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Netflix To Lose 1 Million Subscribers
tekgoblin writes "In light of the recent price increase at Netflix, it made quite a few subscribers mad. Netflix expects to lose around 1 million total subscribers in the short term after the price changes (which split off separate subscription plans for streaming video and DVD rentals). On top of the price increase, Netflix will lose their contract with Starz in February, which will cost them around 1,000 total streaming titles from their collection."
Well really, what the heck did they expect? The e-mail they sent out about splitting up the streaming and dvd mailing services was ridiculously patronizing.
I mean, I would have been a lot more okay with things if they'd just been straightforward and said "look, the people we get our content from are raising the prices on us, we need to charge you more to cover it". That's fine, that I can understand.
Instead, those assholes decided to pitch it as some sort of super awesome deal, where instead of being forced to pay for streaming and dvd mailing together, you're now paying for them separately! It's great! So much better than the old deal! And you, the consumer, are such an idiot that you're not even going to notice that the price of your plan increased significantly, doubling in some cases! (if you're like me and you were on the 1 dvd + streaming plan).
Do they not have any sort of market demographics at all? Do they have no idea the kinds of people that subscribe to their service? We're more likely to be early adopters, for goodness' sakes; we're not going to appreciate being talked down to like we're children who can't do math.
And look, I do appreciate Netflix - as convenient as Redbox is, it doesn't quite have the selection. It's just, reading that goddamn e-mail about the new plans left such a bad taste in my mouth I couldn't stand giving them money any more.
Perhaps if they had a client for linux, there would be some amount of offset due to incoming subscribers. If there were a player, I would be fine with paying their new price for service on linux. The only computers I have run either linux or FreeBSD, so there are no options for netflix for me at the moment.
I dropped the streaming service. The selection is so bad, it's really not worth even $8 a month to me. I'd gladly pay significantly more if the selection was significantly better. I hope they can get their licensing issues worked out!
I don't respond to AC's.
I ditched them for Blockbuster and I'm happy with the service. I'm paying a bit more because I hadn't been getting Blurays, but for the money I'm getting Blurays and games as well. Seems to take the same amount of time to return discs as I was with Netflix.
I have to admit that I get a lot of satisfaction out of their share price dropping by fully half since they announced the price hike. It's amazing to me that they thought that they could make that comment about it being the price of a couple lattes during a period where there's a lot of people who are really hurting for work. Especially without even bothering to roll out anything new to justify the price hike.
Worse still was the comment later that it wasn't to pay increased licensing demands.
The problem is that Netflix was the leader in the industry and had mostly run the competition out of business. This particular misstep was ill timed as Blockbuster isn't yet out of business and there are several other providers of streaming media that are needing customers to get started.
Driving a million customers into the hands of the competition at this stage is really bad for them. OTOH, it's really good for the consumers as there are still other options available.
I tried changing my bank account info and when I called to ask them to reverse a pending charge on the wrong/old account I was told that I would have to close/cancel my service with them, and then restart service at a new higher rate!
So I cancelled. Completely.
Now I have to play the "contest the charge on the credit card game" even though I cancelled on the 9th the charge still showed up on the 11th.
You'd think they would be doing anything to just maintain their current customers, but evidently not.
Say hello to RedBox !
Old age and treachery almost always overcome youth and skill.
That's me. I dumped the streaming service. I very, very, very rarely used it to begin with. It was bad enough when they [i]raised[/i] my price the first time in order to cover other people streaming all of the content they wanted. Now I only pay for the number of discs I want, and it's about the same price I was paying years ago.
"He who can destroy a thing, controls a thing." --Paul Atreides, Dune
Streaming library does suck, but it isnt like Starz was putting out the latest in greatest. In fact they have not updated in a while.
Out of 1,000 movies, a good 70% of them are old black and whites, or westerns, crap I could care less about. Another 20% is kids movies, and out of the left over 10%, well... I watched all the good ones I wanted to.
But I do watch some of the series they have on there... Firefly (rewatch that alot), Scrubs (rewatch), Star Trek series (Watching Enterprise now), Law&Order CI (watching), etc.
