Netflix Price Increase Backlash Draws Attention to New Up-and-Comers

As you’ve likely heard by now, the almighty Netflix announced Tuesday that it plans to raise prices for its rental and streaming video services. But the increase is anything but modest, with plans that are currently $9.99 jumping to $16, a 60 percent increase. Despite the obvious price gouging, Netflix gave a rather succinct explanation on its blog: “Given the long life we think DVDs by mail will have, treating DVDs as a $2 add on to our unlimited streaming plan neither makes great financial sense nor satisfies people who just want DVDs.”

In all likelihood, you first discovered the news on Facebook (or Google+!). Some of Netflix’s 22.3 million U.S. subscribers took to social media outlets to vent their anger, while over 4,800 commented directly on the Netflix blog, threatening to drop one or both services rather than pay full price for both. Netflix also posted the announcement to their Facebook page, inviting over 60,000 negative comments from users. “Dear Netflix” was a trending topic on Twitter, with tweets like, “Goodbye red envelopes, hello red boxes.” But when monopolies make questionable moves like this one, competitors are ready to take advantage of their scorned customer base. With an estimated 80 percent of Netflix’s U.S. customers currently subscribing to the streaming plus DVD plan, AOL’s Small Business notes, “While many of those customers may now be considering a switch to big players such as Redbox, Amazon Direct, Hulu or Apple TV, Eric Blattberg of Wired predicted that up-and-comer Zediva is another business that could see an increase in business.” The potential new powerhouse offers a streaming service that allows customers to, “Rent and watch new movies online as soon as they’re available on DVD,” offering new releases for two weeks at just $2 per rental.

Tech bloggers and all of the major news outlets have been covering the outrage over Netflix’s latest announcement, but it’s the customers that really joined forces to boycott the streaming video company, yet another example of how social networking influences the corporate world. If you’re interested in social media marketing but aren’t sure what to do, contact the interactive marketing experts at Blue Interactive Agency today!