Everyone Needs To Just Calm Down About The Netflix Price Hike

Everyone Needs To Just Calm Down About The Netflix Price Hike

This week, Netflix stunned the entire world by being the first company ever to raise prices. No wait... that's not accurate. I guess it just feels that way because of all the hyperbole and trumped up outrage. Every tech blogger worth his salt has published either a condemnation, or an article about how mad everyone is about the move. Well let me be among the first to suggest that the Netflix price hike is no big deal.

In fact, when I read the news, my exact reaction was nonverbal. It was a shrug. It took me all of three seconds to do the math in my head and realize that $15.98 per month is still an insanely good price for the amount of content I get out of the deal. That's it. I didn't get angry, or even feel compelled to sign an online petition or leave a negative comment on the company's Facebook page.

Why? Because sometimes companies raise their prices. For example, I went to Wendy's the other day and ordered a large iced tea. It cost me roughly $3. But five years ago, it was much closer to $2.

The food industry has been making a killing throughout this whole messy U.S. recession by repackaging--selling us less product for the same price we're used to (The Consumerist blog calls it the "grocery shrink ray"). Since we're silly Americans, we don't look at package sizes, and just see the same price we always pay, and go on about our shopping. Don't believe me? Look at a half gallon of ice cream sometime, because it's got less than half a gallon in it these days. At first, they just dropped down to 1.75 quarts, but most of them are now selling 1.5 qt. containers for the old half-gallon price.

But we like ice cream. Some of us probably feel we need it. So we don't throw a fit in the freezer isle, we just grin and bear it.

Gas prices go up almost every day, it seems, with the national average hovering near $4/gallon. And yet, I can vividly remember paying a mere $0.78 per gallon one glorious summer in 1998. And no one likes it. But we need gas, right? So we keep paying it.

Let's try and example that's at least in the same field: movies. How much did you pay per ticket the last time you went to the multiplex? $9? $10? Even more if it was a 3D show, right? Not so long ago it was $7, and most of you can even remember when movie tickets were cheaper than that. And don't get me started on the popcorn.

Similarly, Blockbuster used to charge $2.95 for a new release rental, and now charges over $5.

Are you starting to see my point? People need to chill out about Netflix raising their prices because they're only, like, the millionth company to do that same thing in the last year or two.

Now... don't get me wrong. I'm not saying you shouldn't be upset about it. You have every right to be. No one wants to pay more money for stuff. I get it. I'm not exactly doing cartwheels about it. But skimming the headlines on Google News, you'd think this was on par with the BP oil spill or something (which, incidentally, it is not... not even remotely). Here are a few:

And that last one hits on the real issue here, I think, which is focusing on that percentage instead of the dollars. Previous subscribers to both the DVD and the streaming services paid $9.99. Now they'll be paying $15.98. If you look at percentages, that's a whopping 60%, which is a large number. But if you look at the dollars, it's only $5.99.

And when I add up how many DVD's my wife and I go through from Netflix in a month, plus the number of movies and TV shows we stream, the fact is that $15.98 is still super cheap--far cheaper than Blockbuster and even Redbox would be.

Besides, looking at the percentage isn't really fair. I mean... if I sold lemonade at a lemonade stand for a penny per glass... but then the next week started charging two cents per glass, would you really complain to me about my prices going up 100%? No, of course not. Because a penny is negligible, and so is two pennies. So... the actual dollar amount matters far more in the price hike than the percentage does.

This price hike comes to an annual increase of $72. That's less than one average month for Comcast cable in my area. I humbly submit that if $6 a month extra is going to kill your budget, maybe you were stretching it to be a Netflix customer to begin with.

Defending Netflix

I'm not the first to defend the move:

Wrap Up

This is not Armageddon. It's just... prices going up. It happens every day all around you, but for some reason... this particular increase has struck a nerve. I'm not saying you should go out and do the dance of joy at the added expense. I know times are tough for everyone, and every dollar helps. But I am saying we need to put the hyperbole to bed, and put away the pitchforks.