That makes it kinda worth it. They have a few more months before I decide to drop them.
It's tough to be the middleman... Netflix stands between the consumers and the content providers, but streaming video is rapidly becoming a commodity, so no doubt the content providers will get greedy and decide they want to own the whole thing end to end. I'm sure they'll ignore the amazing feat Netflix has accomplished (namely getting people to pay for streaming content online) and attempt to set up their own sites with onerous terms (pay-per-view with 24 hours to start) and high monthly rates, then be all surprised when no one signs up and start claiming piracy is destroying their business.
I wonder how many of the people who stayed just picked a cheaper subscription option that didn't include streaming?
1) Bait 2) Switch 3) ??? 4) Profit!
I went streaming only; the physical media via mail doesn't really appeal to me anyway.
If they lose customers, but get more money per customer, it can work to Netflix's advantage big time. Their costs are mostly on bandwidth, and if they lose 1 million customers, that's 1 million fewer people to feed data to. That amounts to major cost cutting, so even if revenues drop a little but are offset by lower costs then they win.
You can lead a horse to water, but you can't make it dissolve.
I've tried repeatedly to restart my subscription, since the DVD-only option is very appealing. But they don't even offer it. (No lie.) I don't see streaming as a viable option for many years, so it's back to the public library for me.
Odd because my plan dropped significantly, enough that I switched to the 5 out at a time plan, which BB doesn't even offer. How the blockbuster streaming working for you btw?
I'm not impressed with the streaming movies, but the documentary/history selection keeps me entertained.
Do you even lift?
These aren't the 'roids you're looking for.
I'm sure they didn't want to hike their prices. But the studios that provide the movies and TV shows demanded huge (like, order of magnitude) increases in their cuts. Netflix had a choice: close up shop, or raise prices. In the end, they may go under either way. That is the studios' goal, after all. They want to control distribution.
Also went to Blockbuster. We only use Blu-Ray and DVDs (no games or streaming). Netflix took so long to send us new releases (spent 2-3 weeks in the "Long Wait" queue) that my wife would usually rent from BB. We have a BB store within 10 minutes and now that they've gone to unlimited envelope exchanges in store, we are MUCH happier than we ever were with Netflix. Plus, BB gets new releases a week or two before Netflix.
Netflix is not saying that they will be losing 1M of their existing customers. Rather, they're altering their guidance for the next quarter by 1M subscribers, which is an important distinction, since it more or less halves the impact from what most people here seem to be thinking. Previously, they had been expecting a decent growth of 400K in the upcoming quarter, but now they are projecting a net loss of 600K in the quarter, hence the 1M number. Yes, it's bad, but it's not as bad as losing 1M of your current customers in addition to however many potential customers you'd lose as well.
The article and most of the other blogs are glossing over this detail, but numbers are always important.
http://www.latimes.com/business/la-fi-ct-netflix-20110916,0,5009354.story
Remember that Starz is really just a middleman, not a content creator, and that the content they have can be purchased directly from the owners, very likely for cheaper than what Starz wanted to charge Netflix for the upcoming year. Starz' content is definitely good, but there are already rumors that Netflix is inking deals with several of the content owners that provide content to Starz. The actual impact on the Netflix catalog could be negligible still, despite how it sounds now.
Let's assume 25M subscribers at the standard DVD + Streaming plan, which I believe was $11/mo. We can chop off a few zeros and still get the same effect, so let's do that and keep our math simple.
25 * 11 = 275
I think the cheapest is now $16 for both, so let's figure out what they'd be making if everyone who stayed kept the same plan at the higher rate.
24 * 16 = 384
Let's derive a quick formula.
(24 - x) * 16 + x * 8, where x is the number of people who choose DVD /or/ streaming.
24 * 16 = 384 = (24 - 0) * 16 + 0 * 8
Now, let's solve for 275, to assume they'd be making the same amount.
275 = (24 - x) * 16 + x * 8
I put this into my handy equation solver because I'm too lazy to work it out in my head and can't find paper/pen...
x = 109/8, or 13.625.
