Massive Exodus From Netflix Over Fee Increase
from the surprise dept
When Netflix first hit its customer base with the rather massive fee increase, we noted just how loud and passionate the response was. A week or so later, Netflix boss Reed Hastings insisted that they were actually surprised that the response wasn't worse, stating:"Believe it or not, the noise level was actually less than we expected, given a 60 percent price increase for some subscribers."Perhaps he should have waited until all of his customers got over the shell shock. The company is now admitting that a lot more people than they expected have canceled their accounts. Somewhere in the range of 600,000 customers bailed on Netflix over this, making it just the second time that Netflix has had a net loss in subscribers month-to-month.
While Hastings also tried to spin the price increase into a story about how Netflix was accelerating subscribers' shift to digital, that story is falling flat with partners like Starz bailing out.
It's beginning to look like our original statement about the price increase was the most accurate. It was driven by the ridiculously high fees that Hollywood now wants, because it can't stand the thought that a service provider like Netflix actually should get any value from helping to drive the market forward. Instead, the content is 100% of the value, and they deserve any and all profits (and then some). It's a classic killing of the golden goose -- something that Hollywood always tries to do. At this rate, it might just "succeed" in that once again.
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Filed Under: movie subscriptions, pricing
Companies: netflix
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Disingenuous
I probably would have stuck with them through this price hike had they not sent out such a crazy letter to explain it. You can't split my service, and raise the prices by a lot, and tell me its for my own good. If their letter would have just said "Hey, the people whose content you love feel they deserve it all and are raising the rates on us a lot. We are sorry we have to do this and raise the price to you.", then I would probably still be a customer. However, I do not like being lied to.
The funny thing is I mainly watched lots of anime and independent films / shows through Netflix. Didn't even watch hardly any of the hollywood junk and yet I still get penalized for it.
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Re: Disingenuous
Then again, I'd happily pay double what you're being asked to for Netflix simply because there's no equivalent service here...
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My Netflix account has been on hold for a while now, i was contemplating if i should just cancel the subscription but now i think i have finally decided.
Voting with my wallet.
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The death of personal property
Take that away and Netflix is completely at the mercy of Disney and friends.
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Re: Disingenuous
Except that the letter can't say that. Not without angering the Hollywood executives who have monopoly control over the content. I'm sure that if Netflix could source content from somewhere else, they would. As a matter of fact, I predict that Netflix will be forced into the movie making business, just so that they can have enough content.
The problem with copyright is that the people who own the movies make all the rules and you can't do anything to offend them, make them look bad, frustrate them, etc. Because in the end they own the content and while Netflix provides and awesome service and deserves all their success, they won't last long if the a-holes at the studios get their panties in a bunch and collectively leave Netflix out in the cold.
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Or whatever.
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Pass the buck
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Golden Goose
RE: Losing Starz, I think the biggest hit is to fans of Sparticus, as their movie selection never impressed me. Guess where fans of that show will go...
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Re: Golden Goose
If Starz doesn't want me to watch Spartacus for a reasonable price, I may just have to not pay for it. I won't pay Comcast for a basic package, and then pay them even more for Starz, especially if Spartacus is the only thing from Starz I want to watch. I have absolutely NO problem with, and I'm even a little excited to, pay Netflix the $8/month for access to Starz content. If Netflix even had to compartmentalize the Starz offering, and charge an extra $2/month or something, I'd still have no problem paying the then $10/month. What I do have a problem with, is paying Comcast so much more than that, for them to provide a far worse viewing experience, for them to include a bunch of crap that I would rather pay them NOT to provide, for them to then charge me an extra, still larger, fee to include the same Starz programming that Netflix was trying to include.
To Starz, HBO and Showtime:
Get out of bed with Cable providers, you can reach a lot more people that way, and with more customers, you can make more money. You're not helping yourselves out any.
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Lulz
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Sigh...
This is crazy, they (Hollywood) force a rate hike on Netflix, Netflix raises it's prices, customers abandon ship, you can bet some will probably turn to illegal downloading as they are used to getting their media online now.
People only have so much money to spend on entertainment, you go above what they can afford, they will find another way. On top of that, now that they constantly feel they are getting screwed by the industry, they don't feel the least bit guilty about screwing them back. Right or wrong, it's true.
I think they (Hollywood) are the only ones that can't see that they are a major contributing factor in illegal downloading.
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And a mandated entertainment industry tax on them like Canada's blank CD tax.
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Here in Canada, I'm paying $21.99 a month for a cable TV movie package that includes a bunch of movie channels and HBO Canada (plus their On Demand equivalents). The range of movies has fallen sharply due to competition from Super Channel and NetFlix. HBO is the only reason we keep the package.
The package cost $14.99 when I got it a few years ago. Annual price increases make me question it's value. If my wife agrees, I'll be dropping the package this fall.
Less money for Hollywood. Oh well.
