Marketing miss.

      4 Comments on Marketing miss.

So Netflix hiked rates today, and people are upset.

I don’t get it. Why the angst? I looked, and as far as I can tell, it’s not a big deal – I’m finally getting charged a pittance for something I value highly.

Bear in mind, I signed up for Netflix back in 2002, and have had a 3-disc-at-a-time subscription the whole time. It’s $19.99, which is less than two premium margaritas at Don Pablo’s. On the other hand, I’ve had times when I’ve had a disc out for 3 months because I keep not making time to watch TV. When they introduced streaming as a free feature, I suddenly was getting ten times the value for my subscription. Taking the rate up to $23.99 for the same deal seems reasonable to me. If anything, I’ll drop the disc subscription (which I’m sure Netflix is just fine with, since they’re getting out of physical distribution as fast as they can) and actually save money.

It seems odd, though. Didn’t Netflix do focus tests? Did they leave out the nerds or something? I mean, your target market is “people who use the Internet a lot,” which means they have a disproportionate reach to their size, and the ability to create flash crowds with things like trending on Twitter. Even a small percentage of people who are really pissed off can make the story “people are angry about Netflix price hike” instead of the more desirable “Netflix clarifies pricing plans, increasing customer choice”.

I’ve met some of the Netflix people, (on the data and API side, not marketing), and they are smart, capable people. Clearly, though, somebody missed the key message that needed to go out. From the NYT article:

What cost $10 a month — online streams of movies plus one DVD by mail at a time — will now cost $16 a month, the company said…

No no no! The message you wanted to get out was “This is a 20% price cut on our most essential service.” Unlimited streaming for $8 a month? That’s a *great* offer.

Swing and a miss right there. Dig that back foot in, and watch it all the way to the bat next time. You’ll get ’em.

4 thoughts on “Marketing miss.

  1. Nate

    I agree. They are missing an opportunity to tell the story better and better sell the new pricing scheme. Don’t make us feel like we were robbing them for years and now they are ajusting to make us pay what they deserve.

  2. MOM

    I like your arguments. I am a big fan of Netflix and feel that we get a great deal paying only $10.99 for 1 disc at a time and free streaming. We’d will go to unlimited streaming for $8.00 a month any time.

    P.S. Due to the richness of offerings delivered by way of our Roku box, we have canceled our cable account.
    That saves us $70.00 a month.

  3. Talley Sue

    You’re right–this is completely being seen as a price hike, and not a wider offering, etc.

    An increase by $4. In a year, that’s nearly $50.

    Of course, it’s a 20% increase, which is big. Consumers may easily believe that Netflix’s increased costs do not exist, and that the price hike is simply “because we can.”

    Now, they WERE giving people streaming for free. Maybe they needed to have first cancelled free streaming, and then given people a month break before they said, “well, we’ll give you streaming for $4 a month.”

    I think it was a mistake to give unlimited free screening at all.

    And I think the reaction is driven because in general, people do NOT want to pay for content on the Internet. They don’t even want to pay subscription costs. (or, they think of their ISP costs and their hardware as “subscription costs” and don’t consider that there are costs to Netflix on the NYTimes for delivering content–let alone creating it)

  4. Kevin Matheny Post author

    You’re right – many (if not most) people mistake the cost of the network for the cost of the content.


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