Raising Prices Raises Ire

What did the folks at Netflix think would happen when they made the decision to raise their rates by 60%? Were they expecting that their customers would be dancing in the streets? It makes one wonder if the executives who make the decisions at Netflix failed to look at companies such as Gateway, Yahoo!, and AOL, which were once flying high, yet made poor decisions that cost them customers. When any company misreads the competition and makes its decisions on poor information, it is only a matter of time before the company hits a wall.

This is where Netflix appears to be. Its stock prices have tumbled in value by about the same amount it raised its prices: 58% as of yesterday. There is also one other problem I believe that Netflix is going to face. Though I believe that streaming video is the future, the current offering by Netflix consists of old content. Netflix believes that people will continue to pay $8 a month for the convenience of streaming outdated material to their homes.

I am one of those who uses Netflix for streaming content via two Rokus in my home. I am one of the exceptions to the rule since I enjoy the old movies, some of which I have viewed a few dozen times or more. Though I am currently satisfied with the Netflix streaming service, I also receive free streaming as a prime member at Amazon. If and when Amazon provides the same content, or more compared to Netflix, I will be saying goodbye to Netflix. I believe that the day will come when this could happen.

If the Amazon Kindle Fire sells the projected four to five million units during the last quarter of 2011, as is currently projected, Amazon could be in a position to take a healthy lead in the streaming content arena away from Netflix. Amazon is providing a free, 30-day trial to all Kindle Fire buyers, of its prime services. This would also include free streaming to the Kindle Fire or other devices. This could potentially bring new customers to Amazon, some of whom could be current Netflix customers.

Comments welcome.

Article Written by

I have been writing for Lockergnome for eight years.

  • http://twitter.com/bdavis2195 Brandon Davis

    Wow I didn’t realize it was 60 percent. You also have to realize, that of course, along with everything else thats in high demand, the price(rates) will increase. Its pretty much a given, because why? Thats how business works!

    • http://twitter.com/andrewjamison Andrew Jamison

      Yes but why take a working business model (the one Netflix had was very successful) and turn it on its head especially when they had to have seen this coming.

    • http://twitter.com/farsighted99 Lynda B

      yes, prices do increase. But not by 50%.  These guys must have rocks for brains. I hope Amazon steals away their customers.

  • Ljwwolfe

    For some of us, Netflix is still the only real game in town because of the size of their library — most of what we rent (a lot of anime, just for starters) isn’t in the catalog of the other services in any form. We just don’t watch that much new stuff. I have several codes for free rentals as Blockbuster kiosks, for example, and we’re having a hard time finding anything we want to rent even when it’s free. So yeah, I’m really annoyed at how much more Netflix is costing us now between the hike and having to pay for both services, but the other options just aren’t an option until they add a LOT of stuff to their offerings.

  • fookoo

    Like others I was not happy with the price increase, but went along with it because it allowed me to watch something, like an old tv series or movie, while waiting for the dvd to show up.  And if I didn’t like it, I could just delete it.  What is not addressed, from what I can see, is that there is a significant difference between streaming even at 720p and a blu-ray of the same thing.  It is a night and day difference, in both audio and video graphics.  I tried Amazon streaming and it was inferior to Netflix streaming, in terms of the image.  Netflix streaming limits me to 2 channel and there is no such thing as a 5.1 audio option.  Even a 5.1 option on something like HBO is inferior to what one can get off of a blu-ray.   So I use Netflix streaming as a kind of preview from which I can then get the blu-ray off of Netflix or actually buy the real blu-ray disc, if I am really interested.   So those who consider streaming to be the future: that’s fine but it doesn’t compare to a real high definition image with high definition audio.  That may come to pass with a dramatic increase in bandwidth, but it isn’t there now.  For my needs, Netflix is the best game in town, given its cost versus what I use to spend monthly buying dvds.