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"The company announced that it expects to have 21.8 million customers subscribing to its movie streaming service, less than the 22 million it had expected. Meanwhile, it reduced the number of DVD rental subscribers from 15 million to 14.2 million.
However, the number of people subscribing to both movie streaming services and DVD rentals remain unchanged at 12 million, which is good news for the company.
from http://www.itproportal.com/2011/09/15/netflix-updates-subscriber-numbers-movie-streaming-dvd-rental- services/
When you look at it net, it would appear that they made a good long term choice. Yes, short term there will be some fuss, but the strong "stick" on the numbers of people using both services is pretty impressive. In the end, it appears that the move wasn't anywhere near as negative as some of the nay-sayers would have suggested. More importantly, the long term bottom line looks fine, as the significant price increase will stick in the long term. The numbers aren't bad enough to suggest any change of course is required.
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Losing 800,000 subscribers isn't that bad, guys. Stop exaggerating things.
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Fucking muppets.
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The goal was 22 million customers and they fell short by 200 thousand and lost 800 thousand more which totals 1 million customers, that is a lot of people don't you think?
Besides customers using both services are a transitional phase how great is that? How many of those they will retain?
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So what you're saying is that making anywhere up to 100% more money from 95% of their customers while losing only 5% of them is bad?
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I actually look at some of this as an outcrop of "sell the scarce". Legal online streaming is still pretty scarce, and the price they were charging was pretty low. After having gotten the public addicted to the product (and having embedded their service in tons of devices), Netflix has made the right move. They split the services, lowered the individual service prices slightly, and jacked the total bill if you want both significantly.
The math is pretty simple: a 60% price increase, versus a 5% short term loss of customers. My guess is that 12 months from now, the customer base will have recovered, and Netflix will be reporting massively better topline revenue numbers in their service, and all this hand wringing by the Mike Masnicks of the world will be for nothing.
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The curve bell already happened if you are loosing customers you are not going to get that much new ones in the future, how they will have revenue growth without new customers?
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http://torrentbutler.eu/
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FTFY
And with that, trying to make their product artificially scarce will result in their demise aver the long term.
Good riddance!
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You know that is why the music industry don't make more money right?
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Neflix hates their Mailer customers
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Hollywood logic
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Netflix isn't good enough
It's about the product continually increasing in price until you finally notice it and the impact of all of those other price hikes sink in. You quickly realize that it's a non-trivial amount and there's something else you might be spending it on that's a better value.
Netflix simply isn't good enough to be a significant portion of the price of a cable subscription.
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Hollywood idiots
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Profit!
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Never liked them.....
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And yet...
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My gf dropped her dvd sub but kept the streaming, we will just get dvds on my account anyway.
The "loss" of starz won't affect me much. I don't dig on disney too much and I am turned off from sony over the whole geohotz affair
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My progression for Hollywood films in a nutshell:
Late '99/early '00 Get Netflix. After three deliveries I get a shattered disc. Netflix not sympathetic, charges me. I quit.
Mid- 00-02: Start to pirate films/games. I'm going to fewer and fewer movies now as prices rise and quality of films doesn't seem on par. I try Netflix again, and again I get a shattered disc, though this time they replace the movies free. I quit out of frustration.
'03-present: Pirate fewer movies, go to theater less and less. Then I stopped pirating films as youtube is introduced and my attention span decreases for sitting through movies.
I no longer pirate much, the idea of sitting through movies/shows sounds so unappealing to me, and the thought of stepping into a theater is intolerable.
My kids? They hate going to the theater. They mostly like interactive games, all of which we get legally and conveniently through Steam. Steam = the service Hollywood should have delivered in 2001, AT THE LATEST. I probably spend $100-$200 a year on Steam, and that is for about 10-15 games a year.
Note that I make 6 figures and cost really has little to do with anything, it has to do with convenience and value.
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Re: My progression for Hollywood films in a nutshell:
convenience and value
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Re: My progression for Hollywood films in a nutshell:
(iTunes doesn't count, so far as I'm aware it doesn't do weekend specials or anything fancy like that, and the last time I installed it, the damned software picked up my music directory, and the share of my music directory, and the link to the music directory on my desktop, and stuck three copies of every single damned song on my computer into the library...)
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Don't get me wrong. I'm not trying to downplay Hollywood's role in this mess. I'm just saying there are probably more factors behind it.
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Don't get me wrong. I'm not trying to downplay Hollywood's role in this mess. I'm just saying there are probably more factors behind it.
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How do you quantify Mass Exodus?
Instead of 49 million; they have 48 million.
Doesn't that constitute a 2% drop, give or take? Why does 2% equate to a massive customer exodus?
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Re: How do you quantify Mass Exodus?
As someone else said, if you can almost double your price and only lose a small amount of your customer base, pretty much any business would jump at the chance. It is actually a pretty clear indication that they were massively under-pricing the market before. They may still be underpriced now.
