In case you haven’t heard, Netflix recently hiked its rates, which resulted in thousands of pissed-off customers, including yours truly. It's now come to light that Netflix not only expected this response, but it is surprised the outcry wasn't worse. So, if you were hoping the online movie distributor was going to change its policies because you, its bread and butter, disagreed with its actions, you can keep dreaming.
CNNMoney reports that in the company's second-quarter recent earnings release, Netflix stated, "It is expected and unfortunate that our DVD subscribers who also use streaming don't like our price change, which can be as much as a 60% increase." Netflix also revealed that "some subscribers will cancel Netflix or downgrade their Netflix plans, [but] we expect most to stay with us." In other words, if you cancel your plan, you're merely an acceptable loss — gotta love corporate arrogance.
When questioned by financial analysts on the thousands of consumer complaints the company has received, Netflix CEO Reed Hastings allowed the "noise level was actually less than we expected, given a 60% price increase for some subscribers. We knew what we were getting into." Again, gotta love corporate arrogance.
But this mindset is not surprising. It's common business practice for a corporation to reduce portions of its customer base to collateral damage. What's interesting to me is that while Netflix's stock went up enough in price to beat analysts' expectations, the company's sales missed forecasts.
Revenue rose 52% to nearly $789 million, but analysts were predicting sales of $791 million. Accordingly, Netflix stock dropped more than 10%. And yet, Netflix is fine with the news, warning investors it "will see only the negative impact of the pricing change" in the next quarter, when it expects to earn 72 cents to $1.07 a share — less than analysts had anticipated. Still, the company is gaining customers, adding more than 10 million new subscribers over the past year.
Netflix did say that it's devising "a dedicated DVD division" it has "no intention of selling" (red flag) and will resume promoting the DVD-by-mail service, which the company had ceased marketing when it became all-consumed with setting up its streaming service.
So, Netflix has gone full circle from that "scrappy little company that wants nothing more than to mail you DVDs for a good price" to that "corporate behemoth that doesn't really care if you're mad that it won't mail you DVDs for a good price." Sadly, all I can say is: business as usual.
So, Netflix has gone full circle from that "scrappy little company that wants nothing more than to mail you DVDs for a good price" to that "corporate behemoth that doesn't really care if you're mad that it won't mail you DVDs for a good price." Sadly, all I can say is: business as usual.
This is dead on.
I do get Netflix streaming and am currently happy with it; that said, the 'customer loyalty' I felt towards them in the early year or two has pretty much crumbled.
I made this website. I'm sorry.