Netflix, Despite The Price Hike And Nightmare PR, Is Still The Best In Field
On July 12, Netflix announced via press release that it was raising the price of its DVD-by-mail and streaming combination by $6, thus beginning one of the most painful-to-watch PR meltdowns in recent memory.
But despite its many missteps and overnight 60 percent price hike, I'm not quitting Netflix. And I don't think I would even if they raised prices again.
There was the excruciating blog post that tried to whitewash the price hike as a "lowest prices ever!" benefit for customers; the tens of thousands of outraged comments and tweets that did not get any kind of response from the company whatsoever; the comment by Netflix PR rep Steve Swasey that the pricing change represented nothing but "a latte or two" to most people; and finally, the proclamation by CEO Reed Hastings' that -- even in the face of an Internet hate-storm nearing Casey Anthony-proportions of wailing disbelief and boiling anger -- "the noise level is actually less than we expected."
"Less than we expected"? Really? What were they expecting, an angry mob to come burn down their building?
It has been a horrendous two weeks for the corporate face of Netflix. They remind me of that famous bit from "The Simpsons," in which Sideshow Bob stumbles around hopelessly getting hit in the face by a rake with every step he takes. They are like King Midas, if everything King Midas touched turned into a horrible public embarrassment.
And yet despite having to catalogue the daily woes and face-plants of the walking failblog that Netflix has become, I have not joined the many who are quitting or jumping ship. I am still a paying Netflix subscriber -- have been since 2003 -- and not only am I a paying customer, but my appreciation for the service has grown stronger through these trials and tribulations. In studying Netflix, and in becoming acquainted with the current alternatives out there, it has become clear to me that Netflix is still the king of online media.
So why is Netflix still the best option? It's rather easy to break down when you consider the alternatives:
UNLIMITED MOVIES ARE BETTER THAN PAY-PER-VIEW MOVIES
There are Internet-based movie-streaming companies out there that can match Netflix in terms of library size; it is a myth that there aren't. The iTunes database of films and TV shows, for example, is gigantic and has available online virtually every movie and program you could want; Vudu, recently purchased by Wal-Mart, has a similarly enormous library of HD-movies, including all the new releases. iTunes and Vudu also both play on great user interfaces and seem, for me, to stream in higher quality than their Netflix cousin.
But do you know what neither iTunes nor Vudu has that Netflix does? A flat fee to watch as many movies as you want per month.
There is something cumbersome and unpleasant about having to pay each time you stream a movie online. There is something equally unsatisfying about not being able to sample the first 5 to 35 minutes of a movie before committing to it. Perhaps I have been spoiled by Netflix's "Watch Instantly" option, I don't know; but that I can't watch what I like when I like without being reminded of a charge on Vudu, iTunes and other on-demand providers really turns me off from those services. This ignores the fact that watching two HD movies on either of these services will generally put you over the monthly fee that Netflix charges for unlimited movie watching.
The winner in the preferable structure battle seems fairly obvious: unlimited streaming over pay-per-view in a knockout. Unless you're only watching two movies per month, you need a flat-fee service to fulfill your movie-watching needs cheaply.
NETFLIX HAS THE BEST UNLIMITED LIBRARY OF STREAMING SITES
... and really, it's not even close.
Even with Amazon Prime's addition of CBS shows and the NBCUniversal movie catalogue bringing its streaming catalogue up around 9,000 selections, it is still totally decimated by the estimated 25,000 movies that Netflix can stream. Prime might be about $1.50 per month cheaper than Netflix, but Netflix has such a huge selection advantage that Prime is still a non-competitor until they fill out their library a little more.
Hulu Plus, meanwhile, is robust enough at 16,000 offerings to be considered an opponent, but unfortunately for the consumer, it can only meaningfully compete against Netflix in its selection of television shows. Its movie catalogue is still inadequate, even with the recent addition of the Criterion Collection films. And, oh by the way, you still have to sit through commercials even though you're paying $8 for the monthly service.
One of the things that drove Netflix to decouple DVD-by-mail and streaming was the new strength of its streaming library, which grew from boy to man before our very eyes. And while many complained that they didn't find the selection of Netflix's streaming to be extensive enough to warrant its own service, that selection certainly begins to look worth the $8 per month when you begin to consider your alternatives, either from on-demand (where $8 can only get you two movies per month) or from unlimited (where the movie selection is really paltry).
REDBOX IS INCONVENIENT, BLOCKBUSTER IS STILL ON-DEMAND AND PIRACY IS UNETHICAL
I think my objections on the previous points fairly well explain themselves, but the last and best three alternatives to Netflix all have pitfalls that make switching to them totally unthinkable.
First, the price is right for Redbox -- $1 per night per DVD is a commitment I am willing to make to watch a movie I might hate. And yet all of the other services I've listed, including Netflix, make having to go to a vending machine for a movie seem like a boring waste of time by comparison. It is all of the inconvenience of brick-and-mortar movie rental stores with none of the fun of browsing through the aisles. The fact that they only carry mainstream new releases also eliminates them from my queue; I like my classics, my indie films and my foreign flicks, which Redbox just does not carry.
Blockbuster-by-Mail is making a big push to pick up Netflix deserters, so much so that they are offering to match Netflix's new prices for any former Netflix customers who sign up with them before September 5. That's great for those who want DVDs by mail -- better selection and the ability to return and browse for DVDs in the still-existent stores -- but for streamers, you're out of luck. Blockbuster has on-demand streaming, which again would put you over the Netflix unlimited price point after just two or three films. Better to just consolidate your bills and rent by DVD and stream from Netflix.
Finally, we come to piracy, which is where many commenters on HuffPost say they are headed now that Netflix has upped their prices. While it's true that you can't beat The Pirate Bay's selection or prices, the combination of being illegal and unethical is at least enough to deter me (if not most adults); and what's more, prices for streaming are low enough that it does not seem worth the risk nor the ethical dilemma.
WRAP-UP
Netflix has done a lot of nasty things in the last two weeks that go against the decade of accumulated goodwill and its reputation for excellent customer service. If there were another service to run to, to punish Netflix, to teach them a lesson, I and a whole lot of other angry consumers would. But frankly, there isn't another option, and so I'm staying put.
No online video site can match Netflix's combination of price, selection and ease-of-access. As I see it, you have three options as the Netflix PR crisis winds down:
1. Sacrifice some money in return for a better selection.
2. Sacrifice selection in return for some money.
3. Get over what jerks Netflix have been and stick with them at higher prices.
I'll be going with Option Number 3, for all of the reasons listed above (to be supplemented, I should note, by a few trips to my local library's DVD section). I'm staying with you, Netflix. But could you do me a favor?
Next time you're going to raise prices, send me a nice email first, OK?
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First Posted: 07/29/11 12:51 PM ET Updated: 09/27/11 06:12 AM ET