(Editor’s Note: For a more recent blog on Netflix pricing changes, click here.)
Netflix has accomplished a lot in its lifetime. It is the key player responsible for a wholesale change of an entire industry. Physical video stores have dropped like flies in the wake of the mail order DVD rental business that Netflix pioneered, with only Blockbuster still hanging around, although by a thread.
Now, in its effort to further transform the industry away from physical DVD rentals in favor of online streaming options, it has made several customer service blunders and angered its subscribers. Instead of communicating changes to its service far ahead of time or promoting new features and trying to entice customers away from physical DVD rentals, the company is simply making changes that force customers in that direction. And it’s ticking those customers off. Call it “Facebook Syndrome,” an unfortunate condition in which you wake up one morning to find the online service you love has been overhauled without warning. And most of the time not for the better.
Netflix hasn’t been coy about its eventual goal to get out of the mail order entertainment business. It might not have the overhead that a Blockbuster does with the need for physical stores, but its shipping costs and logistical challenges are still pretty expensive in their own right. Consumer taste is also shifting towards online viewing as more people have access to broadband Internet and new streaming devices. Netflix’s desire to get ahead of the curve and embrace those changes is admirable (and a lesson Blockbuster never learned), but it sure doesn’t execute them well.
The latest snafu was a brief blog post on the site telling customers that they will no longer be able to add movies to their mail order DVD queue from streaming and mobile devices. Seems simple enough, but the change set off a flurry of angry responses from customers. Many of them liked having the ability to add a movie to their mail order queue if it wasn’t available for streaming. Now they have to fire up the computer to do it from the website.
This came on the heels of new pricing structures that favor streaming customers over mail-order ones, a surcharge for Blu-ray discs and changes to the site so online options are more prominently featured. It’s pretty ironic, really. As Netflix seeks to change its model, it’s alienating the very customers that made it so successful to begin with.
Not only that, but the company is putting the cart before the horse. The service simply doesn’t have much of a selection yet of titles available for instant viewing. We recently purchased a Wii as a family holiday gift. It gave us games for the kids and Netflix streaming for the grown-ups. So far I’ve loved being able to access content on my television (Hello, Dexter marathon!) but all too often when I look for the impulse movie, it’s not available. That’s fine, I get that it takes time and money to build a healthy library of content. Plus, a lot of providers don’t want their content available on Netflix (I’m looking at you HBO). Until Netflix solves that problem, forcing customers onto a sub-par service isn’t just a bad idea, it’s bad business.
I actually just downgraded my netflix account this month when I noticed the extra charges on my statement. I was not happy with suddenly being charged more without being notified. The new streaming only price is definitely cheap option, but I have to agree that their selection is very limited.
I have Netflix as well. I have the one movie option at a time. I also use the watch instantly. But am NOT happy with the limited choices. There is no way they will make that fly.
Maybe I should get rid of Netflix.
I still haven’t picked my jaw off the floor. 4,000+ comments on the (incredibly myopic) Netflix blog post announcing this change, and yet no one from Netflix has addressed any objections. Um…get a clue, Netflix, and hire a PR firm to do damage control. (Disclosure: I’m a Netflix customer–for now…)
@Lacy. The company is indeed in a tough position in that if it wants to have a lot of online content, it will have to pay a ton of money for it which means either a lot of losses year to year (like Sirius/XM has to pay its talent) or massive price increases. Should be interesting.
@Shelly. You’d think it would address the grumbline for sure, but I think the silence is speaking pretty loudly as well. “We’re going down this road, we’re not deviating and we’re forcing you to break your DVD habit.” Time will tell if it starts to lose customers over it or not.
I was a Netflix customer for years, but I canceled my subscription the day Netflix announced it was raising prices on disc plans while offering the cheaper “streaming” plan. I didn’t like being so obviously manipulated, and I can’t watch movies on my computer anyway – I usually work or play games on my laptop while a movie is playing on TV.
For several days I checked for Netflix in the news to see if other people were as angry as I was – but all I saw was hype from people who wanted to speculate on Netflix stock. However, I’m sure I’m not the only one that joined Netflix for the disc service. The reason Netflix was able to out-compete blockbuster was that they had built customer buzz on their mail delivery model! I feel like the rug was pulled out from under me, and I haven’t found a good alternative yet.
I have a feeling Netflix has been cooking the books to inflate their success with the disc business. Perhaps there was even a plan to pump and dump their stock.
Looks like netflix has enjoyed their rise to success and does not realize changes like this certainly was the downfall of blockbuster – i gather with all the limitations that Nexfix wants to put on us – back to Blockbuster and Redbox – at least I get what I want four weeks faster than this shanagans
Just dropped Netflix! Signing up for blockbuster online as we speak!
Just another example of corporate greed…give them less for more…seems to be the new ‘American Way’. With less disposable income out there (because of the economy) to be spent on the frivilous, you’d think we’d all experiencing schmoozing rather than screwing.
