A little over a year ago, I put up a post entitled “The better mousetrap, or ‘Why I like Netflix’.” Basically, I waxed rhapsodic about the genius of Netflix’s business plan, their superiority to the chain video stores I’d had to deal with previously, their excellent customer service, their vast selection, and so on and so on. It was so laudatory that I’m amazed no one accused me of having been bribed to say all that. (And no, I wasn’t bribed.)
Well, some things have changed with Netflix over the last year. Mainly, one thing has changed: the membership price.
Several weeks ago, Netflix announced what was functionally a pretty major price hike. Previously, they had charged $9.99 per month (plus local sales tax) for one DVD at a time, plus unlimited online movie streaming; that’s the membership level I’m at, and it’s apparently the most popular level. Starting today, September 1, 2011, though, it’s $7.99 per month for the one DVD at a time, but no online streaming. It’s also $7.99 per month for unlimited streaming, but no DVDs in the mail. If you want both, like before … you have to pay both $7.99s, so, $15.98 per month.
And the howls were heard across the land …
I have Netflix “Liked” on my Facebook account, so whenever they put up a thread there I can comment on it — and see what everyone else who Likes Netflix is saying. Suddenly at least one out of every ten comments was about how this was a ripoff and totally unfair and the online selection sucked and they hated Netflix now and would cancel their membership and were rejoicing in the drop of its stock price. (I am not exaggerating one iota — they were actually saying all that!) If this had been pre-Internet, they would have been flooding the phone lines and shutting down Netflix’s switchboard. If it had been pre-technological days, I guess pitchforks would’ve been involved. It was really vicious for a while. And remember, these were people who’d clicked “Like” for Netflix — and who hadn’t undone that (which would’ve been the work of, oh, eight seconds).
Now I have to say that a dramatic price jump like that is a PR disaster looking for a place to happen. For the average member, it was a jump of 60%. That’s the equivalent of gasoline at your local service station rising from $3.49.9 to $5.59.9 overnight. There were solid and understandable reasons for it: the production studios were blown away by how popular online viewing had become (and one study recently showed that it now accounts for over a quarter of the Internet’s peak downstream traffic in North America, granted that the percentage has been disputed). And, studios being studios, they wanted a bigger cut of the proceeds. That’s what Netflix passed on to customers via the separate online-streaming charge — that cash, in large part, is going to the content providers (the studios) so that they’ll keep making their stuff available for online play, and make more of it available as time goes on (hopefully). But still, a 60% increase all at once looks bad — even if it’s your suppliers, not you, who’ve gotten greedy, you can expect a backlash.
So where do I stand? Well, first watch this video and I’ll tell you.
(quick check of my e-mail …)
Okay, you’re back? So you might have the impression that I haven’t been taking all the anti-Netflix negativity seriously. And you’d be right — because of one thing I didn’t really touch on in my post last year. Netflix membership was a ridiculous bargain!
Think it through. Not counting times when we had a kid in the hospital or were switching banks, we’ve gone through an average of about five DVDs, plus eight or ten movies/TV episodes online, from Netflix each month. (In summer, the number is higher than that, because my wife is off work and more amenable to staying up late.) That would be the equivalent of at least a dozen rentals from a video store. At the store we most frequented before giving up on video stores altogether, they charged $3.79 (plus tax) per DVD, more if it was a new release. So at a minimum, we’re talking $3.79 times 12, plus 9% local sales tax, plus $4 for the gasoline used to travel to and from Video Hell a half-dozen times … that comes to $53.57 every month. And that’s along with the horrid customer service, the limited selection, the time spent, and the slight increase in pollution caused by burning fossil fuels in our minivan.
For the same results from Netflix, only while being able to stay home, find any movie we could imagine, and get great customer support whenever we needed it (which wasn’t that often), we were paying $10.89 every month — $9.99 plus the sales tax. That’s at least an 80% savings — FOR A BETTER PRODUCT FROM A BETTER SERVICE.
With the price increase, given that we’re going to keep both the DVD delivery and the online options, we’ll now be paying (with the sales tax) $17.42 per month. Still at least 68% less than we’d have been paying for the Crappy Video Outlet Experience. So we’re getting it for one-third the cost of what it would have been under the old system instead of one-fifth, while continuing to get much better service, convenience and options … and this is a problem how, exactly?
(And as an aside, the people who were complaining about the limited online-streaming choices … all I know is that a year ago, our online-play queue ran about 30-35 films and TV series. We’ve watched at least that many since — and it’s still about 30-35, because we’ve found so many more things available online that we want to watch, and they’re adding more seemingly every day. If you can’t be satisfied with Netflix’s online choices, either you have reeeeeeeally narrow tastes in films, or you’re watching too dang many and you probably need to get out of the house more. Just saying.)
Our family falls comfortably below what the federal government calls “the poverty line” — but even to us, $6.53 more per month is not that much. That’s one two-pound block of cheese at the discount supermarket where we shop. That’s one pepperoni pizza at the take-and-bake place. That’s a weekday’s worth of gas if Nina has a substitute assignment in north Stockton. That’s rent for our house for about four and a half hours. That’s a discounted paperback at Barnes & Noble. It’s not a lot! It just means that a terrific service that was ridiculously cheap for us is now only really, really cheap. And nothing else has changed, except that this most likely means even more films will be available for online play (that’s what they’re planning, anyway). It remains a whopping bargain.
So my ardor for Netflix remains unchanged. And me and my wife will be watching an episode of A Bit of Fry & Laurie online tonight, The Rescuers on DVD tomorrow with the kids, and I’ll probably check out Serenity online over the weekend — and maybe The Life and Times of Hank Greenberg too …
Which means I won’t have to hear the Netflix-haters whining. Good times.