Back in July Netlflix announced that they would be raising prices. Basically doubling prices for some users. At the time, I was paying $9.99 for the streaming package + 1 DVD out at a time. The price change was to take affect on September 1, 2011. They split the streaming into two separate plans, each costing $7.99 for a total of $15.98 per month. I immediately changed my plan to the streaming only plan. I was probably one of the few that did not get the DVDs much. And I had ended up losing one in the house (thanks kids), so it made sense for me.
In addition to the Netflix stock dropping when the change took affect earlier this month, it is now reported that Netflix has lost well over 600,000 subscribers since announcing and implementing the change. Why the huge drop? People do not like to get less for more $$. It was announced the same day that the price change took affect that Starz has decided not to renew their streaming deal with Netflix. This takes away a huge chunk of the good movies that Netflix offers. The contract is set to expire in February 2012. They also recently lost movies from Sony. And, HBO has consistently refused to partner with Netflix. A statement released at that time by Neflix spokesman Steve Swasey stated:
Starz has been a great content partner since 2008 and we are thankful for their support.
While we regret their decision to let our agreement lapse next February, we are grateful for the early notice of their decision, which will give us time to license other content before Starz expires.
While Starz was a huge part of viewing on Netflix several years ago because it was some of the only mainstream content Netflix offered, over the years Netflix has spent more and more licensing great TV shows from all four broadcast networks and many cable networks, and we have licensed 1st run movies from Relativity, MGM, Paramount, Lionsgate and others. Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. As we add even more content in Q4, we expect Starz content to naturally drift down to 5-6% of domestic viewing in Q1. We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience.
We have tremendous respect for the Starz creative team, and we look forward to someday licensing some of their original or licensed content.
And now today, Netflix subscribers received the following apology email from Netflix CEO Reed Hastings. It is not apologizing for the price hike, but instead apologizing for not explaining the reasons for the price hike in more detail:
Oh, and let’s not forget that there was also a rumor that they are now going to limit the number of devices that can stream media concurrently to 1. But, Netflix has denied that report. Thank goodness they have denied. That would really suck for my household.
I am just waiting and watching. I still have my streaming only plan. I am hoping that they can find some other sources to partner with to continue to bring exciting movies. I do have cable, but I can honestly say that my household watches Netflix a lot more than we watch cable.