What should be Netflix’s next script for keeping customers?

Netflix, once the star in video subscription services, is finding out the hard way that it’s still all about the customer – and investor.

When it raised prices by as much as 60 percent in the U.S. on Sept. 1 and then bungled an attempt to spin off its DVD-by-mail rental service, it probably never dreamed it would see such an exodus of customers, or the nightmare on Wall Street that followed.

Netflix CEO Reed Hastings said the company should have done a better job of explaining the price hike. He said the money was needed to pay movie and television studios for rights to stream more content more quickly.

Netflix thought it would lose 600,000 subscribers, but instead lost 800,000, taking its subscriber list down to 23.8 million.

What does Netflix need to do to repair the damage, keep existing customers  and bring others back?

Christopher Seward

17 comments Add your comment

Darkstar3d

October 25th, 2011
11:27 am

I’m staying put for now, but Amazon’s Prime, which I have already, is coming on strong and soon I may just drop Netflix altogether. Netflix has two strikes already, don’t make it a third or you are out.

MsTAZ

October 25th, 2011
11:36 am

Netflix should make more of the newer movies available via stream. We really enjoy streaming with having to wait on a disc & having to send it back. We’re trying stay loyal but we are monitoring Amazon Prime very closely.

GoldJacket

October 25th, 2011
11:37 am

It may be too late now. They’ve made Redbox and Blockbuster into real competitors. Nothing like a woman scorn! You piss off a lady and she runs into another man’s arms. Netflix DVD service is falling way behind. They still don’t have the new releases as soon as Blockbuster or Redbox, and it is difficult to even find the new releases when browsing the site. Until Netflix is able to stream new releases, I don’t see their instant view service replacing the DVD service. They need to do a better job of showing the DVD users what they are missing in the instant view.

Mike

October 25th, 2011
11:48 am

I kinda agree. Netflix made it seem like months ago that they could care less about the DVD rental customers. (spinning off and whatnot)
Well, I can do Redbox or Bluebox instantly and return that next day conveniently, without Netflix. I felt like they were minimalizing my business, so I cancelled. Probably won’t go back either.

Terrible Idea

October 25th, 2011
11:55 am

In short, they raised prices with no added value by taking a service that was $9.99 for both DVD & streaming & splitting it into two streams at $8 each. If they aren’t able to stream the new releases, who wants to pay $8 for that? If you are paying $8 for the hard DVD’s (which they rarerly have the new releases available right away), that is 8 redbox movies you can rent per month. With their delivery times & all, it’s hard to even get 8 Netflix movies in per month if you were watching it the day you got it. Everyone is looking for more value for their money these days, and they are just charging you more for the same services?! How quickly a company can run itself into the ground…

Mike

October 25th, 2011
12:03 pm

Well, Redbox doesn’t get the DVD movies that first week, either. (they won’t cannibalize DVD revenue sales)

If they get them quicker than Netflix, I can guarantee you that will change very soon. :)

Joey M

October 25th, 2011
12:08 pm

If Netflix were to release a schedule of content that is going to be streamed I would be most happy. As their program sits now, you don’t know something is going to stream or not.

Logical Dude

October 25th, 2011
12:13 pm

I cancelled after Netflix tried to split in two. I REALLY did not sign up for double-billing.

So I cancelled.

And two days later they said “OOPS!! We’re not splitting in two anymore!”

I’m waiting on the Christmas “Oh Please please please come back!” invitation. Which I may, or may not, take advantage of.

mystery poster

October 25th, 2011
1:40 pm

I kept Netflix and downsized to one dvd at a time. They have more obscure things that you won’t find at Redbox or Blockbuster and are not available to stream.

Unfortunately, there is really no competition. No companies deliver both the streaming and the dvds. Still, at $17 a month with tax, it’s cheaper than cable.

SouthsideD

October 25th, 2011
2:33 pm

Amazon prime is going to walk away with the streaming market. They are regularly adding movies and their customer service is unmatched. We use Amazon Prime Video regularly and twice recently we had a slight difficulty with the streaming and the quality of our video for a couple of minutes was not perfect. Both times, the next day i received an unprompted email from them informing me they were refunding my 3.99 because they considered the streaming quality of my movie was not up to their standards. That’s amazing customer service.

dark30

October 25th, 2011
2:41 pm

@Joey M, all you do is click on a title you want and if it says “Play” under it then it streams. “Add” means it’s on DVD. Both means, well, it both streams and is on DVD. And there are several websites with new Streaming releases listed.