Netflix has a long history of a great product with great service, and it's been undervalued by consumers for some time. I'm sure there will be some who leave in protest. But sadly, they're going to find much higher prices at Blockbuster and a significantly limited selection at Redbox.

Also, I think people are all worked up about this mostly because of the shock. Netflix didn't exactly handle the announcement with much grace, merely sending an abrupt form letter informing customers the prices were going up soon. I think once people get over that shock, and begin to really stack Netflix up against other options, they'll see that $15.98 is still a pretty darn good price for the service.


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Posted in Internet TV
About the Author -
Jeremy Scott is the founder of The Viral Orchard, an Internet marketing firm offering content writing and development services, viral marketing consulting, and SEO services. Jeremy writes constantly, loves online video, and enjoys helping small businesses succeed in any way he can. View All Posts By -

What do you think? ▼
  • Dave4321

    The mistake was not increasing prices gradually. Even if it is still a good deal, such a substantial increase with no additional benefit is very hard for consumers to swallow. Raise prices $2 a year and people will complain, but not revolt.

  • Matt E

    What a bizarre and pointless article. Of course prices (often, but not always) tend to go up over time. It's a function of inflation. When price is adjusted for inflation, however, the price of many goods and services actually decreases, as the customer base widens, manufacturing improves, supply costs decrease, etc.

    But no, a 60% jump overnight is not commonplace or comparable to the examples the author has offered, particularly when there has been no improvement in service. Ultimately, customers will have to decide for themselves whether the significant price hike is worth it to remain a Netflix customer.

    But simply dismissing the complaints by exclaiming "Hey guys, prices go up!" is a bit goofy.

  • http://www.reelseo.com/author/jeremyscott/ Jeremy Scott

    Matt, I hear you. I wasn't trying to dismiss the complaints outright... just point out that the complaining is so loud and, in my opinion, overblown. People will always complain when prices go up, as they should. Just felt this one was way over the top. Thanks for commenting.

  • Ron

    I think what really bothers me, is that i didn't get a letter or email from Netflix, I found out about the increase from articles like this one. So much for being a loyal customer since 1999.

  • Enough is Enough

    sure my car gets me from a to b paying and $10 a gallon is worth it!!

    so when is $16 a gallon good?

    truth is Netflix is good, truth is $16 is a rip off for the content, just like $10 a gallon for gas.

    Netflix has been going backwards for years while HULU gets all the best premium content.

    Hulu is not the answer and now neither is netflix.

    $16 a month for the same service that $9.98 bough is a CRIME!

  • ITCowboy

    I have to disagree with your statement. Sure I love Netflix, I watch it on my Xbox, Blu-ray, even my phone. The streaming is nice, and I always have a BD sitting there ready to watch.

    Is it worth the extra money? I also have a full cable package, On Demand, HBO, Starz. Add to it Crackle and a myriad of other cheaper or free streaming packages, it makes me rethink the value of the new package.

    Admittedly, I do not watch a lot of DVD's (I recently upgraded to blu-ray, but was already thinking of dropping that, all it seemed to do was give me better access to advertising of new movies, and some picture and sound quality, nothing I could do without). Most of the time I have a DVD sitting the for at least a couple weeks, sometimes a month or more, so now it will be like paying rent on a DVD.

    Lets look at the streaming package. Netflix has the whole Starz lineup. I have that on Cable, with On-demand. ok Netflix has really old movies that I do not want to watch, well that justifies it.. Netflix has lots of series (this is what the kids watch most), but those are available on Crackle, Hulu, and many other streaming sites. Lets see Netflix has HBO-Ondemand and streaming .. oh wait no they don't, thats through the cable company too. Netflix has new movies, wait, only on DVD, which they essentially want me to pay more for now.

    The thing I liked about netflix was I always had a movie sitting there, and could use the streaming. Does that justify the price hike? I have my doubts, and will currently be rethinking my subscription. Guess I have until September to make my decision, but sorry, at this point I think Netflix is going to lose out. My monthly entertainment budget already exceeds what I should be paying, adding to that for no gain whatsoever seems to be the wrong move. Sure I will miss the streaming to the phone (not really I used it about 3 times), but this in itself doesn't make a good argument either.

