Okay Geek Farm
How Netflix could have avoided the user outrage
Connor Scalleat
Netflix has just announced a change in its plans that will take effect for customers that are signing up today, and effect pre-existing customers September 1st. The service will be constructing a wall between their streaming platforms and disc home-delivery services. This means that for people who just want streaming it will be $7.99 and for people who just want the home delivery services it will be $7.99. Before you could have both for $9.99 and today both will be a combination of both fees for $15.98 — everyone is flipping out.
Why did Netflix change its prices?
Netflix has always been an extremely cheap service and still is for what you get, although the recent change in plans has caused huge user unrest. But why is this? Naturally it comes to financial reasons; Netflix has a great sum of money and time invested in DVDs and they believe they will be around for many years to come. Netflix’s VP of Marketing Jessie Becker released an announcement stating, “Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs.” So when you think about it, how did Netflix get by for so long by just charging two dollars more for DVD services? The cost of people working to organize DVD’s, facilities, DVD covers, the DVDs themselves, postage, marketing and much more comes very close to two dollars so there is a very little profit margin there.
Despite Netflix’s belief in DVDs, it might be their disbelief in the abiity of DVD’s to maintain sales. Essentially if you make customers choose between streaming and mail services you can allow money to be put in a definite structure and weaken another structure. Thus meaning that, if most choose streaming which is my personal belief then they can slowly remove investment from mail services and invest more in streaming.
Overall, financially it makes more sense to run operations like this, and in the long run is better for the geeks because it will allow Netflix to invest more in streaming services because they don’t have to worry about as many mail customers. But this begs the questions — will the user revolt stop Netflix from moving in the direction they want to?
How could have Netflix avoided the user outrage?
I think that the question “why are people reacting so violently?” is an interesting one. The obvious answer is that people are losing features and paying more, something that no one would be happy about. Personally, I believe Netflix could have went about the price change better.
The streaming service they’re announcing will have more device support, within the next year Netflix has promised to get more companies on board with its service, a remodel has just been done of their website, and algorithms are constantly being updated on their website. All of these things have happened and will be happening. Now, if Netflix could just have waited on the launch of some products and have waited to launch the pricing plan they could have launched new content, design, and backend with the new pricing which would make it seem like you’re getting something out of this price change — but at the moment, it all seems like a slow trickle to users.
Despite users clearly losing something in the service unless they want to choke up the sixteen dollars is obvious Netflix could have focused on being transparent about the situation. Explaining the financial issues with services current price plan along with getting users to understand that streaming will become better if more users just that and not by mail delivery.
The big picture
Overall is it that big of a deal? People spend five dollars on a Starbucks latte everyday. If you ask me Netflix has been under priced all along, the pricing has changed and obviously people are not going to be happy about paying more but when you think about it, the service is definitely worth the increase in price if you use it to its full potential. Netflix wants to give you more for your money, but should they just have waited until they had more to show?
