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In addition to the MythTV and HDTV projects we've been doing lately, I also started looking into online DVD rental places. My wife and I don't watch many movies, either in the theater or at home. But we have exactly zero decent video rental place... [Read More]

Comments

Jim Biancolo

It's hard for me to comment on since I'm on the 5-out plan, and it's not clear to me they have any plans to raise prices for that tier. If I were on the 3-out plan I wouldn't be happy about it, but I wouldn't cancel either. I'm not sure what I'd do if they raised prices on the 5-out plan.

If nothing else, hopefully this will allow them to buy a couple copies of The Ox-bow Incident, which I've been wanting to see for quite some time. :-)

Jim Biancolo

Ah, I see now they're all changing. Here are the original prices:

* 8 out for $39.95
* 5 out for $29.95
* 3 out for $19.95
* 2 out for $13.95

... and the new prices:

* 8 out for $49.99 (+25.1%)
* 5 out for $33.99 (+13.5%)
* 3 out for $21.99 (+10.2%)
* 2 out for $14.99 (+ 7.5%)

The 2-out plan has a 4/month limit under both the old and new prices.

I'd drop the service like a hot potato if I were an 8-out user. Man, those folks got hosed. As for me, certainly I'm not happy about the $4 increase on my plan. I'm going to explore alternatives. I've kinda been wanting to try Nicheflix, which is actually more expensive and with a further distribution center, but with a very interesting selection.

Actually, I think with these increases the time is ripe for Amazon to enter the DVD rental fray.

Becky

It's their company; they can do what they like. I don't have to pay. It's not like the telephone or electricity, which are modern necessities. It will be interesting to see how/if this affects demand. I personally will be sticking with the plan for just as long as I get the service I require.

My guess is the 8-out plan got hosed because those users are most likely to fully exploit the service, reducing the profit margin to zero. I think the increases are in proportion to the profitability of the market segment.

Jim Biancolo

Of course they can charge whatever they like, and of course I don't have to pay.

I do wonder about the Netflix profit margin point though. A bit over a year ago Wired did a piece on Netflix in which they reported:

"It's so convenient that the average Netflix customer watches five movies a month. Some subscribers rent twenty or more. (Which is a problem: Netflix loses money on postage for households that rent more than five a month.)"

http://www.wired.com/wired/archive/10.12/netflix.html

At the time I couldn't make sense of five/month being the break-even point, and I still can't. Assuming that means we're talking about standard $20/month folks, that comes out to $4/movie. I have no idea what their postage is, but I'd be surprised if it's more that $0.50 each way given their volume. It's hard to imagine the envelopes, ordered by the millions, are more than $0.25 each. If they pay somebody $8/hour who processes 20 movies/hour that's $0.40 in labor per movie. So that's like $1.65 per movie in costs (wild guess estimate). That doesn't count breakage or theft, but I've only had 3, maybe 4, broken/lost discs in 283 rentals. A buddy of mine pointed out the VCs must demand a certain profit margin, but still, for five/month to be the breaking point? Yow.

Keidra

I imagine with the increase of subscribers in the past couple of years and the resulting demand for more titles and distribution centers, this was an inevitable increase. Doesn't bother me. I'm on the 3-out plan and it's a lot more convienient than my local video store for older titles. I still think it's a great service.

Stacey

Personally I think it sucks, especially since I've had to call them several times to ask about their slow-downs. My problem with them is that when I first joined, they were receiving my send-backs in two days. After my free period it seemed as if they weren't getting them for three, four, sometimes even five days after I had sent them back.

I noticed that they changed their return address on the DVDs I'd send back. When I first joined, they were being sent back to Lansing, Michigan. That was when it only took two days for them to get my movies back. Then, out of the blue, they changed the send-back address to Duluth, Georgia and now it takes a lot longer for them to get the movies back so I can't get the next movie in my queue as quickly, now. I've had some weekends where I didn't have a movie from Netflix so I'd have to go to Blockbuster to rent one! Kinda defeats the purpose, if you ask me.

I called Customer Support and requested that they change the address back to Lansing, Michigan and they said NO!!! They said each zip code has their own send-back center. Well then, WHY did they have me send them to one place to begin with and then switch on me? So, basically they haven't pleased me enough to be thrilled about wanting to stay with them, especially since there are now other options, not to mention their price increase. I've had Runaway Jury as number 1 on my queue now for over a month and haven't seen it as well as other movies that were at the top with a long wait. For those we've also had to make a stop at Blockbuster. Basically lately I've been more displeased with Netflix than happy. If they won't give in and help me fix my problems with them, then I won't give in and pay more for services I'm not happy with. I will just print out my queue and rent them elsewhere.