    So unless Netflix is going to be offering newer movies to stream, or adding a whole lot of value to their plan, I think I will have to cancel. It was a nice ride, and fun while it lasted, but I think I will just have to get a redbox DVD when I want to watch something and deal with the inconvienience of the store... Oh wait I am already there almost every day too..

  • David

    My problem is with how it was handled. It was done in a very cavalier, insensitive way that was disrespectful of loyal customers. With no improvements to justify such a large increase, it is just a blantant move to increase profits and push people towards a streaming service that does not have enough content. Add to the that their arrogant comments yesterday about how they expected people to be upset (read: they don't care) and that 30,000 people cancelling is insignificant and they have lost my business after many years of loyalty. Not because of the price, but because they clearly don't value me as a customer. Netflix service and selection has declined in the past year and this is the latest in a series of price increases and changes (such as charging $2 more for blu ray) that have been poorly handled.

  • Steven

    I think i totally agree with everyone here that the way they increased the price with exactly the same service and without explaining why and without any concern to their customers is outrageous, but they did that because they really think they are the only player in the market and they have no competition and once the dust settle everybody will keep their subscription and they know it. they did enough planning and testing and they know its going to happen. next year they will increase again and everybody will be happy about it. unless there is a true competition it will keep happening over and over. for me id rather pay $50 for any other service then keep Netflix $16 service. they have to stop doing that.

  • http://www.reelseo.com/author/christophor-rick/ Christophor Rick

    Apparently, Jeremy doesn't use Netflix. The problem is that most of the catalog is not streamable and so if you wanted to get something that wasn't streamable, it was just $2 extra a month to be able to do that. Now, in order to have that exact same service, you have to pay the $6 more. So they've actually reduced the service, while raising the price. They eliminated the package deal and considering the lack of streaming on much of the content it was a logical package. Now they're saying, oh no...you can pay $8 a month for the WHOLE library as DVD AND $8 for just a wee portion of it as streaming media.

    Jeremy also doesn't see why we should all be complaining. It's a free country and a free market economy Jeremy, have you forgotten? User outrage and account termination is our only recourse in this matter. Since I'm one of those tech bloggers worth his salt who condemned it it's my duty to point out the flaws in such a move, because it's a free country and a free market and offer alternatives, which I did.

    This is a customer service oriented country, it's why we offer gratuity in restaurants, it needs to be earned by good service. Netflix doesn't deserve customer loyalty after this because they have just spilled a glass of red wine in our laps, completely forgot to put our food order in and stuck their finger in their nose before wiping it on our plates while serving us... If that were to happen, complaining to the manager would surely end in no payment required. Since Netflix is the manager and simply thumbed their noses at the customers the only recourse is to terminate our patronage of their establishment.

    So yeah, it's sort of a big deal...

  • http://www.facebook.com/profile.php?id=607848625 Matt Chroust

    Sorry the analogy isn't working for me. If the price of movies, ice cream or burgers increased 30% overnight, you can bet there would be an uproar. Netflix spokesmen equated the increase to the price of a latte, but my plan increased from $24.95 to 34.95 monthly. I put my membership on billing hold and told them why. I didn't blog-whine.

  • http://www.reelseo.com/author/christophor-rick/ Christophor Rick

    Oh yeah, here's the other bullshit thing they do, which I forgot to mention:

    If you want to cancel,
    Cancellation will be effective immediately - no refunds for partial months.
    Instant streaming on your computer or via any Netflix ready device will no longer be available.

    So because you want to end the automatic payments a la AOL 1999, you lose the rest of the time you've already paid for...poor customer service, like I said.

  • Tyler Sarsgaard

    Blockbuster charges $2.99 for a new release but it is a daily rental. With Dish acquiring them, they went to a new pricing model.

    At the very least, we should be able to cancel Netflix and use the remaining time left on the account. As it stands, once you cancel it is instantly finished.

