Thursday, July 14, 2011

Eat a duck, Netflix. Eat a bag of ducks.

A week ago, I worried about finding a topic for my 12th July post. The other 11 weren't fully written, but I knew what they would probably be and had a rough schedule. That was all before I received an email confirming that Netflix is really, definitely gonna be a jerk about its success. Also, that they seriously want to go Streaming-only and ditch DVDs.

Before we even get there: That lovely "suspend account" button would be wise to use when August comes around, & it's a great way to voice your complaint. You won't be charged while it's suspended, nor will you lose your data or queues. If enough of us complain about these one-sided changes, you know Netflix will finally cave in. Or look at it this way: what will they change next, and how soon?

A 1-2 week Netflix strike would be easier to survive than you'd think. I've already given you tips to watching free videos online (and legally), and as I'll explain below, this whole problem is really about the Streaming service. So: go to youtube and watch motion pictures there; take a free 1-month Amazon Prime trial and watch the hell out of that; grab the 1-week Hulu+ trial, and marvel at how many shows are not actually available on it, because I guess 6 year old "House" episodes are the holy grail. Or you might even try reading a book.

The picture above pretty much says it all: instead of paying $9.99 each month for all-you-can-eat instant viewing and all you can eat (but one at a time) DVD rental, Netflix has graciously chosen to start charging me $15.98 per month for the same privilege. Or I could pay $7.99 for either one. Netflix' email was mirrored by a post on its blog, and other news sources picked up the announcement; current Netflix "members" (that's what we're called) got about 50 days' notice before the changes take effect.  F you very much, Netflix.

For one thing, you're theoretically doubling (almost) your revenue with one big unilateral move, and screw you for that, Netflix. Hell, your last big price change was only 8 months ago, and when this one starts in September, it'll still have been only 10 months since the prior price hike! So now screw you with a baseball bat, Netflix, for these choices; screw you with a baseball bat coated in wasabi and tobasco sauce. 

Classy businesses don't raise their prices significantly multiple times in a year. For one thing, it shows greed, which isn't bad until you combine it with a lack of consideration to the people generate revenue from. For another, it shows that you make bad bets. See, sometime before November 2010, Netflix bet that they could make a pretty decent amount of money by changing their prices so myself and many others would pay $9.99/mo for 1 DVD at a time and unlimited streaming, while others would pay just for Instant Viewing.

Well, it turns out that Netflix bet so badly that they need to change their bet, less than 1 year into it. The big bonus for us "members" is that we get to spend more money because of their choice; we suffer by $6 more, but it's still their bad bet, right?

Another lesson Netflix could learn - some businesses go all blindly narcissistic, becoming immune to criticism like a drunk. Word of mouth, public perception, and genuine goodwill actually do matter, even when your sales are going great. The lesson that it all leads to is: you should probably change your offerings a little when you change your prices.

It's one thing to ask someone to pay an extra dollar for the exact same product. It's much easier to accept, however when you add new content, or even revise the "content package." It seems (and might even objectively be) fairer. What do I mean?

Well, try this example: Netflix could add lots of new content for streaming, like a variety of modern foreign television. The company is already going Streaming-only in South and Central America, as well as the Caribbean; and those viewers will also have Spanish and French language as options for the service. I suppose a clever businessman or woman would think, "it's a good time to grab as much foreign tv as possible!" This move could justify this latest, 2x-in-10-months price increase - especially if it made Netflix into the greatest online source of 1980s+ tv from France, Italy, Germany, etc.

Or try another possibility: Netflix could add different packages for people that only want to rent American movies from 2000 or 1998 and on; those are certainly mass-produced more, so it probably costs Netflix less to stock those, right? Like, maybe I pay $5 for the 1 DVD offering because I'm only gonna rent movies up to 1997, and probably a lot of Bergman or Bertolucci.

Ooooor: why doesn't Netflix offer to, oh, i dunno, not charge old customers for the Instant Viewing when they chose the DVD option - or maybe for just $1-2 more? Maybe just $0-$2 more until the start of 2012 or something. Isn't it clear that there are a lot of alternative?

There's actually a ton of options here, and our beloved Netflix chose the crappiest one. They went with the choice that made them the most amount of new money yet offered the least amount of new benefit to the public. It's like the opposite of innovation, and, as I pointed out recently, their service isn't exactly perfect.

Try an idea that might sound really cutting edge and beneficial to everyone - limited Instant Viewing options that you can add onto your DVD package for $1-2 bucks. If you're going to watch 100 hours of Instant each month, you pay $5 or $8 more; if you're going to watch 2-5 hours, or maybe 10, you pay $2-3 more.I don't know the actual cash value of those options, but still...

Doesn't that actually sound like a really good compromise? I'm not even saying that Netflix would have to give people plans that would automatically bill them X if they use X much video - people could guesstimate their needs and pay accordingly. That way, Netflix still gets that thing that must leave cell phone execs in a state of constant arousal - consumers who sign up for more than they use every month.

I can tell you why this is probably all really happening, and I'm not even going to give Netflix the credit of writing, "people are streaming too much and they're trying to recoup the bandwidth costs." No, Netflix, 2 prices increases in >12=I don't give you that much credit. It's a simple, common equation.

This is probably all happening because Netflix envisions a world where all they do is rent streaming videos. Think about it: it has all the benefits of renting real estate, because you never lose anything and people only receive something temporary, something transitory. Even better, there's no physical stock, postage costs or packaging! Remember, this is the modern American businesses era, where you borrow money from the company that you haven't purchased in order to buy that company, and you don't have to produce anything to have a product.

The worst part about all this is that Netflix' recent moves really support my opinion - which otherwise might just read like a snarky, knee-jerk, cynical reaction. I mean, they recently stripped all the identifying info out of their "member reviews," and last year, they removed the option to share your lists with your friends. They're depersonalizing the site and the "Netflix experience" more and more, which sounds like people that take their customers for granted.

Oh, no, wait - I forgot. Netflix doesn't call us customers, we're "members." I guess I'd rather it were the other way around. The "customer" is "king," and is "always right," according to the old saying. "Members" on the other hand, they're not kings of anything - they're court jesters that might get lee-way, but could be executed at any time.

See, this site is free, and I could think of my readers as "members." Since you're not paying for this, you can't complain too much about what you get here, technically. It would be very different, of course, if you were forking over your cash for this. I guess Netflix is taking our money, but still looks at us as if it's doing us a favor.

It's also worth noting that the next day (which is now yesterday), Netflix also announced that it renewed a deal with NBC that simultaneously (as tAVC points out) cost Netflix access to same-season NBC shows. Looks like I'm not the only one who sees this as a transition by Netflix to streaming-only, and it looks like I'm not the only one who dislikes it.

I don't feel like I'm being too rude to Netflix. They're not a real person, with real feelings, or anything like that. And, since they ran Blockbuster out of business, why should anyone be thrilled that they want to leave the DVD market? Having unseated the former king of it, it doesn't even sound like a move that makes sense. It sounds more like hitting on a 20 in blackjack...

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