Is the Netflix Price Hike the Beginning of the End?

The evolution of Netflix has been a fascinating story, one that could very well one day be made into a movie. And there is a strong possibility that movie will not be available for viewing through Netflix’s Watch Instantly service. All jokes aside, Netflix has crossed the corporate Rubicon into the fiery debts of greed and profit – at least, that is what many customers seem to think after the video company recently announced its price increases.

Like the Ferengi of the Star Trek universe, corporations like Netflix are only concerned with profit – at any cost. Those Netflix customers who thought Big Red (as I am now calling them) would be different are now kicking themselves. And how could they be different after spending years in the seedy underworld of Hollywood, making under-the-table deals to convince movie kingpins to cut them in on the profit? The masses have been duped yet again.

The truth is, the price hike from Netflix may very well be the beginning of the end for what many hoped would become a serious alternative to cable TV. Its Watch Instantly library was never particularly impressive, unless you count canceled TV shows and Japanese anime. But for movies, it was sorely lacking streaming rights for most recent and major films. For that, customers still had the DVD/Blu-ray mail service. Now, Netflix wants those loyal customers to pay full price for each or double the price for both, and many of those customers are saying “fat chance”.

So, how did it come to this? With an income of over $100 million, Netflix was certainly not a corporate giant, but it was still making a profit, while other video rental services that shall remain nameless wallowed in financial misery. One would think Netflix would be slashing prices and dancing in the streets. Instead, they have raised the cost of their premium services and left customers, who would practically take a bullet for them, fuming with remotes in hand.

To understand the root of the problem, we need to recap the series of events that led us here. Netflix began as a DVD mail service that offered “unlimited” viewing. As fast as you could watch movies, mail them back, and chase down the mail carrier to get your latest flick, you could keep on getting more. If you believe Netflix, which one must now wonder if anyone actually does, the costs of mailing those DVDs and paying for customers to mail them back were astronomical. Once the streaming service gained popularity, Big Red saw it could save money by using bandwidth rather than postage (picture the Ferengi crunching the numbers and then showing off a sinister grin).

Profit, after all, is the name of the game, and movie studios were putting more pressure on Netflix to share bigger chunks of their profit. While the rest of us are in a recession and can barely afford Netflix anyway, the movie studios, TV networks, and Netflix were playing “pass the millions”. This eventually set off a light bulb over someone’s head in accounting, who then passed the revelation onto the Big Red executives: that doubling the price doubles the profit.

What customers do share in common with Netflix is that they want more for less. They need more for less. They are making less money for doing more work and having to pay more than ever for food, gas, electricity, health care. and rent. What little entertainment they can afford is one area where they try to save. Otherwise, they would have premium U-Verse or Xfinity packages and buy all of their movies through iTunes while sipping mint julep and watching their servants polish their iPads. But that is not realistic for most, and neither are Netflix’s new prices.

It is probably too early to tell if this is the beginning of the end of Netflix as we know it. While video streaming shows promise, it has a long and treacherous road ahead of it if it is ever to win over the hearts and minds of movie kingpins. Until then DVDs will still be around, even if people are reduced to trading them at pawn shops rather than playing mail tag with Netflix. In the end, the winner will be the greediest and most Ferengi.

Tavis J. Hampton is a writer and long-time Netflix customer with a poor record for maximizing profits. For your web hosting needs, he suggests Manchester dedicated hosting company 34SP.com.

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Comments

  1. I too am disgusted. I surely understand that prices go up, but such an increase is ridiculous.