Customers Outraged at New Netflix Pricing, Investors Giddy
July 14, 2011 12:30 PM
comment(s) - last by
The price hike and change in service plans are not sitting well with many Netflix customers, but Netflix already knew this would happen
Two days ago, Netflix announced that it would
change its pricing and plans
associated with its DVD rental and video streaming services. These changes include separating DVD rental from video streaming entirely, charging $7.99 for one or the other. For both, the cost is $15.98 (the current price for one DVD out at a time and unlimited video streaming is $9.99).
The price hike and change in service plans are not sitting well with many Netflix customers, but Netflix
already knew this would happen
. In fact, one day before announcing these plans, Netflix told customer service representatives to be prepared for angry callers.
Today, the company even increased the number of personnel in the department to handle the amount of phone calls they've received. "Hundreds" of Netflix employees have been answering phones, and this still caused some callers to have to wait to speak to an employee. The sales representatives have said that many of the calls have been "emotional."
"We tested, we researched, we analyzed," said Netflix spokesman Steve Swasey. "We knew what the reaction would be. We are not surprised. We knew that there would be some people upset by the service and with the price being adjusted."
According to Rich Greenfield, a Wall Street analyst with BTIG Research, Netflix employees have not been giving callers satisfactory responses through the day. Greenfield tested how Netflix's service department was handling the flood of calls by making over 35 calls over a two-hour time period, and said that Netflix employees simply tell customers (who threaten to cancel their subscription) to wait to cancel until September when the new plans/pricing takes place.
"There was simply no promo or 'save' technique to offer us a discount to
retain our business
," said Greenfield. "This would appear to illustrate that Netflix is simply not concerned with the prospect of losing customers."
In addition, Greenfield said he waited on hold for about 9 to 15 minutes while making these calls.
While customers are up-in-arms,
investors are salivating
at the Netflix price rise. According to Ingrid Chung, a Goldman Sachs analyst, the higher prices will make up for the cancellations by "driving customers toward more profitable Netflix plans."
"Gross margins should benefit as we believe that the majority of lower-priced (subscribers) were less profitable for Netflix," said Chung.
Chung also mentioned that "lower-priced subscribers" may be drawn to the streaming-only service as well, which could prove to be a successful shift.
Netflix shares increased three percent yesterday after the announcement of the new plans.
This article is over a month old, voting and posting comments is disabled
Won't Work For Long
7/14/2011 8:30:43 PM
The further we delve into the information era, the less the individual blocks of (data) are worth.
I can see wanting to move people away from the physical DVD model of distribution and their not wanting to lose money, but the answer there is to charge the same and keep increasing value added content to keep customers, not drive them away with ever increasing prices to do the same things they've always done.
It's insulting and that will turn people away without even considering the value in the service. Besides which, people like change of pace and this makes them stop and think about other things they've been missing out on while growing roots between their arse and the couch cushion.
"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad
New Netflix Plans/Pricing Announced
July 12, 2011, 7:21 PM
Netflix Gobbles 29.7 Percent of Peak Downstream Traffic in North America
May 18, 2011, 6:24 AM
San Francisco's Market Street Receives Free Outdoor Wi-Fi
December 17, 2013, 11:14 AM
Facebook Announces Auto-Play Video Advertising in Your News Feed
December 17, 2013, 10:00 AM
NSA Debates Granting Snowden Amnesty if He Keeps His Mouth Shut, White House Says "Nope"
December 16, 2013, 1:17 PM
Amazon's New "Pantry" Service to Compete with Costco, Sam's Club
December 13, 2013, 11:26 AM
Quick Note: Former Googler Becomes Director of U.S. Patent and Trademark Office
December 12, 2013, 10:42 AM
AT&T Launches U-verse with GigaPower Network in Austin, Texas
December 11, 2013, 5:14 PM
Most Popular Articles
Report: Windows 8.2 Revives Start Menu, Runs Metro Apps in Desktop Mode
December 10, 2013, 2:56 PM
Chinese Media Puts Positive Spin on Its Smog Problem, Touts 5 "Benefits"
December 11, 2013, 12:39 PM
China's Lunar Rover Enters Orbit, Prepares for Historic Sat. Landing
December 13, 2013, 5:00 PM
The History of Normandy: How Nokia Plotted a Low-End Android Line
December 11, 2013, 8:12 PM
Metro-Enabled Firefox Browser Expected to Land After Two Years of Work
December 12, 2013, 5:21 PM
Latest Blog Posts
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
Global Cyber Espionage Concerns Reveal Growing Cyber Armies
Nov 29, 2013, 11:04 AM
Is The Period Becoming an Expression of Anger?
Nov 26, 2013, 2:02 PM
NSA and Congress -- You Will Never Kill the Constitution, It's an Idea
Nov 10, 2013, 2:00 PM
AT&T Explores $100B+ USD Deal to Acquire Vodafone's European Operations
Nov 4, 2013, 7:34 AM
More Blog Posts
Copyright 2013 DailyTech LLC. -
Terms, Conditions & Privacy Information