ATLNative

October 25th, 2011
3:12 pm

I had Netflix until the split and, like Logical Dude, I didn’t sign up to be billed by 2 separate companies. The streaming movie selection sucked big time and, frankly, we just weren’t using it enough. I’ve looked at Amazon Prime and may do it, mostly because I’d rather pay a little more each time I want a movie rather than blindly paying each month and feeling pressured to make it worthwhile. To each his own, I guess.

…and who says the free market doesn’t work?

Bobby

October 25th, 2011
3:14 pm

Netflix only raised prices because the content providers started charging a LOT more to license the new content. Unfortunately, Netflix had been getting away with highway robbery in regards to licensing rates, and the movie studios finally got smart and demanded more money. Netflix didn’t have this money, so they were poised to lose a LOT of content at the rate they were billing.

So, if they had kept the prices the same, the streaming library would have become drastically smaller, causing consumers to cancel the service.

The option they took was to raise the rates so they could then afford the licensing fees for streaming content. This, also, caused consumers to cancel the service.

Then, they decided that they would try to lower the licensing fees from content providers (so they can offer more streaming content) by splitting up the two sides of their business. This would mean that there would be two different contracts with two different companies, rather than the one contract they have now. A lot of the reason you can’t rent a new release movie in the first 28 days is because that was the compromise they had to make to get streaming content. Separating the companies would have eliminated that. However, this caused consumers to cancel the service.

All Netflix was doing was attempting to adapt to the changing landscape of the licensing environment for streaming content. The consumers did not want Netflix to adapt. The content providers knew this, and are basically pressuring Netflix into irrelevance by turning their own customers against them. Then, the content providers will release their OWN streaming service (see HBO Go or ESPN3 for examples) that will be available to you for cheaper than Netflix, AND they will have things they refuse to license to Netflix.

The content providers don’t want there to be a one-stop shop for streaming content, because they want a larger cut. In a few years, you will have to go to different places to get different streaming content, and either they will be included in your cable bill or you will have to pay for them separately. Or both. Netfilx will become irrelevant just like TiVo is irrelevant today. (How many people do you know actually have a TiVo and not a generic DVR provided by your cable/satellite provider? Exactly.)

Netflix tried everything they could, but ultimately the consumers turned on them for daring to adapt to the changing landscape, and that’s why we’re seeing articles like this.

And if you don’t think that Blockbuster Online and Amazon Prime will be next on the list of companies the content providers will shake down, you’re crazy. Netflix was just the 800lb gorilla. Now that they’re gone and people are moving to these other services, they will start getting the high licensing fees that are taking Netflix out of the game.

Kat

October 25th, 2011
5:07 pm

I’ve never needed to watch a movie so badly that I HAD to have it the same day. The streaming is usually enough for me, unless I want to build a night around a certain genre of movie, and then I get p***** when things aren’t streaming.

Dollar Value

October 25th, 2011
5:12 pm

they need to cut prices, quick–back to the original amount. I dumped them last month and just use redbox and hulu for movies.

Lancelot

October 27th, 2011
7:15 am

There are federal laws that protect people / companies from what the networks / studios are doing but for some reason no one dares to take them to court. The networks / studios are conspiring against anyone they think is ripe for a shake down & it’s costing John Q Public Billions. These tactics violate federal law but the lobbyist have most of Washington by the balls so we won’t see anything done in federal court any time soon.
I’m really stunned that this price gauging & strong arm tactics aren’t being investigated.

Kandy Crowe

October 28th, 2011
9:39 am

I was perfectily happy with the DVD mail service, so I invested in the co. in Aug. What a mistake! If I could go back in time, I wouldn’t. Now I’m just waiting and hoping Netflix will dump Hastings and do right by the loyal customers. I don’t want to lose my investment in what used to be a great company. What a mistake!