Netflix Raises Prices by 60 Percent, Sparks Social Media Outrage

Customers take to Twitter and Facebook to vent their anger, while tech bloggers and competitors react to Netflix's controversial move.

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Netflix increases pricing plan by 60 percent, setting off a social network firestorm.Netflix's announcement on Tuesday that it will restructure its pricing plan, essentially raising its prices by 60 percent, was accompanied by a relatively mild explanation on its blog: "Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs."

However, the reaction to Netflix, a longtime customer favorite, has been anything but mild. Faced with having to pay about $16 for separate streaming and DVD plans instead of the current $9.99 fee for both, some of Netflix's 22.3 milion U.S. customers took to social media outlets to vent their anger, while tech bloggers scratched their virtual heads and competitors reacted to the blood in the water.

More than 4,800 customers posted comments on the Netflix blog on Tuesday, mostly complaining about the limited streaming catalog and threatening to drop one or both services rather than pay full price for both.

Netflix also announced the new price plan on its Facebook page, sparking almost 20,000 comments by the end of the day. Comments included, "Great idea to kick the people while their [sic] down ... So much for customer satisfaction. Greedy, Greedy, Greedy," and "Can you even IMAGINE how much champagne was flowing at the Redbox/Hulu/Amazon offices today!? HA! Good for them!"

A Facebook page titled Cancel Netflix is proposing a movement to cancel Netflix services en masse on September 1, when the pricing change is set to go into effect.

"Dear Netflix" was a top trending topic, with tweets such as, "Dear Netflix, your new prices make going to the movies look affordable," "Dear Netflix: Are you trying to save Blockbuster?" "Goodbye red envelopes, hello red boxes," and the often retweeted, "Dear Netflix, As much as we love the 'cerebral romantic comedy documentaries' genre you suggested, paying double is insane. k thx bai."

Stephen Colbert weighed in via Twitter as well: "Netflix is increasing their rental fees. Great, now it's going to cost even more to have 'Precious' on my coffee table for four months."

About 80 percent of Netflix's U.S. subscribers currently have the combination streaming and DVD plan, according to Tony Wible, an analyst with Janney Capital Markets. While many of those customers may now be considering a switch to big players such as Redbox, Amazon Direct, Hulu or Apple TV, Eric Blattberg of Wired predicted that up-and-comer Zediva is another business that could see an increase in business. The video streaming company offers digital streaming of new releases for two weeks for $2 per rental.

Blockbuster, which Netflix has practically brought to death's door, pounced on the news by emphasizing some of its lowered prices to the media and customers, although The Wall Street Journal mocked its efforts. Meanwhile, Redbox responded to an MSNBC.com article by sharing some posts from its Facebook page: "I am renting 5 tonight just to show you my support and to rebel against Netflix!" and "C'mon Redbox -- you need to create a streaming option to supplement your DVD rental business -- Netflix's decision today definitely leaves a gaping hole in the market now. Boo Netflix!"

Several tech bloggers covered the news as outraged consumers themselves. Athima Chansanchai of MSNBC, an 11-year Netflix customer, reported getting the shocking news via an email from Netflix.

Matt Burns of TechCrunch relayed a common subscriber experience that contradicts Netflix's rationale: "Previously, I know at least in my house, the DVD option was a nice backup just in case the particular title wasn't available for streaming; it really felt like a $2 add-on. This happened a few times over the last year since Netflix's streaming catalog is around 20k titles where they have 100k available on DVD."

And Peter Kafka of All Things D described the sudden drop in Netflix's value to customers that accompanied its increase in price. "One of the reasons I really enjoyed Netflix was the notion that it provided instant gratification -- I can stream anything they have with a click -- but that it gave me the option to get even more, with a little bit of planning: Add a disc to your queue, then wait a day (or two, max), then boot up the DVD player," he wrote. "I rarely took them up on the offer ... but it was nice to know it was there. And it made me feel like I was getting good value for my $10 a month. Now I'm a little less enthusiastic, and I bet I'm not the only subscriber in that boat."

Tags: Netflix backlash, Netflix pricing change, Netflix raising prices, Netflix reaction, News

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