Netflix Huge Mistake to Raise Prices
David: Netflix. I am a Netflix subscriber,and I've liked it for a while for a number of reasons, including the pricing, which was10 bucks for unlimited DVDs, one out at a time, and unlimited internet streaming, andI also liked the fact that big cable companies didn't like Netflix. In other words, theywere concerned Netflix was going to affect their subscription rates, because people couldjust have internet plus Netflix and skip the cable bill altogether, if they wanted to misscertain, you know, live news, etc., which a lot. a lot of which you can get onlinenow anyway. There was great stuff on it. I then got a TV with the builtin wifi, soI could just stream the movies right to my
TV, fantastic stuff, OK? Then Netflix announces, as of September 1st,they're going to be changing the pricing. So for me, instead of the $10 for DVDs andstreaming, I could pay $8 for the unlimited streaming, $8 for the DVDs, so now we're upto $16 total. We're talking about a 60% increase in the pricing. And now, lo and behold, it turns out, by theway, when that happened, I went to just the streaming, I really wasn't getting very manyDVDs, the turnaround is so slow that I'm only talking about a few DVDs a month anyway. Iwent to the streamingonly plan, and it sounds
like a lot of people are actually doing that.Netflix is now cutting subscriber projections by 1 million subscribers after the price hike.It seems people really don't like paying more for their Netflix rentals. And I actually think that we are at such akey moment in terms of net neutrality, big media corporations, Comcast buying NBC, etc.,that I actually think Netflix would've derived a bigger benefit by sticking with their lowerpricing a little bit longer. They're still going to make more money in the aggregatebecause it's such a significant price increase, they're not going to lose 60% of their subscribers,or whatever combination of $8 subscribers
and cancellations would work out would bethe breakeven point. But I think that if they had held off a littlelonger, I expect to see a lot of antibig cable company sentiment in the next year ortwo. I think Netflix could've been expecting complete domination, whereas now we've gotthe Amazon Direct Streaming, if you're an Amazon Prime member, you can get the streamingincluded, is my understanding. There are some other services that are coming up. I actuallythink it was a strategic mistake for Netflix to up the pricing so significantly so soon. Louis: Think so? I've not heard of this Amazon.is this out right now?
David: It's out right now. My TV, which hasthe Netflix internet app has the Amazon one also, so we already have integration. AndI was just reading today, if you become an Amazon Prime subscriber, that you do get accessto all of. a lot or all of that online Amazon content as well. I think this is opening up the door in a wayNetflix would probably be better off not opening the door. Louis: Probably. I was under the impressionthey had like a complete stranglehold on this market, but I guess not.
David: They have they do have a very strongposition, they do, but there are more services coming up, and with this significant priceincrease, I don't know what will happen. I'm sure they know much more than I do. Louis: I'm sure they did a lot of numbercrunching. David: I'm sure they did, but still, not allof these decisions are always made correctly. Louis: Right. David: In other words, we've seen when.the first time quot;The New York Timesquot; implemented pay for access, it did not go well, they scrappedit. Now they've implemented it again. Seems