Thursday, July 14, 2011

My take on the Netflix price hike

I think my readers here know that back in 07 my family fell on times. Gary was laid off and the job change initially meant a huge drop in income. We survived, but not without some changes. We eliminated all luxuries except the internet which was bundled with our phone bill and--when we took a family vote--won as the thing everyone liked the most. Among the luxuries that we decided we didn't need was the satellite. Out here without satellite or cable, there is no TV signal so this was a big thing to let go of--initially.

Being a tech-savvy bunch, we worked out how to connect our old family television to an old computer and proceeded to hunt up our favorite shows online. It turned out we were only about a year or so ahead of the trend (I remember when we had to wait for everything to buffer before we could watch it). By the end of 08 many, many people were doing similar things (my oldest son made extra money showing neighbors how). In 09 it had become so common that most new TVs came with computer hook-ups.  It took some adjusting, but the last time we took a poll, everyone (except maybe Gary who still misses the TV remote) liked on demand viewing better. That and TV has become less of an empty decision--everyone reads, writes, plays games, and talks to one another more. So I'm happier too.  

In 08 we discovered Netflix online streaming and DVD rental service and became immediate fans. It was easy to use, reasonably priced, and the service was decent. I've even blogged about Netflix a time or two. I recommended it to friends and family regularly. The last time I looked, most of the people I know now use Netflix. We've been with this company through a few minor rate changes, but they weren't huge and we understood that business expenses change. It was certainly not worth leaving them over. 

Fast forwarding to July 12th, 2011, Netflix announced a change in its rates to the tune of about a 60% increase. A whole lot less for a whole lot more. There has been a public outcry unlike anything I've seen for a while. 

What you can see from their article, when this issue was presented to customers, the biggest problem most had was the lack of directness on Netflix's part. Instead of presenting it as a simple price hike, they attempted to paint it up as something that would work to our advantage. As one viewer put it, "Don't piss on me and then tell me it's raining." I think it would have been better received if they A) had been less greedy and settled for a 25% to 30% price hike and B) presented it as a matter of economics (the studios putting the squeeze on them for more money). Initially, I was sympathetic, thinking "B" was their biggest problem. 

But nooo . . . their biggest problem is a group of executives who have made so much money, that they--like the banks from a couple of years ago and many of our politicians--have lost touch with their customer base.    

Today one of these executives--very foolishly--went public with his perspective,  blowing several thousand unhappy customers off as the unimportant "few" and that they'll recover from it and make even more money. Worse, he's implying that the price hike is so minimal that we'll barely notice it. I have a news flash for this obviously out of touch exec: times are hard and many, many of us have quit drinking lattes (or learned to make our own) and kept your service. Until now, you've been a luxury many people have viewed as worth it. Judging from the response, I'd guess you'll be going the way of those lattes.  The air up there on top of those mountains of money must be awfully thin. 

So what is my family going to do? I've reduced my membership to bare bones for now. And we're going to explore our other options. I'm an Amazon Prime customer ($40 a year as a student--I order my dog food, animal veterinary stuff, books for college, the stuff I make my laundry detergent with, and homeschooling curriculum from them which amounts to better prices and free shipping). Amazon is offering free streaming to their Amazon Prime customers on older movies and per movie streaming fees on newer ones. Hulu streams a wide selection of TV shows (old and new) for $8 a month. And those are just the ones that come to mind now.

Regardless, I think it 's safe to say that we will very likely be looking for creative solutions to the problem, just as we did when we left satellite behind. Netflix, like satellite, over estimates the importance of their service in our lives.  


WhiteStone said...

Yep. We reduced our Netflix, too. May eventually get rid of it entirely.

Ray Veen said...

Whoo, tell it like it is, Mary.

So how you been? Still writing?

Mary O. Paddock said...

Whitestone--We're going to try Amazon Prime. I'll report back here.

Ray--Hey there! Good to hear from you. I just tried to post on your blog and it ate my post (I think). 'Did not want to spam you.
I'm good. And yes, I am still writing--currently editing, actually. If my post shows up on your blog later you'll see what I'm up to