Categories: Blog
by Mike Dailey on September 15, 2011

Apparently, Netflix’s decision to raise prices by as much as 60 percent is turning into a “horror show” for the company.  Who thought otherwise?  A 60 percent rise in price, or a 50 percent cut in service, either way you look at it this was a critical mistake for Netflix.

Netflix’s stock price is down more than 40 percent compared to where it stood before the company announced the higher pricing structure, equating to a $6 billion loss to shareholders… so far.  I can only see more customers dumping their now over-priced offering and spending their entertainment dollars elsewhere.

From a business perspective, and from my experience in customer relations and customer management, I would expect any customer faced with a decision to accept either a doubling in costs or a reduced level of service, to select neither.  The customer will shop around to see if the same level of service they once had can be obtained for an acceptable cost.  This is exactly what the American consumer is doing, and exactly what Netflix should have expected.

When the decision to raise prices and cut content was announced, Netflix subscribers threatened to drop the service.  Netflix’s CEO thought it wouldn’t happen.  The customers were serious, and now they’re making good on their threat.

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