Tuesday, September 20, 2011

Is Netflix Still a Frugal Option

by Kevin Surbaugh


Recently Netflix raised their rates which has angered a lot of their loyal customers. Many of whom have cancelled the service. I for one have not, although I am not to pleased that I don't have unlimited DVD's and streaming for about $10. Instead I now have unlimited streaming only for about $8.

What previously cost $9.99 (for most new users this was presented as $7.99 for streaming plus $2 for the DVD option) now cost $16. Compared to physically renting discs from Blockbuster this is still a bargain, and Netflix's catalog is still far superior to the chain-store. but the size of the price hike stunned customers. Netflix's growth has flattened, and the company admitted last week that it was revising subscriber numbers downwards. Shares have fallen 45 per cent.

But it's the breaking of the bundle that is hard to fathom. Netflix not only said it would be presenting its customers with two plans, it would separate the two businesses. This weekend CEO Reed Hastings issued a grovelling apology.

- The Register

"We lacked respect and humility in the way we announced the separation of DVD and streaming, and the price changes. That was certainly not our intent, and I offer my sincere apology," he wrote in his email to customers.

However, Hastings also announced that the strategy would continue unchanged. The DVD business will be renamed: Qwikster. Netflix and Qwikster sites aren't integrated, so if you can't find a movie to watch on streaming you have to search all over again for the DVD. If you rate a DVD, the rating will register on Qwikster, but not Netflix. And vice versa.

In his email he wrote it this way, Qwikster will be the same website and DVD service that everyone is used to. It is just a new name, and DVD members will go to qwikster.com to access their DVD queues and choose movies. One improvement we will make at launch is to add a video games upgrade option, similar to our upgrade option for Blu-ray, for those who want to rent Wii, PS3 and Xbox 360 games. Members have been asking for video games for many years, but now that DVD by mail has its own team, we are finally getting it done. Other improvements will follow. A negative of the renaming and separation is that the Qwikster.com and Netflix.com websites will not be integrated.

While it does succeed in letting the investors know that Netflix is determined to make streaming its core business, the consequences of confusing and alienating customers may be high. What made Netflix feel attractive was price and choice - but also the bundle. If felt like a bargain. Now I am not so sure that it is really a bargain anymore. I have considered cancelling the service altogether for better picture quality on cable by upgrading that service. The problem is I would get to chose the movies I want to watch.

What do you think. Share your comments and/or discuss this topic on the forum.
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go ahead share your thoughts with me now, my ears are open. I'm always eager to hear what you think.


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