Dear Netflix- An Open Letter From a Loyal Subscriber

Dear Netflix,

Today, after a few websites leaked the news, you officially announced a new pricing scheme for your subscriptions.

Before I get into the meat of this, let me acknowledge two things: Netflix (or something like it) is the future of video entertainment. Netflix, as a for profit company offering a non essential service, has the right to charge whatever they want and I can pay it or cancel my subscription.

That being said, what is the deal, Netflix? In less than one year you have almost doubled my monthly subscription cost? I’ve gone from $9 to $10, and now come September I will be paying $16 for the same service I once paid $9 for. Please don’t dress it up by saying:

“Since then we have realized that there is still a very large continuing demand for DVDs both from our existing members as well as non-members. 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.”

That is bunk. There is no need to eliminate the Streaming+DVD plans just to create DVD only plans.

To be fair, when I started paying $9 the streaming content was not as robust as it is now. And I did not complain when the modest $1 a month increase hit. I understand that acquiring new content for streaming is expensive, and some studios want a lot of money for the right to let us watch their shows and movies.

I know that’s why you are raising the prices. I think that you hope two things will happen. Either people will choose streaming only options, giving you more leverage with studios about the number of streaming viewers or they will pay more, giving you more money to buy the rights to more shows for streaming.

But there is a third thing that will also happen: people will cancel their subscriptions completely. If the comments on the blog I linked to are any indication, a lot of people are thinking about it. But you already know that don’t you:

“As always, our members can easily choose to change or cancel their unlimited streaming plan, unlimited DVD plan, or both…”

Here is my dilemma. I would rather just stream all of my content. I have devices on all of my TVs that can stream from Netflix. I normally maintain over 50 titles in my queue, mostly TV shows. I love it. But, I want the new releases as well. I want to get a new DVD release sometime within a few months of its release date. So we have the single disc plan as well. Now because you have seen fit to split their service, I get to pay twice for those services. No discount. If the streaming content was almost as much as the available DVD content, I would just stop getting the discs, but it’s not.

It’s not nearly as much. Thats why you need to raise money and grow their number of “only-streaming” subscribers, so you can increase the amount of streaming content. But that means making people mad, and you may lose subscribers. Which weakens your position with the studios and lessens the monthly income. People who don’t want to pay $16 are going to be mad that they are losing access to content they have had previously. They are not going to be satisfied with the current streaming catalog, which is why you need to take steps to increase the catalog… by raising revenue, etc… I get the catch 22 you are in.

I would not mind paying a bit more. I like the way the catalog of streaming content has been expanding. But you should offer a discount for people who want to keep both streaming and discs. At least until the streaming content catches up with the available disc content.

Meanwhile I’m going to sit back and hope you bow to the public pressure that’s coming your way. I’m going to console myself with the fact that in reality, even $16 a month is a fraction of what it would cost to go to a local store and rent the same content for viewing that I get from you every month. I’m going to continue to ignore the reoccurring issues with streaming to an Apple TV 2. And I’m going to relish the thought that if you mess this up, someone else will come along and provide the same service you do, better, for less.

Right now you’re leading the pack, today you stumbled.

—————————————————–

EDIT:

I received this form email tonight (Not in response to anything, I’m sure everyone got one):

“We are separating unlimited DVDs by mail and unlimited streaming into two separate plans to better reflect the costs of each. Now our members have a choice: a streaming only plan, a DVD only plan, or both.

Your current $9.99 a month membership for unlimited streaming and unlimited DVDs will be split into 2 distinct plans:

Plan 1: Unlimited Streaming (no DVDs) for $7.99 a month
Plan 2: Unlimited DVDs, 1 out at-a-time (no streaming) for $7.99 a month

Your price for getting both of these plans will be $15.98 a month ($7.99 + $7.99). You don’t need to do anything to continue your memberships for both unlimited streaming and unlimited DVDs.

These prices will start for charges on or after September 1, 2011.

You can easily change or cancel your unlimited streaming plan, unlimited DVD plan, or both, by going to the Plan Change page in Your Account.

We realize you have many choices for home entertainment, and we thank you for your business. As always, if you have questions, please feel free to call us at 1-888-357-1516.

–The Netflix Team”

At least this one sounds little more accurate: “separate plans to better reflect the costs of each.” Of course it would be probably more accurate if they just said, “To pay for buying more streaming licenses.”

Advertisement