Netflix could go down to 10.375M users of the DVD+streaming, and have 13.625M users of one or the other and still make the same amount of money.
Methinks Netflix did their math beforehand. They're going to be making bank, and savvy shareholders are buying now on this dip on bad news. Happens every time. Netflix is here to stay, for as long as the content owners will allow it to exist.
Colin Dean Go a year without DRM
You could just do what millions already know. To get true HD quality with total portability. AND
....
an unmatched selection of titles
Including the newest titles anywhere...
use BITTORRENT !!!
who prays for Satan? Who in 18 centuries has had the humanity to pray for the 1 sinner that needed it most? ~Mark Twain
Netflix doesn't have a streaming plan. At least not one that can accurately be called one. I rarely if ever used it as the selection was so poor. It was overpriced at $2 a month and it's even more overpriced at $8. For that I can get hulu or rent a couple movies online from Blockbuster.
I find it quite interesting in the netflix prediction:
Prior to model change:
Streaming only: 10,0m customers
Streaming+DVD: 12.0m customers
DVD Only: 3.0m customers
Post-implementation of the new pricing model, Netflix expects the customer base break-out to be:
Streaming only: 9.8m customers
Streaming+DVD: 12.0m customers
DVD only: 2.2m customers
So let me get this straight - the price for streaming+dvd is at least doubling - and Netflix is not expecting that customer count to go down at all. Instead, they are expecting a net loss on the two plans they are creating to make things better - instead of a net loss on on the plan that is going up 100% for many customers.
I switched to their competitor who has more content and better prices!
We also went streaming only. If Netflix doesn't have something I want to see, I can usually find it on a different service like Vudu.
I'm wondering if 1 million lost customers might ultimately help Netflix when negotiating for streaming rights. The copyright owners have an unrealistic (IMHO) idea of what their movies are worth and now Netflix has hard data to show that a significant number of customers will not pay more.
Netflix did better than I thought they would. They only lost 4% of their subscribers over this, and it looks like their revenue is going to go up. Pretending that everyone was on the cheapest plan, they used to have 25 million subscribers paying $10 a month for $250 million/month. Now they have 21.8 million paying for streaming and another 14.2 million paying for DVD, each at $8 a month for a total of $288 million/month. Since the price of the larger plans didn't change as much as the cheapest one, I think it is safe to say that they will be making more money when this is done than they did before.
Suppose they had given a $2 discount for people on both plans, like I thought they should. They would have increased revenue further by doing that if everyone stayed, and 2.6 million more people decided to go with both plans, or alternately if the same number left but 4 million decided to have both plans. Of course, that doesn't consider increased costs of both plans.
No kidding. That email was a spin-fest from the beginning and the executive team should be roasted about it at the next shareholders' meeting. It insulted the hell out of customers. If they had said something like "yes, streaming has gotten a lot more expensive for us to do, if you want to do it you're going to have to pay more - a lot more," then customers would not have been happy - but they wouldn't have been condescended to like a group of fourth graders. (Hint to fourth-graders: they're treating you badly because you're too young to be able to fight back. They're bullies. Remember that when you grow up - people who bully kids are, without exception, assholes. As a corollary, be kind to the teachers who treat you like a young, unwise, but nonetheless real and valuable person, because they're actually looking out for you.)
Don't be too hard on Netflix; It seems they are caught between a rock and a hard place. The studios let them get by on table scraps before because they didn't see them as a serious revenue source, and saw them as just an opportunity to pick up minor bits of revenue which they wouldn't otherwise collect. Now Netflix has everyone's attention, and the studios are going to want the full slice of the pie. Analysts predict that Netflix licensing is going to increase from $180M to 1.98B in the next few years. With that looming over Netflix, they must be desperate to find a strategy to cope. If the studios get their way and Netflix goes down or concedes to their desired licensing, then we all lose and we end up paying $60 to $120 per month like we pay for cable instead of $8 / month. Personally I just have the Netflix streaming service and no DVD. I don't care about the DVDs, but I wish they streamed more videos. It would be nice to have Netflix under Linux though, so I wouldn't have other options than my console.
