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Why Netflix Had To Raise Its Prices 574

Posted by timothy
from the well-raise-my-rent dept.
sperlingreich writes "Last week, after movie streaming service Netflix raised its prices by 60%, the company's customers took to blogs and social networks in revolt, threatening to cancel their subscriptions. However, between the cost of mailing DVDs and paying increased licensing fees for content, a Netflix rate hike was inevitable. Is it still a great movie bargain? What alternative services are there?"
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Why Netflix Had To Raise Its Prices

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  • Whiners... (Score:4, Insightful)

    by msauve (701917) on Thursday July 21, 2011 @05:33PM (#36839198)
    My cable company wants much more than $16/mo to get the various premium channels (HBO, Showtime, etc.). $16/mo is a good deal to be able to watch what you want, when you want.
  • by mallyn (136041) on Thursday July 21, 2011 @05:35PM (#36839224) Homepage
    I have not been to a first run movie theatre for about 3 1/2 to 4 years; I've lost count.

    I find plenty to do without going to first run movies or event renting movies.

    To be brutally frank with you, much of what comes out of 'the industry' these days have very little to keep me engaged.

    So, I take the money I save by not subscribing to movies and tv and engage in hobbies that keep me engaged and creative, such as these at http://www.allyn.com/ [allyn.com]

  • Re:Whiners... (Score:5, Insightful)

    by LordNimon (85072) on Thursday July 21, 2011 @05:42PM (#36839322)

    Every time a new DVD becomes available on streaming, Netflix has to pay a higher licensing fee. When does it stop? What good does it do me if Netflix has 1,000,000 movies on instant streaming, but because of all the licensing fees, the service costs $100/month?

  • by sqlrob (173498) on Thursday July 21, 2011 @05:42PM (#36839324)

    It's not even the all at once, IMHO.

    It's the "you're getting better value with us raising the prices and nothing additional being added" spin they tried to put on it.

  • Re:Whiners... (Score:4, Insightful)

    by Hatta (162192) on Thursday July 21, 2011 @05:46PM (#36839398) Journal

    How do you think they're going to get licensing for more movies (especially new releases) without raising more money to pay increased licensing fees?

    By paying license fees per view, and not per program. If netflix expands their selection, I'm not watching any more than I ever did. What sense does it make for me to pay more to have access to programs I don't watch?

  • Re:Whiners... (Score:5, Insightful)

    by sqrt(2) (786011) on Thursday July 21, 2011 @05:53PM (#36839512) Journal

    $16/mo would be fair for being able to watch what you want, when you want...but that's not what you get with Netflix streaming. You get to watch what the studios approve of, for as long as they think you should be allowed to. Content trickles into the streaming library at a snails pace, and movies are frequently pulled after a few weeks. It's not all HD either, even newer movies which should be. Just because other options are also similarly overpriced does not make it right. The studios need to adjust to the new normal where they make less profit, have to deliver a higher quality of service, and give consumers the choices they want. The alternative is to keep taking massive hits from Bittorrent and non-sanctioned streaming sites. Until they realize that their stranglehold on content has ended and they need to compete with free (and that's possible, it really is), they're going to keep making mistakes like this.

    Instead of raising prices and locking down selections and distribution channels they should be lowering prices, making things more reasonable, enticing people who haven't been paying to go back to legitimate channels. Release movies on Netflix and DVD at the same time, open up their entire back catalogue, make it available wherever and whenever the user wants.

    But of course they won't do that. Some executive thinks their bottom line is better served by giving people less choices, charging more, suing people, and generally making the legal services the worst option.

  • by uniquename72 (1169497) on Thursday July 21, 2011 @05:55PM (#36839556)
    This a thousand times. If they had said, "Our licensing fees are going through the roof, and this new pricing scheme will help us build an even better collection of streaming content," I would have been happy to pay a little more. Instead they told me how great it was that I was going to pay more [netflix.com] for the same service, with no suggestion that an increase in available movies might accompany the hike.

    Fuck 'em.
  • Re:Whiners... (Score:5, Insightful)

    by darkwing_bmf (178021) on Thursday July 21, 2011 @06:01PM (#36839660)

    If what is currently "dvd only" content was made available for streaming at the same time the price was hiked, then I believe most people would have been okay with it.

  • by fortyonejb (1116789) on Thursday July 21, 2011 @06:02PM (#36839682)
    You can all but guarantee the studios behind the licensing wrote in something to keep them from doing just that, no way they can appear to be the bad guys.
  • by h4rr4r (612664) on Thursday July 21, 2011 @06:04PM (#36839704)

    I have had the opposite experience. Our anecdotes therefore cancel out.
    Hell, when I had cable I would have given up ESPN if it saved me $0.25/month.

