NetFlix, Qwikster, Comcast, Dish(ter) : The Real Question Behind the Netflix Price Hike. How Much are You Willing to Pay for TV and Movies?

Full disclosure. I am not currently a Comcast or Dish(ter) subscriber.  I really think dish should change their name to Dishter to kindof push their image with the younger generation. I am a Netflix subscriber.  I have been for a few years now.  I like getting DVD’s in the mail, I love watching streaming TV and movies with the online service.  I have not forgotten why I am a Netflix Subscriber.  There is 1 primary reason.  It’s the Money!   Do you know how much it costs to waste time watching TV these days.  Let me break it down for you. 

Comcast can get you into their basement package for $30 a month for the first year.  Then the price skyrockets for year 2 of your 2 year commitment.  Nice! To be fair to Comcast they aren’t the only ones playing the gouging game to their customers. 

In fact when we look at the same package of channels (limited to say the least) on Dish, magically the cost structure is exactly the same.  Even the required 2 year agreement is the same.   I am sure that executives from both companies would gladly explain how the economics of the market are such that this is the price point that the customers are willing to bear for the quality of entertainment that is being offered. Yeah sure.       

The thing that really gets me is not only do you have to pay through the nose for their services but you still have to suffer through the commercials.  Please!  I hate being marketed to.  There is nothing better than watching chick flick TV with your wife, or girl friend only to be offered feminine deoderant spray, personal lubricants, pills to increase your “personal satisfaction”, plastic surgery options, skin care products, body shapers, hair removal aids, appetite suppressants, exercise programs, and of course personal hygiene products.  No wonder women in the US are having self esteem issues.  After 2 hours of chick TV I start to wonder if these jeans make my butt look big.

Its no better While watching sports.  In fact its probably worse!  My son believes he can tell you whether you are on the football game or the baseball game by the commercials.  If it’s a beer commercial, followed by a truck commercial, followed by a witty insurance commercial your watching football.  If it’s a beer commercial followed by a NASCAR promotion, followed by a car commercial followed by Viagra or Cialis your watching baseball.  You want to know the sad thing.  He’s right!

I don’t want to watch commercials! I don’t want to fast forward through them with my TiVO. I don’t want them to be there at all!

The answer for me was Netflix. Initially when I signed up it was $8.99 a month for a single DVD sent through the mail. Shortly thereafter the offer was extended to include streaming movies and TV for an additional $1.00. Now that’s a total of $10 a month. There are no commercials. No sidebar ads on the website. Nothing. I will admit I wondered how long it could last. The content portfolio was extensive. I was in heaven. The only content that is lacking is ESPN. I am still waiting for their executives to pull their heads from the proverbial sand and realize that their internet distribution will far exceed their channel partners and in many ways allow them a lower operating cost structure and higher profits on the same advertising revenues, but that’s a blog post for another time.

When Netflix announced the dreaded price increase the Media jumped on them so hard it made me stop and wonder what I had missed. Surely there must have been something missing from my price notice. My costs are indeed going to be going up. From $10 to $15. I get that from a percentage increase that is a %50 bump. I see that if you are comparing the cost of the old subscription to the new subscription we are talking about a big jump. The thing is, I am not looking at a cost comparison of Netflix subscription options. I am comparative cost shopping amongst media providers. Netflix wins hands down. 

Today I received an email from Reed Hastings apologizing for the way that he had handled the notification process for the price changes and restructuring of Netflix offerings. This was clearly designed to placate the media and drive value back into the falling NFLX stock price. I hope it does. The email was a rehashing of what I already clearly understood. You can’t run 2 internet based businesses off a single cost structure. DUH. 

It seems the media needed to make a really big story out of something that really wasn’t, so they could flex their muscles and crush a perfectly great companies image in the face of a $5 price increase.   

Over at All Things D Peter Kafka discusses his opinions on the diversification of offerings announced in Reed’s e-mail and makes what I think are some really good points.   

Thanks for the email Reed. I really did appreciate that you reached out to me, but you didn’t really need to. I am still convinced that Netflix, and now Quikster, are the definitive TV and Movies option. At $15 a month I still smile every time I turn on the Netflix knowing I can watch my favorite Movies and TV shows without a single commercial interruption. I’m looking forward to new release DVD’s in my mailbox from Quikster. And all this without the 2 year time commitment that has built distrust and disdain between the providers and customers of every cell phone network, communications company, media conglomerate, TV network, and movies rental organization who has attempted it. It is a pleasrure doing business with a company who, in my mind, has done just about everything right! 

VIVA Netfilx! Viva Qwikster!

Comments

• Anonymous
  September 19, 2011
  I went to the movies on Sunday.  It cost me $10.50!  Netflix is a bargain.  The only thing I don't like is the new name.  Netflix says what it is.  Quikster says nothing about the product it offers.