  • Comrade

    Rofl at the blogger trying to be "edgy" .

  • Jeff

    When I initially got that email, I was pissed. But, then I realized, they were actually doing me a favor. Their streaming service sucks (such a limited selection), so I was able to unload it and save myself $2 a month. If they really wanted to stick it to me, the wouldn't have offered the disc-only option. Thank you Netflix for the price DECREASE!

  • Daniel Overton

    The problem is that the price increased 60% with no changes, improvements or added content. If they want to make a move toward being primarily a streaming content provider, then they need to actually provide some streaming content that people want to watch. The streaming content serves as filler while I'm waiting for new releases to arrive in the mail. If new releases were available for streaming then, sure, I'd watch them that way. But they're not available!
    The $6 isn't the issue (I pay over $400/mo. for entertainment apps, cable, internet subscriptions, etc.). The issue is such an extreme price increase with nothing to show for it. I would cancel any service that increased so dramatically with no changes or improvements. I don't think there would be such outrage if they had beefed up their streaming content BEFORE increasing the prices. If I felt like I actually got something for my money, then there would have never be a problem. If I could stream their entire library, I'd pay the $16/mo and be happy about it...but I can't. I can only stream old Indie flicks and decades-old TV shows. They just don't have enough streaming content to justify offering it as a separate plan. With this steep increase in price with absolutely no changes or improvements, they will unfortunately lose all my business. Netflix seems to have the mistaken impression that they've got the market cornered so they can do whatever they want, but between DVR, OnDemand, HBO GO, Hulu, Amazon, RedBox, etc. I'll be able to keep myself entertained and probably save a few bucks in the process. Adios Netflix!

    • http://www.facebook.com/profile.php?id=41302226 Daniel Joseph Meyer

      Only because they wanted more money for their movies. That's another reason why they had to do this price change, the movie studios jacked up the prices for Netflix and they have to adjust accordingly. They have Netflix over a barrell so then we feel Netflix's pain too

  • http://www.facebook.com/profile.php?id=1537301385 Kenny Perciavalle

    What a stupid thing to say..

  • Lisa Porter Bridges

    What journalists and analysts are missing is that their streaming content is not yet worth $8. Maybe one day but not yet. In the long run I'm sure Netflix will be better off with streaming movies only. So most reporting on this are missing that yes for the future it's good to move away from dvds. But they have to improve their streaming selection before hiking up the prices. And yes the crappy way they have handled this has made a lot of customers feel unappreciated. Quite a few customers are cancelling their accounts based on principal alone.

  • http://www.facebook.com/profile.php?id= Anonymous

    It's not about the money. What it's about for me, and you touched on this in the article, is their attitude about it. Don't tell me that this price increase is to offer customers more options, because that's bullshit, and we all know it. Plus, the attitude that they are conveying is one of contempt and ambivalence towards customer concerns. I'm canceling out of principle. I'm a long time paying customer, and I don't appreciate being lied to and talked down to. Thanks Netflix, but no thanks.

  • Terrell Gibbs

    I think the media has been encouraging the hysteria by reporting it as percentage increase over the previous rate. It only seems low because Netflix was previously offering such a sweetheart deal as an incentive to get disks-by-mail customers to try streaming. But promotional deals don't continue forever, and with streaming getting popular, Netflix's licensing costs have increased in some cases by 1000% or more.
    Instead of a 50% increase over what I was paying, I can just as well think of the increase as 6% of my cable bill (and I've had several cable bill increases of that magnitude). It's still a small price to pay for the convenience and quality of having both streaming and blu-ray disks by mail.

  • Amber Travers

    I think what really bothers me is there are certain shows I really like to watch (True Blood being one of them) that are not available on instant watch. If Netflix wanted to crank the streaming price up to secure shows like that, I would have no problem abandoning the DVD option. However, their streaming content isn't good enough to do that yet. Not to mention, I have to wait up to a month after some things come out to even get them on DVD. Paying a few extra bucks to Blockbuster for the 1 DVD a month almost seems like a better option. I had the 2 DVD's at a time plan and downgraded to the 1 DVD at at time plan and am still paying more than I was before. It would have been nice if they raised it a little at a time rather than so much at once.

