Is Netflix Really Facing 50% Churn? Well, No
Cable operators across the country weary of cord-cutting hype — not to mention Jeff “200-Pound Chimp” Bewkes and Charlie “Blockbuster” Ergen — must be enjoying a moment of schadenfreude about Netflix’s PR headache this week.
There has been an allegedly titanic customer backlash against Netflix after it announced it will hike subscription fees by eliminating bundled streaming-plus-DVD plans (see Netflix Hikes Price Of DVD-Plus-Streaming Service Up To 60%, Netflix Price Hikes Aimed At Pushing Subs Away From DVDs: Analysts and Dish Cuts Blockbuster Rates For Netflix Subs, But Still Isn’t Cheaper).
One data point: BTIG Research’s Rich Greenfield said that of 35 calls placed to Netflix customer service Wednesday, he reached a rep only 15 times with wait times between 9-15 minutes.
And according to a couple of unscientific polls, Netflix subs are steaming (streaming?) mad and about to cancel en masse.
USA Today says 74% of nearly 6,000 of readers who took an online survey said they plan to quit Netflix, while TheStreet.com found 54.1% of 5,000-plus voters said the same.
Emphasis, though, on the “unscientific” nature of these polls — e.g., they’re for entertainment purposes and actually statistically meaningless, since the voters are self-selecting and not a random sample. If you’re cheesed off, you are 4500% more likely to vote in such a poll, according to an unscientific poll I conducted just now inside my head.
Still, Netflix will lose customers. But it’s likely going to keep adding subscribers who sign up for the $7.99-per-month streaming-only plan.
What’s frustrating for Netflix customers is that the company is now forcing them to make a choice at all. And, as one of my friends pointed out, Netflix is acting as if the catalog of ~20,000 streaming titles is roughly equivalent in value to a selection of 100,000-plus DVDs. Clearly, it’s not.
Piper Jaffray’s Michael Olson now projects Netflix churn of 4.3% in calendar year 2012 vs. his previous estimate of 4.0%. But he also expects an increase in revenue to more than offset higher churn.
Is Wall Street wrong? Did Netflix push its luck too far with the price changes? Add your unscientific comments below.
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Mark commented:
Netflix has opened the door for more competition and that will be good in the long run.
william allen commented:
Netflix had no choice since the big boys were letting them know they got away cheap the first time they nego. for content but as they started to grow and flourish at the expense of the big operators they were certainy going to pay the price for competing and reaching into the pockets of the big players.They are still less expense and one of many options now in the streaming content business.
Nat Kayle commented:
When I want to see a movie I don't want to wait days for it to come in the mail so when Netflix announced their streaming service I eagerly signed up expecting to watch all my favorite old movies. To my frustration not a one of dozens I looked up was available by streaming. And what was available was crap I'd never even heard of. I felt duped. If they are going to claim to be a streaming service they should stream stuff people want to see.
vincewarde commented:
Talk about a bad time for a price increase - within months of ATT and Comcast capping our bandwidth. It's obvious that Netflix did not get the memo: Streaming is now limited. We need DVDs more than ever now - especially those of us who don't buy TV services - in order to save GBs. They would have been much wiser to have avoided splitting the streaming and disc services - now I am free to at least look at other disc services without loosing the Netflixs streaming service. Did they think this through? I think not.
Home Theater Spot commented:
Netflix is becoming really hard to figure out. They claim in earlier press releases that they are are primarily a streaming company, that also happens to rent DVDs. Number one the streaming selection, as mentioned is extremely limited. The quality leave much to be desired as well. Audio is limited to 2-channel and the video is not even DVD quality in many instances.
Upcharging for Blu-ray discs is also a turn off. I didn't buy a 55" HD display, and a projector with a 92" screen to watch DVD or lesser quality. Netflix, I have played the "plan change game" with you many times. This time I am done.
So happy that Redbox is in my area. I have also vented my frustrations here, http://www.hometheaterspot.com/showtopic.php?tid/146380/
Maybe Netflix will get the message.
Napa Bob commented:
I don't know about others, but streaming over Comcast in the Napa Valley (highest speed possible) doesn't work very well. I'll drop the limited streaming option, period.
Tiberius Kirk commented:
GREED IS GOOD ... if netflix wants to raise rates , they should also upgrade there entire streaming collection... no one wants to look at movies that went straight to dvd or movies no one has ever herd of ,,,, its shocking no one is talking about the quality