Within two months of learning that Netflix would be splitting its DVD mailing – now known as Qwikster – and streaming capabilities into two services, priced at $7.99 each or $15.98 for both, nearly one million Netflix customers cancelled their subscriptions.
These customers are rightfully disappointed by the formerly beloved company’s woefully misguided attempt to increase revenue and steer customers away from DVDs and toward instant streaming.
In light of the economic recession and rising unemployment of the last five years, it is insulting for Netflix to ask their customers, many of whom have used the service since its inception in 1997, to eliminate half of their service or pay twice as much just to preserve the original options.
By charging 60 percent more for the combined mail and streaming service, customers who cannot afford the new price must choose a single platform with which to view their films in order to continue paying the original price, and the options aren’t equal. Now that Netflix’s contract with Starz – formerly a major provider of instant streaming movies – has ended, Qwikster’s selection of DVDs is larger than Netflix’s instant selection, leaving those who prefer to stream their films with such gems as Jesus Christ Vampire Hunter and Troll 2.
Netflix CEO Reed Hastings has said that he intended the changes to help shift the focus of the company from DVDs to streaming – a move that wisely acknowledges the likely demise of DVDs and Blu-Ray in favor of web-based rentals.
But Hastings is clearly out of touch with his customers if he thinks the average movie-watcher is prepared for that shift anytime soon.
Most people are currently unable or don’t know how to stream movies from their laptops to their TVs, don’t own an iPad or other tablet device and don’t want to watch all their movies on their computers or smartphones. In pushing streaming too soon, Netflix has alienated a substantial portion of its customers it may have kept, if only it had waited for people to catch up to the improved streaming technology.
By emphasizing streaming over DVDs, Netflix is also leaving itself vulnerable to competition from other streaming sites that may have a greater selection and better prices, such as Amazon, Blockbuster and Apple. In addition, customers frustrated with movie rental prices now have more incentive to seek out free but illegal downloading sites and pirated DVDs.
Hastings may comfort himself with the thought that Netflix is simply ahead of its time. Let’s hope he’s not out of business before that time comes.