Following the announcement that the cost for Netflix's vaunted DVD and instant streaming plan would jump 60 percent in September, several researchers measured the doom and gloom of a disgruntled subscriber base. And that was before Netflix itself revealed it might lose more than one million members this fall. A recent survey from Magid Associates provides a glimpse into why the company may not be too far off - and who their money will go to instead.
Just one week prior to the controversial price hike taking effect, Magid asked 700 Netflix subscribers and 350 non-subscribers about their plans regarding the instant streaming giant. Would members remain members with Netflix ostensibly asking them to foot the bill for its ongoing expansion and growing licensing costs?
Almost 10 percent of respondents told the firm they intended to cancel their current plans straight away, avoiding the possibility of paying extra. 14 percent of respondents claimed they were "seriously considering" axing the monthly Netflix bill from their monthly bank statements. Another seven percent were unhappy with the service in general and would cancel; the rate increase was a non-factor for that group's decision.
Mike Vorhaus, president of Magid Advisors, believes Netflix's problem indeed lies with content quality.
"A major reason that many consumers are not happy with their Netflix service is due to the quality of the content selection in the streaming service," said Vorhaus. "Netflix will need to improve the breadth and timeliness of their streaming content to re-build major consumer momentum."
A difficult balancing act, as content providers are increasingly seeking more cash for deals. A summertime contract renewal with NBCUniversal was estimated to cost Netflix $300 million. Failed talks with Starz earlier this month mean that by February Netflix could lose a large portion of popular TV shows and movies.
Magid found one DVD rental competitor is poised to reap the rewards of Netflix's current crisis. Around 60 percent of polled members confirmed they were also avid Redbox users. Half of them said the price hike would push them to patronize those big red kiosks more often.
Overall, the results echoed another study conducted last month by analysts at Piper Jaffray. The group revealed that 15 percent of the 350 polled Netflix subscribers said they would end their memberships, while 24 percent would increasingly use Redbox.
Netflix's response to the confluence of bad news involved splitting its business into two parts: DVD rentals are now branded "Qwikster," while instant streaming will continue under the Netflix name. Already that move has caused headaches for the company's PR. A Twitter account bearing the quirky name existed prior to the official announcement, effectively throwing a monkey wrench into Netflix's plan to utilize the social networking phenomenon and get the word out.
If things couldn't get any worse for the company, new reports suggest Dish will unveil its long-rumored, Blockbuster-branded streaming service this Friday. It's unclear if the Dish/Blockbuster service will be able to offer a compelling deal for both ex-Netflix members and new customers, but the companies have shown in the past that they have no qualms about going after the company.
A battle between the two rivals could be the best new show in town this fall. (via Home Media Magazine)