Acemakr

I'm on the 3 out plan and I'll also stick with them. Service has been wonderful - I'm about 12 miles from a distribution center and I usually get available films the next day. Sure beats late fees and drives to Blockbuster.

Stacey

Blockbuster is just down the street from my house about two miles and on the way to work. I've never had late fees, either. I was hoping with Netflix I'd save money over Blockbuster.

Jim Biancolo

The more I think about the "five/month break-even point" (assuming that number still holds from the Wired article I referenced above), a price hike seemed inevitable. Assuming that number is correct, and based on a pure $/rental analysis, Netflix is actually banking on people being willing to pay more per movie than they could get at a local shop (i.e. those people willing to pay $4 or more per movie, which is what folks that rent 5 or less per month pay). If everybody rented more than 5/month, their business would collapse (according to that Wired figure). So their survival hinges on folks that want to pay MORE to not necessarily be able to pick the movie they want on a given night (like they can walking into a shop). This is traded off against a great selection, no driving, and no late fees, of course.

Don't get me wrong, I am an ardent Netflix subscriber and still think it's a great service (largely because my distribution center is so close). But yesterday I wasn't even considering other options. Today I am.

Bradley Dean

I'm on the old 4-out for $19.99 plan, I've been with NetFlix for a while. How does this affect me?

Aaron

Well I am switching to gameznflix.com
I am sorry that they lost $5.8 millions in Q1 but the fee increase + NO video game rental in one subscription. gameznflix.com's 3-out plan is only $18.95 for movies and/or video games.

I like Netflix a lot, but no video game is a MAJOR down for me. If they increase the price but add video game rentals I will stay with with them in a heart beat.

mike

Why am I already paying 21.25?

Bradley Dean

Okay, just got my answer, this is from the email I got from NetFlix tonight:

"Beginning June 15, 2004, we will be raising the prices of all our subscription programs. Although the 4-at-a-time program has been discontinued for nearly four years, we value your long-term relationship with us and have continued to provide you this service at the same price we charge our 3-at-a-time customers. On June 15th, we will be raising the price of both 3-at-a-time and 4-at-a-time programs to $21.99."

I'll be staying, it's still a good price.

Erie

Funny When I joined the 2 week trial the service was horrible... I was only able to get 3 movies in that 2 weeks. A month later I decided to join the 3 out plan and service was better. They usually get my rentals the next day and I get my rentals 1/2 days.

Netflix (IMHO) is still the best way to watch Anime and I'll be sticking to them. Very hard to find rental places with anime and even harder to find anime on dvd other than buying them for $24 a piece.

Jim Biancolo

Erie, have you considered GreenCine:

http://www.greencine.com

"With the best selection of indie, arthouse, anime, foreign, classics, documentaries and other esoteric fare. Including rare titles available at no other service."

Michael

I have been a customer for nearly a year. Although I love the wide selection, I have started to become displeased with the service since it is becoming seemingly impossible to get a new release for at least 2 months after the release. I am currenty on the 8 out plan, and I didn't seem to have this problem until I upgraded. Now with the $10 (+tax) price increase, I will have to start looking to either downgrade my service or look at other online rental providers.

Brian

I don't agree with the price increase and will now consider other options. I upgraded to the 5-out plan because the turnaround time on DVD got to be more than a week. I have been on the service for a few months now and would have to say the service has gotten steadily worse since I started. I agree with an earlier reviewer, my turnaround has almost doubled since I started. I takes an average of 3 to 5 days to send or receive a DVD. Along with mislabled DVD's and slow response from customer support, I don't see how the CEO can justify his statements of improved service. I pay the same price as another member who sends and receives their DVD's in one day. That means they can view up to 4 times the DVD's that I can for the same price. That doesn't seem right.

I voted my opinion by canceling the service. In my opinion it is just barely worth the 19.95.

Gwen

I just switched to the 8 out plan 2 months ago. I was on the 3 out plan for about a year and service was great..the DVD's arrives in 2 days and turn around was great..received about 12-15 a month.
BUT
When I changed to 8 out..I noticed that it would take 3-4 days for majority of DVD's to arrive.
Bad considering I live in the vicinity of one of their southern distribution warehouses.

I too am not happy about the price increase and am keeping a tab on delivery time compared to price increase for a few more months before I decide to cancel service or switch to another plan.

Funny that their price increase doesn't take into effect that I am sure their subscriber load has also increased which means more revenues. IMO their excuses for price increases are NOT justified.
I agree with a previous poster, 8 out people got HOSED!!! big time!!!