    Simple fact; I and many like me will not pay for entertainment and watch advertising. One or the other.

  • Re:Whiners... (Score:4, Insightful)

    by msauve (701917) on Thursday July 21, 2011 @06:09PM (#36839784)
    "that's not what you get with Netflix streaming. You get to watch what the studios approve of, for as long as they think you should be allowed to. "

    And that differs from how movies are released to premium cable channels and network TV in exactly what way?
  • by superdude72 (322167) on Thursday July 21, 2011 @06:14PM (#36839842)

    Did you really think $9.99/mo for 1 DVD at a time + all the streaming content you can eat was going to last forever? Those are *startup* prices. They do that to grow the business, then they jack up the prices when they need to be profitable.

    And they're never going to include new releases in the all-you-can-eat streaming at that price.

    I do wish they would stop changing the streaming / not streaming status of movies, however. It's frustrating when a movie that has been out for ten years, and was streamable last week, suddenly is not streamable. Can't say I understand the reasoning behind that, other than that their licensing just makes no damn sense.

  • Re:Whiners... (Score:5, Insightful)

    by FreonTrip (694097) <freontrip AT gmail DOT com> on Thursday July 21, 2011 @06:23PM (#36839992)
    Compared to digital cable that would still be a cost savings. How warped is that?
  • by Daetrin (576516) on Thursday July 21, 2011 @06:26PM (#36840032)

    "Instead they told me how great it was that I was going to pay more"

    Can you please show me where you see that in the linked page? Personally what jumps out to my eye is:

    Netflix: "By offering our lowest prices ever, we hope to provide great value to our current and future DVDs by mail members."

    ie This is great for the people who just want DVDs by mail.

    Netflix: "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."

    ie Letting people who are in it for the streaming get DVDs as well for just $2 isn't generally profitable for us, and people who only want the DVDs and aren't interested in the streaming don't appreciate having to pay $2 more for a service they don't want.

    Netflix: "We think $7.99 is a terrific value for our unlimited streaming plan and $7.99 a terrific value for our unlimited DVD plan."

    ie They think both plans are worth the price they're charging for them. (Well duh!)

    So they did say it's great... if you're either Netflix or someone who only wants DVDs. If you're not in either of those categories then they didn't say it was great for you.

    Yes they're obviously trying to spin it by focusing on the people who will pay less, but they're not actually saying what you're trying to spin it as.

  • Re:Best value (Score:4, Insightful)

    by Mr.Fork (633378) <edward.j.reddy@g m a i l.com> on Thursday July 21, 2011 @06:31PM (#36840106) Journal
    Gellenburg - I think you nailed it. What else is out there that provides the quality of signal, selection, or portability of view-able devices out there that is even remotely compatible? I'd pay triple to get access to even more content, like HBO and AMC shows, and new movies on DVD from Paramount, Universal, Dreamworks, 20th Century Fox etc.

    What is crazy is that the senior management of these companies can't see ---here we are SCREAMING --- LET ME PAY FOR UNLIMITED ACCESS TO http://entertainment.slashdot.org/story/11/07/21/2023219/Why-Netflix-Had-To-Raise-Its-Prices#YOUR [slashdot.org] CONTENT---HERE TAKE MY MONEY PLEASE!!!... and they would rather send me a subpoena from a RIAA lawyer. Oh the humanity! :)
  • by Anonymous Coward on Thursday July 21, 2011 @06:44PM (#36840254)

    Please stop with this.
    Any time something goes up in cost while reducing quality you get your Stockholm syndrome folks who whip out this line, parroting the company's marketing droids.
    Have you noticed that the streaming titles have gone WAY down hill.
    It used to be that there was a pile of new stuff every Tuesday. What was running on cable movie channels closely matched what was on Netflix streaming. Now you get dubious foreign films, 6.02x10^23 singing cowboy movies and maybe just maybe a B-F grade recent release. This month's was some Ashton Kutcher movie.. Which looks like it has already been pulled.
    So they are offering more Anime, this is the only thing that has improved. Streaming is filled with affordable rights titles. Why are they affordable? almost NO ONE wants to see 90% of them.
    Not to mention that it was quite a while ago that they decided to withhold DVDs through the mail until they had been on the shelves/PPV for 3 FREAKING months.
    So as we watched a service we liked go into the toilet is is nice to have the "He only hits me because he loves me!" crowd crawl out of the wood work to say that the price increase for this reduction in quality "Is less than a small latte from Starbucks!".
    As long as there are people who parrot the marketing droids or just sit back and take it, this will keep happening.
    As the MPAA/RIAA/MAFIAA intend to kill any goose who lays golden eggs unless they get 100-150% of the eggs, it may be time for me to learn to torrent.

