I love Netflix. I think their service is fantastic, prices fair, and their integration across a variety of hardware choices is top notch. It’s one of those monthly fees I have no problem paying even when I don’t consume very much in a given month. I’ve followed their ascent to greatness burying Blockbuster in the process, and also paid close attention to the realities they have begun to face with increasing operating costs. It was just a matter of time before the major studios demanded a bigger piece of the pie. And of course it was just a matter of time before those operational cost increases effected their pricing structure.
I’ve always thought $10 bucks or so a month for unlimited streaming AND 1 DVD out a month unlimited was a terrific deal. So much so that I could never understand how they were making any money. So when Netflix recently announced they were raising their prices, I wasn’t really that fazed by it. In fact, I was expecting it. But boy did Netflix drop the ball on their communication strategy.
Straight from their announcement:
By offering our lowest prices ever, we hope to provide great value to our current and future DVDs by mail members.
Now we offer a choice: Unlimited Streaming for $7.99 a month, Unlimited DVDs for $7.99 a month, or both for $15.98 a month ($7.99 + $7.99). We think $7.99 is a terrific value for our unlimited streaming plan and $7.99 a terrific value for our unlimited DVD plan.
Really Netflix? I know there are plenty of people in the world that you might think this would fly with, but most people can read between the lines. This isn’t about offering added value or choice, it’s about you having to raise your prices because the studios are increasing your operational costs.
Netflix does a lot of things right, but not being open and transparent about their subscription changes are currently hurting them as they are taking a beating in the public’s eye. What Netflix should have done was just been open about the increase in operational expenses they are experiencing due to the studio’s demands, and that in order to continue to provide the same level of service, they have to pass some of those costs on to their customers.
People understand that the prices of things go up. It’s a part of life. Sure they would have still experienced some backlash, but nowhere near the level if they had just come out and had not try to hide it behind silly statements like the ones above.
Transparency and authenticity always reign supreme when it comes to communicating to your audience, and when you don’t, people tend to call bullshit. Netflix is learning that the hard way.