This was inevitable. Like all other money mongering companies before it(wally world), netflix has dismantled the competition by offering a service and or product at a deflated rate and now is in a power position that allows them to dictate to their customers what they should want. The streaming options are limited and that is ignoring the obvious reason so many people embraced netflix initially (including myself), which is the ability to get hard to find/ out of print dvd rentals. If they want to force feed me bad movies and deny me access to Argento, Fulci , Kurosawa, Chan-wook Park, and Corbucci then I don’t want anything to do with them anymore. In fact I see a great opportunity for an enterprising person to revolt and lead an uprising of the undead video store……….
Look at the on demand download/stream model and what do you see? Tons of recent content and ‘selected’ classics that someone in an office somewhere “Thinks” you want to see. And that…..is the problem. Instead of running towards what everyone else is doing, Netflix should not only celebrate, but ‘Market’ the fact that they have a massive library of unique classics and art films, NOT likely to be found in the minions of streamy-downloady-VOD flavor of the week clones in the cybersphere. It’s exactly the FACT that discerning viewers prefer pertinent variety that compels them to flock towards Netflix. It seems quite obvious that by doing away with the DVD model, they will inevitably cut back on classics, unique cult, and art films available (Thereby destroying the edge they currently enjoy). This latest decision is no more than the proverbial “Shot in the foot”. As a discerning viewer and student of human nature, I emplore Netflix not to continue with this misguided decision.
@anon: I wouldn’t subscribe to it being as manipulative and shady as you suggest because Netflix has made no secret about the fact that it sees online streaming as its future and it wants to eventually rid itself of the DVD biz. Again, I think that’s fine, but the way they are tactically going about it is so misguided it boggles the mind.
@Bart: Blockbuster’s downfall was actually about its refusal to change (establish a rival online mail order service before it was too late) and to desperately cling to that most odious feature of the old-school video rental industry: the late fee. Blockbuster didn’t take Netflix seriously and payed dearly.
@Nick: Hope you don’t have to go right back! Blockbuster may not be around too much longer. If it was smart, it might consider becoming the DVD mail order alternative to Netflix.
@LinLn: Can’t argue with you. Tough economic times are when you suck up to your customer, not anger them.
@Terry and Jay: I’m not sure you can build a business/marketing plan around cult and niche movies (the mainstream stuff pays the bills, like it or not) but you’re right to note that the crowd interested in that aspect of the service is getting dumped on.
i wish to cancel netflix acct please give me telepone no. so that i can talk to someone
Maybe people should switch to blockbuster online, they never charge extra without consent, and there is still dvds being sent to people and plus side, people can take those dvds mailer and exchange them in the store for free movies. I like my online program with blockbuster.
What I don’t get is if they really want to push customers to streaming only, why did they suddenly change the streaming only plan from 4 streams at a time to 2?? All this makes me want to do is switch back to the dvd plan I had previously and make them send me a new movie every other day!!
@Terry: I caught “Seven Samurai”, “Yojimbo”, and “Dreams” last year on streaming, and I’ve got at least a couple more Kurosawa films in my queue (to say nothing of what they probably have on disc).
In general, even as satisfied as I am with my streaming queue I’ll be the first to admit there’s plenty of stuff they don’t have (who knows when I’ll get to stream HBO stuff like “The Wire” or must-see movies like “The Incredibles”), but they do have a good selection of newer stuff on streaming (Burton’s “Alice In Wonderland”, Abrams’ “Star Trek”) and plenty of other good stuff from TV (“Black Adder”, “Pushing Daisies”, “The Office” (both versions)) to foreign (“Oldboy”), a range of classics (“His Girl Friday”, “Breathless”), and sub-mainstream and documentary films (“Palindromes”, “Exit Through the Gift Shop”).
I’m usually the first to complain about what a service *doesn’t* have, so it does feel a bit weird, though nicely so, to be satisfied (relatively and for the moment) with Netflix’s streaming choices. I do have a DVD queue full of hundreds of titles that I wish would get to streaming, so I realize what’s *not* there, but I think people might feel a little less short-changed if they just looked at what is out there.
Their current streaming selection isn’t enough, I unhesitatingly grant, but there has been plenty to keep me busy since they started it., i.e. not to let them totally off the hook, but there are greater consumer injustices to be incensed about.
UPDATE ON BEHALF OF LARRY: NetFlix’s fourth quarter earnings came out recently and guess what? They destroyed analysts’ expectations. The numbers are extremely impressive:
– In Q4 2010, Net profit was $47.1 million and revenue was $596 million compared to net profit $30.9 million and $445 million in revenue the same quarter last year.
– Upon this news, NetFlix shares spiked as much as 15% on Thursday (1/27/11) and are now trading at an all-time high.
The company reported its customer base has jumped to more than 20 million subscribers. It is now the second largest subscription-based video company in the country, behind cable provider Comcast. For continued growth, commenters will be glad to know they plan to sign exclusivity agreements with more networks (like HBO) in addition to staying focused on its streaming content.