    I am paying more than before and getting less and I have been a customer for years. I guess it makes me feel unappreciated. It's just poor form on their part.

    • Stephanie Anne

      comcast has it on hbo on demand the night it airs.

  • Preston Boley

    I don't know about everyone else, but mine was not going up to $15.98. Mine was already $14.99 and now it's up to $19.99 for streaming and DVD's. For 2 DVD's, I was fine with $14.99, didn't like it, but was ok with it. Now, it's 20 bucks, at that point, I might as well do the Redbox for new rentals. It's not that many new rentals that I haven't seen anyway! Not worth it to me, they get the $7.99 streaming for me and that's it!

    • http://www.facebook.com/profile.php?id=526000981 Vicki Goodding Clinton

      I'm discontinuing mine as well. If they released all their new titles to streaming, it would be worth it.

    • Maria Edwards

      I just had streaming so mine won't go up..I just go to red box here on base if j want a new movie and they always have discount codes sent via text or email

  • Jason

    My initial reaction was anger when I saw the price increase, but honestly I got over it. Speaking as someone who cancelled my cable service over a year ago, I can't complain about Netflix at all. It has kept me constantly entertained, and if I was honest with myself before, $10 a month was practically robbing them for the amount I used it. So a 60% increase is a lot, but considering the fact that this is replacing cable for me, that's still one hell of a bargin.

  • Laurita Moore

    Netflix rocks! I like foreign films and the selection cannot be beat anywhere. My other favorites are educational documentaries. I have over 100 items on my DVD queue and over 100 on Instant. I no longer watch television at all. Much cheaper than cable and much more content.

  • Lizzy Claiborne

    60% more for what? They didn't add anything or make it better, Netflix just grabbed More. A lower price hike and then another little price hike, and nobody would be fazed...

  • Steve

    Their blog posting regarding this has reached the maximum posts (5000) that Blogger will allow on one topic.

    I could not find one person that was not either going to outright cancel or at least downgrade.

    I am downgrading to just the streaming.

  • Bj Sizemore

    I agree with Daniel, well partially. If they knew they were going to do this then they should have upgraded their streaming capacity and made more new movies available. There should be some visible compensation to lessen the blow for the hard headed and blind consumer that doesn't realize, "Holy crap, I've been getting a REALLY good deal all this time!"

    I'll be glad when their movies are point for point streaming OR DVD. I don't even use the DVD service, haven't in over a year. More choices for streaming is the way to go especially considering the price increase. I've been streaming only for some time now, so it doesn't really effect me in the least.

    IT WILL BE OKAY you guys. You are getting a great deal STILL. They have to recoup costs and make money you know. IT IS a business. Or would you rather they just close up shop? I know I wouldn't. I love my INSTANT NETFLIX!

  • Mark Brady

    Jeremy, do you really think it's right of netflicks to do this to it's customers, or are you just a perpetual speedbump?

  • Karen

    Have I missed something or do people just not understand that the movies they are able to stream are those they pay the studios for. Not to mention the fact that the studios decide what they are given, which means "no new releases" are going to be streamed. The price hike is not that much in real terms and if people want to go crazy about the (OMG!) 60% they can, but what is the point. Leave or stay. I paid $14.99 for 2 DVDs and unlimited streaming, which was great and a good price, so now I pay $19.98, it's $5 and if that is going to break me I would cancel or change my plan. Did you expect them to leave part of their service free forever?

  • Joe Hunter

    I personally don't think the new price is too bad, but for me at least, the streaming content isn't worth it, and having to lug DVD's around is a pain. The response from the company has been, shall I say, a bit too Los Gatos. There tends to be a bit of a bubble there, and people sometimes forget that the rest of the world may not have it as good as they do (not vilifying their success at all). For an international company to forget that is pretty amateur.