It's the same reason why the actions of a single greedy TSA agent in New Jersey is enough to call for the entire system to be scrapped. It isn't because the wrong is that large, but because the storyline (get rid of the TSA) was already written.
As a side note, Mike, I notice your traffic is up this month again as you start flogging the TSA horse again. Amazing isn't it?
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So, which BS would you like to address first?
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I mean, seriously, if there was a legal torrent of shows literally given away, I would support that. It's not about convenience, it's about control. And that obsession is killing a large swath of the entertainment industry.
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If Netflix continues to drop users and ends up losing 10% of their base, then we can talk exodus. But at this point, they are just dealing with normal shifts after a sizable price adjustment. Check back in 6 months to see the true answers.
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Bump in the road...
It's all about cutting the cord. Netflix isn't doing deals with Starz because people enjoy paying cable companies for tons of channels they don't watch. People enjoy paying less for more and will generally do that even if a free (but dodgy) alternative is available.
Maybe the TV and movie studios are unaware of all the streaming sites that are on the net. Consumers have absolutely NO FEAR of watching content on those sites since we are not infringing in any way. We are just watching the content we want to watch and not downloading or sharing it illegally (And without tons of adverts).
It all just makes you wonder how much control the lawyers have. At the end of the day the lawyers have convinced the content industry that its better to pay lawyers to fight a battle that can't be won rather than to invest that cash in innovation.
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My problem with Netflix is...
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$Billions!!1!
Not only are they not getting Netflix's money, the rate hike will drive more people to piracy. Using the MPAA's figures, Starz should be bankrupt in 3...2...
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I hope they become a viable option again. A prime example of why I quit:
"Batman" lists a ton of DVDs, only 3 or 4 were actually available by streaming.
I was one who only wanted the DVD option because of the gaps in the streaming selection. I will miss it, and hope they get their business in order and can win me back. But for now, I will be using other (legal) options.
For the most part the documentaries that I was really enjoying from netflix are already online free from other sources.
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Now, the studios/MPAA are going to reverse all of that, and all these people that have come to rely on watching movies/shows/whatever over the net are going to have trouble finding that movie/show/whatever they want to watch. They'll search for it, and the wonderful 'DVD only' caption will pop up.
Does anyone honestly think these people are then just going to pony up more dough and add DVD's by mail back to their subscription? Or rush out to the store and buy what they want to watch?
My money is on them clicking over to their favorite browser and searching for an alternative to netflix, and finding torrents or whatever, since there aren't any *legal* alternatives.
I think the MPAA did much worse than kill the golden goose this time. I think they just introduced an entire new group of disgruntled consumers to 'piracy'.
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Happy
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re:Disingenuous
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Movies are cheaper than ever.
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I'd pay more..
What I am waiting for is the landrush to streaming that will occur as dvd sales continue to fall off a cliff. We are like the early stage of itunes when everyone was complaining about copy protection and there were tons of hold outs. Eventually everyone will jump in. I just wish the content holders weren't so stupid to think that it will somehow not turn out like the music business.
I am not sure what model is perfect because subscriptions seem to be more palatable that individual purchases for Video Content.
I would happily pay $1-$9 per channel(depending on which channel :)) for through netflix. I already have the service in my tivo and wii and blu-ray player. They could do a la carte cable and completely cut out the likes of comcast.
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Not a problem for streamers
I know that I can't get everything Netflix has to offer with only streaming, but there's still a huge amount of content, and new things showing up all the time. Fuck Starz. I wasn't that impressed with their feeble selection anyways. There's a massive load of streaming anime on Netflix now, and I'm happy as hell about it.
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All In All
This issue dovetails quite nicely with several articles I've read recently about how similar RL is to The Producers, and how, mysteriously, no one ever makes any money in Hollywood, but somehow all these big budget movies get made, salaries get paid, blablahblahblahalbha.....
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Still a good deal...but what will they do with my extra money??
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Re: Still a good deal...but what will they do with my extra money??
If you don't start saving your change that you are going to has less in the future.
To pay for things.
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Netflix
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Netflix
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Stop yelling at Netflix!
Come join my Facebook page (or just leave your thoughts). Click here - Loyal to Netflix
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Management *and* Hollywood are killing Netflix
If I could have convinced my wife to drop cable TV, I would have sign up for the DVD plus streaming service. But there's just not enough available on streaming to make the new price worthwhile. We used to be hopeful and check the streaming listings on my Apple TV when my son visited since he has a membership. I don't recall ever finding anything on Netflix streaming that we weren't willing to wait for the DVD.
Anyway, it's not just Hollywood that wants to kill Netflix. Between the price increase and this latest Qwikster boneheaded move (http://news.yahoo.com/netflix-separates-dvd-streaming-businesses-122052917.html), management is doing their best to kill it as well.
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