Netflix price hike

On July 12th Netflix announced a 60% price increase. A plan that includes DVDs and streaming content currently costs subscribers $9.99. As of September 1st, the cost will be $15.98. The new fee structure is effective immediately for new subscribers.

In the first few days after the announcement, social media played a huge role in providing a venue for outraged customers to voice their opinions. Within 24 hours of the announcement, Netflix's Facebook page logged more than 28,000 comments, most of them negative (customers see red). A consumer poll indicated that as many as 1/3 of Netflix's 23 million subscribers would drop their subscription (International Business Times article). Subscribers recorded videos of their opinions and uploaded them to YouTube, including "Hitler Reacts to Neflix Increase in Pricing":

The furor seems to have subsided. Today the Huffington Post put out an article entitled "Netflix, Despite the Price Hike and Nightmare PR, Is Still the Best in Field" (HuffPost Tech). Because none of Netflix's competitors offers the same or a superior service at a competitive price, many irate customers may very well decide not to cancel their subscription.

Now would be an ideal time for Blockbuster, Amazon, or Hulu to promise disgruntled Netflix customers that they have the capacity to duplicate Neflix's DVD + streaming plan for less than $15.98 per month. If a competitor can pull that off before September 1st, 1/3 of Netflix customers might actually jump ship.

Regardless of customer's threats to leave, the Netflix price increase is not likely to hurt the company's bottom line. The recent expansion of streaming services into the Canadian market has been very successful. Within the next year, Netflix plans to expand into Europe and Latin America, reaching as many as 43 countries, according to the following report:

I expect this story to resurface in late August when current Netflix subscribers will have to decide if they have a problem with the September 1st price hike.