Client Contests

Friday, July 15, 2011

Netflix = Company of Outraged Customers


Earlier this year B.M.M.O. posted an article about Netflix and how they were gaining an increased customer base.  Netflix was able to build this customer base by offering their services at a low reasonable price, now they are trying to cash in on that with these higher prices and consumers are not having it!  This price increase was announced on July 12, 2011 and this could very easily ruin their market share.  Customers previously paid $10 for online streaming and one DVD rental at a time, now the cost has increased to $16; the streaming and DVD rental services are $8 a piece or can be bundled for $16.  Consumers were not happy; they took to Netflix’s blog and Facebook page to express their anger regarding the price hike.  Don’t try calling, the wait time is out of control.  Netflix has had an advantage because they are the only company that offers online streaming and mail DVD rental, but will this be enough to keep furious customers around?  During this horrible economic state, is this the best time to be increasing costs in the upwards of 60%, entertainment isn’t a necessity. 

While there is no true competitor to Netflix because only they offer online streaming and DVD rentals, there are some business that could have an opportunity to benefit from Netflix’s price increase.  Cable and Satellite carriers could see an increase in their rentals via digital boxes; it creates the same “I never have to leave home” feel. 

B.M.M.O. Consulting always wants to keep the consumer happy, so we found some alternatives to help you keep your movie viewing plans on track. 
·         Amazon Prime – A membership program for $79 a year that allows you to order items from the online store and get free two-day shipping and discounted one-day shipping which comes with a video streaming option.  You get shopping discounts and movie time all at the same place.
·         Blockbuster By Mail – A DVD by mail program that lets you rent DVDs or games and have them shipped to you, they can even be occasionally returned to the store.  Blockbuster’s advantage is that they offer Blu-ray.  You can have 1, 2 or 3 rentals out at a time for $12, $17 and $2o respectively.  To get online streaming for Blockbuster it’s a different service with an additional fee.
·         Hulu Plus – An online movie and tv show streaming program.  For $7.99 a month you can watch unlimited videos online.
·         Redbox – The ever popular $1 for one night rental business, for $1.50 you can get Blu-ray discs and for $2 you can rent games.  If you decide to keep them an additional night, they just charge your credit card for an additional day’s rental.  The negative of Redbox is that the demand is sometimes higher than the supply on new movies when they first come out.

If you should decide to cancel your Netflix service, we hope one of the options above helps you keep your movie viewing pleasure alive.  Or you could follow the instructions of Roger Ebert, via Twitter he recommended that you keep your streaming services and cancel the DVD portion.

Netflix has yet to release a statement about the increase or to empathize with the customers.  Per Richard Greenfield, of BTIG Research, Netflix isn’t even offering customers discounts to keep their business.  Is it better to have customers get either DVD or streaming services or nothing at all?  This is a decision Netflix better make soon.  Despite the news of the price increase and the unhappy consumers, Netflix has seen consecutive days of stock increases.  Only time will tell how long this will last.  Netflix better find a way to keep their customers happy, customers make the business.

2 comments:

  1. Netflix seems to be either trying to foster a competitive industry, or shoot themselves in the foot. Although they could in league with the internet providers to get people to go exclusively to streaming so they can glow the cap off their broadband bill so their wallets can get gouged that way. blockbuster has been aggressively seeking the estimated 2.5 million customers that will leave in September when the new prices go into effect. Working at DISH I am always getting updates on blockbuster, they even launched a good freebie for DISH customer, 3 months free of blockbuster by mail, check it out at http://bit.ly/m8kwjf

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