How not to announce bad news

Netflix is a company that offers a DVD by mail service. You pay a monthly subscription. You maintain an ordered list via their website and and are sent the highest placed available DVD which you mail back after watching it and another one is sent to you.  We signed up for the service in 2008 when we moved into our current home. Netflix also offered Internet streaming of video included in the main plan. This allowed us to watch a selection of films and TV shows on demand on a PC. Netflix also enabled streaming to other devices, so we have a Blu-ray player that allows us to stream to our TV and we can also watch on our iPad. Netflix has increased the range of content available to view instantly. We watch far more stuff via streaming than on DVD; although the range of DVD material remains far wider.

Last week Netflix announced a change in pricing and created a storm of negative reaction. They announced that they were introducing a new DVD only plan at their lowest ever price, $7.99. This is less than the current $10.99 subscription. There was already an existing streaming only plan for $7.99. The catch, however, was in the second paragraph.

Second, we are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both. With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail.

Note how they try to make this sound as though they are offering a choice to their customers, while hiding the sting in the last sentence; they are removing the option of a plan that includes both streaming and DVD. You can subscribe to both plans, but they offer no discount to those who do so. Thus to get the service we currently get we pay $15.98, which is about 60% more than at present. If Netflix needs to increase prices by 60%, they should at least be honest and state that.

We shall keep the streaming service as it represents good value, especially with all the Doctor Who, Star Trek, and BSG to watch. The $7.99 DVD has a dimmer future, with two local stores offering DVD rental for $1 a night, that means that we could watch the disc a week we manage for half the price. Even though Blockbuster and other rental stores have died from the Netflix effect in recent years, there are still other options. The badly managed pricing increase has made me and others consider those options.

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Published in: on 18 July, 2011 at 6:06  Comments (1)  

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One CommentLeave a comment

  1. Dave and I discussed, and we’ll probably end up with streaming only with DVDs from another rental. I suspect Red Box will make a mint – it turned out to be in the right biz at the right time.


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