  • John Carroll

    60% price increase? That is a horrendous price increase. If you note, the previous fee for netflix took care of the advertising, the purchase of movies, salaries,and all overhead. They were making money. The 60% increase is pure profit. Unheard of mark up. It's like having income to pay all your expenses including eating out etc. Then gettin a 60% raise that is to go for nothing but your pocket book. Nice raise.

  • http://jwcllc@charter.net John Carroll

    Let's see. I make 1000 per week. I pay my bills. I buy groceries. I pay to eat out on my budget. I save 25 dollars per week. I get a raise of 600 dollars or 60% of my salary. I stay on my budget which is comfortable, I stick the 60% in savings with my 25 dollars and now I save 625 dollars per week. Nice raise. All profit!

  • http://jwcllc@charter.net John Carroll

    John Carroll Says:
    Your comment is awaiting moderation. at

    Let’s see. I make 1000 per week. I pay my bills. I buy groceries. I pay to eat out on my budget. I save 25 dollars per week. I get a raise of 600 dollars or 60% of my salary. I stay on my budget which is comfortable, I stick the 60% in savings with my 25 dollars and now I save 625 dollars per week. Nice raise. All profit!

  • Thomas Chirillo

    You go and tell that to some of our citizens who are elderly or poor or both and live on the pittance that our government sends them as an "entitlement". Netflix is a big part of their entertainment. By the way Jeremy what is your salary, bonehead?

  • Justin Brockman

    If you're so worried about a price increase of $6... you probably shouldn't be spending your money on netflix. Chances are you spend more time on netflix than you do with your kids so how bout you cancel your subscription and utilize that money in a much more appropriate way.

    • Brent Morris

      Whatever...How about if gas went up 60% tomorrow (only $6/gal), would you care? My problem, like all the others, is that their streaming content is really sub-par and the 1-DVD at a time kept it tolerable. But, as you point out, I can more wisely invest my $16 in gold and go to Redbox for some decent movies. Oh, and chances are, you'll never win a father of the year award...hooah?

  • Kate

    I think they didn't actually "raise" prices. They used to be only DVDs, then added the streaming for the same price. You could say they let us have a long trial of the streaming and are only now charging what its worth (I think its actually worth more than they charge even). Once streaming came out we increased our use of it over time and now are at about 80%. We'll switch over to streaming-only from 1 dvd & streaming, which is actually a drop from $9.99+tax to $8.99+tax for us.

    If we want to switch to DVDs for a month at a time, we can (it'll even save our DVD que I believe). They used to let you switch plans at any time and pro-rate, but not anymore (more typical of companies, so I can't complain too much). They needed to raise the prices because they got their in with the big movie makers before streaming was popular, and now their contracts are up and the costs have gone up, so they need to pass on the cost to us. Maybe this will even increase their selection at a faster pace than they have been? I am seeing lots of people planning to switch over to only streaming. Agree with the article--Netflix is a great value, but cancel if you want!

  • Kate

    To add: I'll be waiting until right before the Sept 1 change over date to get the most out of my money (and watch the DVDs I want out of my que).

  • Worst Article Ever!

    What a pointless article. Is was poor logic, lack of thought and my favorite section was look at three other people who are like me. It must be.... Learn to write a decent article or stop posting. You are awful

  • George Hunt

    Netflix LOWERED prices for those of us who choose either flix by mail OR streaming. When the two modes of delivering entertainment were bundled with no opting out of either, those of us who use only one mode paid more than we do now. I am paying about $2.00 less for the same service I was getting prior to the bundled price increase because I don't opt for streaming, don't use it, don't want it, props to Netflix, peace.

  • Julia von Arb

    A 60% increase is PLENTY to complain about especially when no services are added. And, I found out about the increase in a news article, FFS. If NF cared about keeping it's customers they would increase prices gradually, make their service better and notify us when big changes are coming. Thumbs down to NF and the author of this "article."

  • John Haake

    Netflix knows what they are doing by making me choose: http://www.johnhaake.com/wordpress/2011/07/netflix-is-making-me-choose/?posts.

  • Tim Pratt

    Is not refunding partial months legal? Cable companies and wireless companies will refund partial months.