So according to TFA, Netflix had 12 million people paying $10/month for streaming+DVD. Those 12 million people will now pay $16/month. That's an extra $72m/month.
10 million (like me) are streaming only at $8/month. They're losing 200,000 of those, or $1.6 million/month.
3 million get the DVD only plan. They're losing 800,000 of those. I don't know what the average DVD only customer pays, but let's be generous and say it's $20/month. This'll cost Netflix $16m/month. They're still $55 million/month in the black.
So you're all saying Netflix has done something really stupid because they're...making more money?
Netflix has pissed people off simply because people don't want to pay more, not because the service isn't worth it. I get TONS of value for my $8/month. I may get around to adding the DVD bit for those shows I can't stream because another $8/month is peanuts. I spend more than that for one movie ticket. I spent more than that on lunch today. But somehow I'm supposed to be all outraged that a service I actually like wants me to pay that much to watch movies all month long. I just don't see it. Sorry.
OK, so they lost 1,000,000 of 25,000,000 that are ditching NetFlix. But what I want to know is how many that were paying $9.95 before said "screw it" and just reduced their payment to $7.99, taking only one of the two services, hopefully DVDs by mail. And overall how did this price increase affect their gross and net income.
I'm an American. I love this country and the freedoms that we used to have.
You certainly made the "short list" of features that led to me giving up my Linux install and my wonderfully uber-compatible XBMC installation. In fact, you were the most important factor leading to the change. The fact that XBMC and MythTV work together as well as the Bundys when it comes to broadcast televison, well, now that I think of it, that's the only other reason. Rest assured, you were the reason for the switch.
Now, Microsoft made $50 on the transition; I'm a student. And Windows Media Center is pretty damn good, once sufficiently beaten into submission. I have it now as compatible with videos as XBMC, with metadata collection and display almost as good. However, you guys were nice enough to build an add-in to WMC, cool. $8 a month is pretty awesome for HD movies to just be THERE. Schweet.
However, that just ain't the case. Even though I'm a lucky bastard and can pull down about 3MB/s (and yes, I mean a little over two 1.44MB floppy disks, or maybe 0.0001 Libraries of Congress), "HD Video" just won't play. I don't use quotes for effect, I use them because that's what you call it, I can't get your player to cough up any information about what the hell resolution, frame rate, color profile, or codec. It skips and sputters, surely because Silverlight 4 isn't hardware-accelerated - but Silverlight 5 just isn't there either.
Now, I can: 1. Minimize WMC. 2. Start Firefox. 3. Go to your website. 4. Log in (WMC is logged in separately). 5. Go to My Account. 6. Click Video Steaming Settings (or whatever the hell it is) 7. Change the rate to 1GB/hr. and 8. Click Next. This gives me a 404 error, but it's been changed. 9. Return to WMC, completely stop the movie, and restart. Then we have video. I can't change that shit in the WMC client. That's cool, but it's not HD. Can I get a discount?
Now, I'd be cool with the fact that my HTPC (which is otherwise quite capable of 1080p, thankyouverymuch) isn't getting HD content, because I could at least have that thing playing and use another device, like my iPhone. Now, I was paying for the ability to stream HD to one device, and I wasn't getting that. I can't give you numbers for sure because your client is so locked down. However, I'm pretty sure that the SD-only stream my HTPC receives plus the mobile video on my iPhone still isn't the resolution I was paying for, but that's now blocked.
Can I have my money (and time) back?
(P.S. Dear Slashdot: You owe me karma back from the Google+ post. How the HELL did that end up there?)
Are getting screwed. I like the option of getting a DVD for a show that wasn't available via streaming. But when the price changes came, I decided I used streaming more than the real video service, so I opted for the streaming only at 8 bucks a month. Now they are losing stars, which means I am not essentially paying the same for a greatly reduced service.
I have seen the value acquired for the dollar spent on netflix rapidly diminish over the past several months. I'll probably end up canceling entirely and go back to waiting for a service to come along that does streaming right.
( note: I'm not entirely blaming netflix here, they're the middle man and have to play games with the content holders, who we all know are bastards. Doesn't change the end result however. )
Mod me down with all of your hatred and your journey towards the dark side will be complete!