  • Re:60%? Try 7% (Score:0, Insightful)

    by Anonymous Coward on Thursday July 21, 2011 @07:14PM (#36840558)

    The next person who compares ANYTHING to the price of a latte needs to be torn into pieces and set on fire. My rate went up 60%. I don't care what your rate did. I have NEVER bought a latte. Not even really certain what a latte is. The fact that you obviously have to much leisure time on your hands and enough money to not care does NOT change the fact that this impact, like most things, rapes the lower income folks.

  • Re:Whiners... (Score:5, Insightful)

    by EdIII (1114411) on Thursday July 21, 2011 @08:32PM (#36841316)

    I know people paying much more for much less.

    Take any major cable provider. They charge per digital box, which is why you can't just hook up any TV anymore and get the premium channels, and then each box has its own charge for the premium packages.

    So you get:

    1) Advertisements. Way too many, way too frequent, and even channel surfing exposes you to the infection that is advertisements.
    2) In-media Advertisements. Saw The Matrix for about 5 minutes on AMC a few days ago at a friends place. Was absolutely fascinated that people put up with that shit. There was an upper left advertisement for something. Breaking Bad logo and next play time in the lower right. AMC logo prominently displayed in the lower left. At least 10% of the entire movie taken up with NOT THE MOVIE.
    3) High charges for channel packages including shit you don't ever want to watch.
    4) Per box charges.
    5) Hidden regulatory fees.
    6) Pay per view and movie rentals where I get the * privileged* status of paying over $5 to rent a movie for the next 24 hours.

    Riiiiigggggghhhhtttt

    Netflix.

    1) Still only $20.
    2) Unlimited 2 DVDs as many times as I can get it.
    3) Streaming options that are fairly good and getting better.
    4) NO ADVERTISEMENTS.
    5) NO ADVERTISEMENTS.
    6) They just added Star Trek TNG, Voyager, and Enterprise. Check again. They are adding a ton of TV shows.
    7) Starz play. That gets you access to some interesting movies streaming only available via shipping otherwise.

    On the whole, Netflix is a great deal. Even if it goes to $40 bucks a month, you still have to pay far more than that for all the aforementioned bullshit in addition to the Internet charges from your ISP.

    Competition?

    Blockbuster. BWAHAHAHAHAHAHHAAHAHAHAHAHAHHAHAHAH!!!!!!!!!!!!!!!!!!!

    Anybody even look at it yet? Those executives must be on crack. They are still trying to charge $3 and over for streaming movies and will "sell" you protected movie content that you "own". Seriously? Who is left that is still falling for that bullshit? If you have a DRMd file on some device it is only owned by you as long as the authentication servers stay up in their data centers and are still operating. How many have gone down and fucked all the customers?

    Redbox is not out with its service yet.

    Websites for the actual content producers are full of advertisements and bullshit too. Not much better.

    The Big Media ISP cooperatives? They are trying to offer streaming and purchase services, but again, at $5 per movie.

    Look at Dish Network. Sure, I can see a movie still in theaters, but they all cost more than $5 for 24 hours.

    There is NO competition to Netflix at all and they know it.

    $20 bucks? Wow. There are some really entitled and bitchy people out there that cannot see the big picture.

  • by Emperor Shaddam IV (199709) on Friday July 22, 2011 @08:22AM (#36844264) Journal

    Empty Threats? Do you have any statistics to back that statement up?

    I for one am a Netflix subscriber that used to be 5 DVD a month - when they had that plan. But I have downgraded 3 times. First when they started throttling movies and I wasn't get my DVD's in a reasonable time. Then I was at 3 a month. I dropped to 2 a month when they pulled the Blu-Ray "bait and switch" and started charging more for Blu-Rays.

    Now this. So I dropped them to streaming only and I am considering canceling.

    I don't think its empty threats. A lot of us have been with Netflix for a while and we have long memories. Each time the Netflix Management pulls one of these stunts, some of us cancel and some of us downgrade.

    I came very close to canceling this time.

    And its not about the money, its about being treated like a "customer" and not a "moran".

    I think they really f'd it up this time and I think a lot of those threats of cancellation were not idle.

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