So bottom line? Every customer has a right to their complaints and obviously NetFlix could certainly elevate its “customer service/PR game”, but right now NetFlix executives are seeing their current trajectory covered in cash — and lots of it.
I just signed up for netflix and I am amazed at not only the limited selection, but the selections themselves. Some lists show the same movie twice and I have only 25 per catgory on my HD tv. This is what we are losing BlockBuster for?
Why is everyone complaining? this is the best i have ever seen netflix. I am getting rid of digital cable because there is never anything on. I love the choices and not having to wait for dvds. i have got to watch old shows i never got to finish watching and ones i never could because i am not good with keeping up with times shows come on and forgetting to watch them. I watch netflix on my ps3 more than i do digital cable. and spongebob for my kid makes life so much easier. Most people are into internet stuff like this. the world is going for internet more than anything and this is one of those steps.
Like it or not, change is in the wind. Netflix built its business with our help, but not our permission so they don’t feel the need to clear it with us when they choose to make a change. Nothing is going to stop them, nothing is going to change their mind. I reckon I’ll just grab a gob of Netflix stock and hang on for the ride. :-)
The main problem I have with the streaming push is that it satisfies the casual movie watcher, not the enthusiast.
I invested in 1080p, massive screen, home theater, 3D. I’m not going to watch compressed streaming content with pixels the size of my thumb. I’m lucky to have an excellent indie DVD rental shop down the hill, and the redbox/Blockbuster box seems to do VERY well, so the physical discs aren’t dead in my house yet, if Netflix wants to dump film geeks like me, then we’ll dump them.
They can enjoy the “Jessicas” who simply need Office reruns on their computer monitor and nine dollar earbuds. It’s a valid market.
@Jones, I feel the same way you do when it comes to the investment in equipment. As I mentioned in the post, we stream it through the Wii console, but that has no hi def capabilities. It’s ok for casually watching a show or something else that’s interesting at the moment, but when I sit down for some serious movie watching, I want my 1080 pixels in all their glory. I’ll continue to take the discs thank you very much.
I sympathize with you, Jones, but as a film geek myself (Mr. A. Anderson can attest to that) I would suggest that the situation isn’t quite so pandering. There’s no question that quality is not a constant with Watch Instantly, and that is a fair gripe. As a quicker means for getting through content (a much better variety than people seem to recognize), though, not much else can touch it. If you’ll notice from my earlier comment, the service feeds more sophisticated tastes than just popular TV shows. I appreciate that WI helps me get through *more* content than I can by waiting for discs. Yes, I’d prefer reliable, high quality, but there’s too much good stuff to get through to sit around waiting for discs.
There is some validity to your point, though. It’s not so much about the quality the service is capable of as it is the *unreliability* of getting that quality. It is capable of acceptable hi-def from most devices (though it still doesn’t quite match disc quality), *particularly for the convenience*, but even with an ISP capable of accommodating the highest def options (which I have) from, say, VUDU, Netflix seems to have trouble way too often mustering up 4 bars worth of quality. That needs to change and has tried my patience.
In terms of available content, there isn’t much to reasonably complain about at the moment. There’s lots to see for every taste. Yes, they will have to boost that to stay competitive, but for now there’s plenty to watch and it’s the speediest way I can think of to even pretend I might get through all the stuff I want to see before this mortal coil fails me.
Streaming is the future. Blu-Ray is the future. Netflix is successful because they have always looked to the future, and people that have money and want to spend it are interested in the future as well. Someone like me that can afford a 100 dollar streaming device and a 50 dollar internet connection can have twice the quality of DVD for less money from Netflix. Smart business is to understand your goals, and proceed with them regardless of what other companies are doing. Netflix is growing in the right direction. I encourage all of you to do the same. If you don’t like progress towards streaming, then take your business elsewhere. Your options are getting very limited at this point.
@Joe, I totally agree with you that streaming and Blu Ray are the future, and Netflix is in the right to recognize this and move aggressively in that direction. The problem is that it is tactically going about it all wrong and forcing its customers in that direction before they are ready and before Netflix has any kind of decent selection of titles to stream to enhance the appeal. You need to induce your customers and make them happy to accept the change, not force it on them to their detriment.
I have really enjoyed the current system but if I have to choose between the two or get both I may have to cancel. The mailing system gives me newer movies but is subject to the post office which gives me about two movies a week. Streaming is great but limited if you want new releases. Unless they bridge that gap, this will be a hard decision as I agree streaming is preferred but they must make new releases available sooner.
Good-by netflix. Hello Redbox and hulu plus. Hulu has a MUCH larger streaming library and I can watch 2 movies a week with Redbox for the price of Netflix.(4 a week at new price) AND Redbox LOVES to give free movies ( about one a month if you take advantage of the offers). Only watch about 2 mailed DVDs a month thru netflix. SEE YA NETFLIX. You will not be getting my money.
I tend to agree with this guy. Get over it folks..
http://irritatedtechie.blogspot.com/2011/09/netflix-announcement-my-take.html