My wife (who is homebound due to a workers comp issue) watches Netflix streaming. A lot.
She complains continuously that they do not have the latest releases available to stream, but then she finds herself a new (to her) TV series and watches that.
And when I say "watches," I mean "vigorously consumes". She starts from episode 1, and goes until she reaches the end.
She uses up to about 450 gigabytes per month of bandwidth doing this, by my measurement.
So, as saddened as I am that Netflix's new pricing scheme has finally come to shove, I am moreover disheartened that I have allowed such a travesty to fester to such an extent that it affects all of us.
I would like to take this opportunity to apologize. I am unreservedly sorry for my wife's behavior and any impact that it may have upon you and your family.
-adolf, #21054
Kid-proof tablet..
Heck, the linked article even includes a set of charts showing where Netflix plans to lose customers. Yes, Netflix will lose 200K streaming only customers and 800K DVD only customers. On the other hand it expects to have roughly the same amount of users that use both services (12 million). The difference, of course, is that now these 12 million customers (roughly half of Netflix's users) will be paying twice as much as they were previously.
And somehow the idiots on Wall Street think that this is a *bad* sign. Netflix just doubled the revenue that it extracts from nearly half of its userbase. The cost to the company was less than 5% its userbase, and 8 out of 10 of the customers Netflix lost were the DVD-only customers that are more expensive to service anyhow.
It almost makes me want to rush out and buy stock in Netflix tomorrow. Eventually the boneheads that do financial reporting are going to do the the math, and realize that the folks running Netflix are *much* smarter than they are.
So your plan is to go to the store that was so behind the curve, they went bankrupt, were bought by MAFIAA studios, and now aim to shut out competition by pulling releases? I'd like to see how satisfied you are when Netfilx shutters, and BB raises prices with no benefits to users.
Absolute power corrupts absolutely. indymedia
It isn't offensive and unless you know the backstory it does sound idiotic. Way back in the '90s, Blockbuster was very powerful and dominated my local market. They treated customers very poorly back then. They screwed me with bogus fees a couple of times and I finally vowed to never do business with them again.
These days I have an unbelievable number of options for entertainment, so the loss of Blockbuster doesn't worry me at all and in fact I'm happy to see them go.
I watch documentaries and foreign films. I did a comparison (searching for favorite titles) and could not find what I wanted on Blockbuster but they were available on Netflix.
If Blockbuster would carry long-tail title, they might get my business. In the meantime, Netflix is the only way for me to see the films I want to see. No brick and mortar store rents them in my area (read: anywhere in Iowa) and Blockbuster doesn't even have them with the shipped disk method.
20 years ago, blockbuster tried to bill me over 100$ in late fees, plus the 'cost' of the VHS which they claimed was 49.99.
This was after I called them the day I rented the movie and informed them that I was sorry but my pet damaged the VHS tape. 2 months later I got the bill for almost 200$ in the mail, I called their manager, basically told them they were fucking dreaming if they were ever going to even see me again, let alone pay this invoice, if they wanted me to pay the standard 24.99 retail of the fucking movie THAT THEY WERE SELLING FOR THAT PRICE, I would, but until I got a correct invoice, as well as a written apology from a blockbuster executive, they would not receive a single cent from me, and I would tell everyone I know this story whenever blockbuster was brought up.
I kept my word for 20 years and single handedly stopped hundreds of people from patronizing blockbuster. I am proud to think I helped play a part in that company's downfall.
I'm guessing you're not old enough to have seen the mass overcharges that blockbuster tried to pull in the 90's when they had a near monopoly. I haven't forgotten, nor will I.
I remember how they would open a store across the street from an established, successful, large catalog independent video store and try to drive them out of business. If that didn't work, they would offer increasingly outrageous sums to buy them out. Once that was done they would operate the store long enough to sell all the movies and then board it up.
It made me sad to see so many good stores with personality driven bankrupt to feed the blockbuster machine. I took great pleasure in watching blockbuster go bust.
Man, you really need that seminar!