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Memo to Netflix: It’s the Pricing, Stupid!

CEO Reed Hastings -- and the investors flocking back to Netflix -- are misguided if they think the mass exodus of subscribers was about the DVD rental spinoff. It's about the rate increase!

What is all the fuss about Netflix scrapping plans to split up its streaming and DVD businesses? From what I can tell, the 60-percent price increase for using the services remains intact.

CEO Reed Hastings blogs today: “While the July price change was necessary, we are now done with price changes.”

Newsflash: One million subscribers didn’t drop Netflix because it was spinning off its mail-order DVD business into a new entity called Qwikster. People abandoned Netflix because it raised prices from $9.99 for streaming plus DVD rental, to $15.98 for the same package.

Hastings -- and all those investors that are loving Netflix (Nasdaq: NFLX) again -- are naïve to think that it was the mere inconvenience of having to subscribe to two services that made subscribers so irate.

He writes in a blog today:

It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs.

This means no change: one website, one account, one password… in other words, no Qwikster.

And I write: Who cares?!

Last month, Hastings apologized for the company's "arrogance" in announcing the changes, but said the company would not budge on the new pricing.

Our household just about to cancel Netflix altogether, but when we heard this news, we changed our minds ... briefly.

Now that it looks like the new rates are holding firm, we will be dropping the service. We don’t use the streaming service enough to pay $7.99 per month for it. Ditto for DVD rentals.

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Article Topics

Blogs · Video · Digital Media · Netflix · Qwikster · All topics

About the Author

Julie Jacobson, Co-Founder, EH Publishing / Editor-at-large, CE Pro
Julie Jacobson, recipient of the 2014 CEA TechHome Leadership Award, is co-founder of EH Publishing, producer of CE Pro, Electronic House, Commercial Integrator, Security Sales and other leading technology publications. She currently spends most of her time writing for CE Pro in the areas of home automation, security, networked A/V and the business of home systems integration. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, earned an MBA from the University of Texas at Austin, and has never taken a journalism class in her life. She's a washed-up Ultimate Frisbee player currently residing in Carlsbad, Calif. Follow her on Twitter @juliejacobson. [More by Julie Jacobson]

3 Comments (displayed in order by date/time)

Posted by Rokfrd  on  10/10  at  11:17 AM

2011 will arguably go down as the most poorly ran Netflix I’ve ever seen.  The company is all over the place with no clear direction.  They make premature announcements then retract.  Price increases, multiple websites and logins, splitting up a solution that had been working out so well.  Really Netflix?  You honestly thought these were good moves?

Posted by Julie Jacobson  on  10/10  at  11:23 AM

As a user, I don’t begrudge Netflix their price hikes or one-time plan to spin of DVD rentals. I just believe they and their investors are naive to think that people were leaving because of the inconvenience rather than the new prices. Subscribers were leaving long before the actual spinoff would be implemented.

Posted by Keith  on  10/11  at  03:31 PM

Canceled Netflix 6 weeks ago. They removed to much content from their streaming catalog!! I even responded to their survey why I quit after 4 years. Netflixs business plan is a plane ready to crash into a mountain. Glad I deplaned .

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