Netflix could lose 2.5 million subscribers following rate increase

By on Jul 26, 2011 at 7:40 PM
Business July 26, 2011

Netflix could shed as many as 2.5 million paying customers as a result of its recent move to significantly increase the monthly cost of its DVDs-by-mail rental service. Netflix announced earlier this month that it would be adjusting its monthly rate plans. Whereas subscribers had been able to stream unlimited digital content and receive DVD rentals by mail for as little as $9.99 per month, Netflix’s new combination plans start at $15.98 per month, a 60% increase. Research firm TDG polled 500 Netflix customers who subscribed to DVD and streaming combination plans at the time Netflix announced the price hike. Based on the results of that survey, TDG estimates that Netflix stands to lose between 12% and 15% of combo plan subscribers within the next six months due to the new plan pricing. That would translate to between 2 million and 2.5 million subscribers — or a minimum of nearly $240 million annually. Many subscribers who might stay around also say they intend to switch off of their current combo plans; 34% told TDG they will switch to a streaming-only plan and 44% said they will opt for a DVD-only plan. Netflix warned investors during its earnings call that the rate plan changes could have a negative impact on its business in the near term.

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  • Tom

    I’m surprised that everyone is getting this angry over the price increases.  I agree, it is a relatively big increase, but I still think the price is reasonable for what you’re getting.  Think about it: Netflix’s most expensive plan is ~$24/month (3 DVDs + streaming), and with that you have access to almost anything you’d ever want to watch, and the cost stays the same, no matter how much you watch.  You probably pay 4 times that amount for cable TV each month, and every movie you watch On-Demand probably costs you an additional $5 (unless you don’t mind the complete crap they let you watch for free).  The selection is limited, and with my provider, SD content looks to be about VHS quality.

    I will say, I’m not sure a streaming plan is worth the money, given the limited selection.  I’m not sure yet whether I’ll keep paying for streaming or not, but I’m definitely going to continue my DVDs.

  • Jellis1414

    I have just cancelled my subscription as well.  I loved it before, but this increase in insane – and a way for them to try to bully everyone since they are the only game in town.  Well tough luck – I rather pay more money some where else just to send a message to Netflix….  

    So good luck trying to live this total screw up by Netflx…  Good by Netflix!!!!  Plus, all of my friends are doing the same…  Bye Bye….

    • stanleyipcus

      Assuming you have the cash flow to purchase / lease a vehicle (which isn’t like since you consider $6 an INSANE amount of money), you must shit your pants every time you have to refuel at the gas station. Do you at least drive a hybrid? 

  • Pfdv

    There should be a bundle discount. I watch one thing a night – either a DVD or streamed. Not both. So why should I pay full freight for both?

  • Andrewtclements

    If you do the math with subtracting lost subscribers plus the 22% that will pay the new 15.98 they will net positive 24 MM. That is without subtracting the operating costs they will save by sending out less DVD’s right?

  • clem

    Netflix simply set an entry price to the market really low and expanded to every device possible to lure subscribers. Now they have a critical mass they can set their prices. 9.99 for up to 10 dvds a month plus unlimited streaming? That was a steal

  • Anonymous

    Why would they say half would leave Netflix? I’m not going to join VUDU/Amazon or any other streaming/dvd rental company. I’d rather Netflix. I got rid of my streaming plan cause they don’t offer too many older movies online to stream. So I stick with my DVD  plan. Yes it’s a bit high cause NETFLIX themselves says it’s getting to expensive for them and more Netflix apps being added to mobile device that’s why they hike the price up. So still don’t see why people get mad over this just choose both or one of your rental choice. NETFLIX is the best rental company to date

  • Lizmass240

    wow. havent seen a beef like this since T.I. and Ludacris….

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