Thoughts on the Netflix Rate Hike

by Brett Sappington | Jul. 19, 2011

Netflix had to have seen much of the anger and harsh words coming. After all, when you shift pricing significantly on a huge customer base, you are going to find a big percentage of consumers suddenly on the wrong side of the demand curve. Also, while many in the industry predicted that a Netflix price change was likely in the cards due to expiring content deals, many consumers may not have seen this one coming. Almost nothing makes the natives quite so restless as an unexpected price hike.

Netflix has recently stated that its service is still a good value for the additional $6 a month. Unfortunately, given some of the Facebook postings, its upset subscribers are not simply evaluating the "value" of the service. Many will see the change as Netflix "taking" something from them. So, the hurt feelings will drive many to evaluate other services.

For Blockbuster, the Netflix news could not have come soon enough. We can expect folks to look more closely at Blockbuster, Amazon, Redbox, Hulu Plus, VoD from their pay TV operator, and other options. Some consumers will calm down and return to Netflix. Some will opt for other services. Ultimately, the complex, competitive world of video became just a bit more interesting. 

Tags: retail

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