I find it surprising that not one individual has mentiond that the netflix price is going up as dvd burners and disks are getting cheaper, isn't it obvious that people are not keeping the dvd a few days until they have a chance to watch it but are just burning a copy right away and sending it back the next day to to build up their movie librarys for the lowest cost possible. Is netflix this dumb not take this into account or am I the dumb one? It will only get worse as prices on dvd burners and disks continue to go down.

Hunter McDaniel

Well, of course I don't like it. But I consider Netflix to be a valuable service and will still suscribe at $22/month. What I would like to understand is which of the following three factors is most important in driving their cost.

A. a small minority of users who rent a very large number of movies per month. Are the rip-and-return customers just an anecdotal few or a real problem?
B. increased rental activity across the board due to faster turnarounds faciltated by more distribution centers.
C. being muscled for a larger take by the movie studios.

The recent price increase is probably the right option for them if factor(B) is what is driving their costs. If not, I would argue for them to take a different strategy as follows.

Factor (A). If this is their problem then they ultimately must back away from an unconditional "all you can eat" model. My suggestion would be a modified version of the current economy plan with multiple tiers, where each tier allows x movies out at a time, a maximum of y rentals per month and a maximum of z rentals per quarter (where z is less than 3*y). They can then offer customers the option of either slowing down new rentals to stay within their plan limit or paying $x for extra rentals. Netflix has all the data they need to figure out where the sweet spot would be for such a plan to weed out unprofitable users.

Factor (C). This is a harder one to solve. What I would like them to do is put the movies with high royalty costs into a separate category and tailor their controls to that category rather than apply them across the board. Don't handicap my access to anime and indy flicks just because Hollywood wants more money for LOTR.

Anyway, that's my $0.02

Tom Wilson

After reading the Netflix press room release dated 04/15/04 (record $100 million revenue and record low churn), it really makes me wonder why successful companies keep trying to doctor their formula to continued success. Raising fees will do many negative things to this formula, including a higher churn rate (subscriber dropouts), slow new customer commitments, and negative public image.

Don't underestimate the public image view. eBay continues to have record profits and yet continue to raise fees in search of more profits. But because they are a near-monopoly in the online auction business, they can do this formula rather successfully, although most people have a growing disdain for eBay. If a competitor were able to break through, watch out eBay!

Netflix is not a monopoly, and thus if their fee raising policy alienates enough people, their business revenue and public opinion will gravely suffer. Unfortunately, I for one was about to join Netflix, but as an occasional movie renter will now do better at the public library or other rental places instead of Netflix with their fee increases.

jen

I've been with Netflix for two years now and have been extremely happy with the service. I started out at the three out, then moved to five out and am now at eight out. I can understand increasing prices, but not raising the 8 out plan by TEN DOLLARS. I'll definitely be unhappily cutting back to a smaller plan.

rudenoise

I'm cancelling my subscription to Netflix. I've noticed there is a delay between deliveries to my home...I think they are witholding and stalling on the 8 plus.

vick

for those who have an 8 out plan.. whats the maximum movies you were able to rent in a month.. cause at 2 dollars a pop from a local rental place.. those being dvds.. i could get 25 movies.. if i can get more then those.. then yes i am down with netflix..

and of course their delaying your rentals.. they know people cant watch 8 movies in one day and return them the same day... people are defintely building their libraries... as anyone would with this sort of unlimited plan...

Scott

Not sure why people think that there is some sort of conspiracy out there and that Netflix is "withholding and stalling" their rentals. That's ridiculous in my opinion. I've been with them off-and-on since their inception and have mostly been satisfied with their service. It doesn't come as a shock that their prices are going up. That's part of living in the good ole U.S. of A., the home of capitalism, remember? I am on the 8 out plan and haven't decided if I'm going to drop down. Currently I rent and watch two dozen movies a month. That's just over $2 a movie, even with the price increase, and I can't complain about that.

David

It really becomes obvious that Netflix does indeed throttle the shipping of DVDs right after upgrading. I went from 3- to 5-out a month ago and I find it very difficult and frustrating to get a decent amount of movies. I can get a movie every other day and with the occasional mail hiccup expect to _EASILY_ watch 50 movies each month. This assumes I watch every movie in the afternoon and ship them out that evening in the late post.

I am very interested in a class-action lawsuit against Netflix if there are any attorneys out there that want to take them on.

JJK

Why does Netflix throttle accounts once it's upgraded? Do they not want customers to go on higher-priced plans?

I'm about to finish up a free-trial with Netflix. For the next few months, I'd like to watch about 5 or 6 discs a week. I don't want the bother of having to deal with throttling, so I thought signing up for the 6-out plan would cover my bases. Is this not the case? If I tried to rent 20-22 discs/month, would I be tagged for throttling regardless of the plan I was on?

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