to raising price of content, it seems Netflix has no choice but to increase the price for streaming and DVD rentals.
Netflix founder and CEO Reed Hastings have enjoyed nearly unprecedented customer loyalty and popularity as the Web's most popular movie-rental service simply due to the breadth of its DVD offering. Even removal of Sony titles from the streaming catalog didn’t lead to many complaints but raise in price saw a different image of consumers.
However, Steve Swasey, a spokesman for the Los Gatos, California-based company confirmed that Netflix had indeed prepared employees to receive a certain amount of calls from those unhappy with the hike. “We tested, we researched, we analyzed. We knew what the reaction would be. We are not surprised. We knew that there would be some people upset by the service and with the price being adjusted. Some will leave and some of those will eventually come back. It’s still a great value,” she said.
Echoing the voice for Netflix Robert Levitan, the CEO of Pando Networks of a firm that provides streaming software to gaming companies and previously to NBC Universal said “Consumers have an unlimited appetite for consuming streaming right now. We all tend to think, as consumers, that we just click 'play,' and it comes down. We don't realize the physical and financial costs of serving that data.”
Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs, as said in the Netflix blog post, considering popularity of the DVD format among consumers. In fact quite a few Netflix streaming customers depend on the DVD-by-mail add-on because certain blockbuster movies are available much faster that way.
With Netflix relationship worsening with here is a look at few other alternatives that are waiting in line.
BlockBuster by Mail: They claim that new releases are available 28 days before Netflix and Redbox. (One DVD out at a time: $12 per month, two DVDs out at a time: $17 per month, three DVDs out at a time: $20 per month)
Redbox: New DVDs for rent at thousands of kiosk locations around the country costing $1 a night. Blu-ray movies are priced at $1.50 per day and video games start at $2 per day.
Apple iTunes: Starts at 99 cents and going up to $3.99. (Cost round up: $1 to rent TV episodes, $2 to $3 to buy them; $3 to $5 to rent a movie, $10 to $20 to buy one.)
Amazon: Amazon currently offers 6,000 movies and TV shows, most of them are not quite famous. Pay-per-view basis ranges from 99 cents and going up to $3.99. (Television shows cost $2, movies $4, $10-$15 to buy but streaming is included in Amazon’s prime package of $79 a year.)
Hulu Plus: The streaming service costs $8 per month which gives access to 1,000 seasons of current and classic shows. Latest episodes can be watched freely whereas $8 applies for TVs and mobile devices.
On Demand Streaming Services: On-demand streaming rentals starts at around $2-$3 apiece for movies and $1 for TV shows.
HBO Go: This app can be run on iPad, iPhone, iPod Touch and Android devices. HBO costs about $15.99 a month through a cable or satellite provider.
Vudu: Video for rent or sale (price range from $3 to $5 to rent. $10 to $20 to purchase)
YouTube movie rentals: Camille Hearst, YouTube Product Marketing Manager said that the costs to rent new movies are $ 3.99 each and for old movies is $ 2.99 each. Each tenant has 30 days time to watch the movie that has been rented and given 24 hours to watch it from start through to completion.
CinemaNow: More than 12,000 videos to rent or buy. Move new movies cost $3.99 to rent, while the occasional bargain basement flick falls into the $1.99 range. Month by month fee $29.95 and yearlong subscription plan comes in at $99.99 (or $8.33/month)
The other options include Time Warner and Comcast who provide alternatives for those who want to cancel their cable service.
Few months back, Clicker posted a chart comparing Amazon Prime to the other streaming services out there, including Netflix, Hulu, and iTunes.