An open letter to Netflix;
This is a really bad move for your company, let me break it down for you!
You were transforming media as we know it into an animal capable of swimming with, if not taking down, the big boys. Many people that I know (including myself) have given up paying for cable and gone with Netflix almost exclusively. You could have been well on your way (especially if you developed better set-top boxes) to being ‘the new television”. I really believe, had you kept adjusting and advancing your model in the other direction, you were on target to set the new standard in the entertainment media industry. This move is almost certainly going to reverse that momentum. Had you kept heading in the direction you were going, you could have further revolutionized media as we know it! Instead you are heading down a long sad path following a long precession of bad examples such as ebay, cable, vegas and many more. These entities all ditched what made them rich household Icons, in favor of putting the squeeze on the people who got them there in the first place. Sounds ridiculous right? They all have another thing in common, they are all losing money and clientele at an alarming rate. Now, you are following the herd off of the cliff, you have opted for greed over integrity. You are discarding key elements that brought your company where it is today, in favor of making more money, but you are shooting your empire in the foot and holding the door open for the competition to waltz right in. Any boost in revenue from these vader tactics that you may see, will be short lived. In the long run, you are undermining all of your previous efforts. If you are going to start changing things, you can’t change things that give your company its perceived value if you want to continue on your quest for world domination. If you make any changes on your model of success, it should be to ad value, to “enhance” your product, not subtract from it. Do the math!
Johnny has plan A for 9.99, he’s very adamant about watching his movie and sending it back immediately, so he averages one and a half movies per week. That comes out to 6 movies per month. That equals $6.00 (on the high end, personally I only do about 4 movies per month) which, when compared to the next most viable option (redbox), accounts for $6 of your $9.99 monthly fee leaving $3.99 to account for instant view movies. $3.99 for 10,000 movies sounds pretty good right…and it is. Charging any more though quickly depletes from it’s value and here’s why.
For me and many others Netflix instant view has replaced cable premium movie channels. It has some draw backs and here is what they are:
- Premium cable channels ad one or two recent box office movies per week, I rarely see any on Netflix. The movies through the mail offset that, but no longer will once you more then double what you were already charging for the same exact product.
- premium channels have great original programming and you see it right when it comes out, Netflix has no original programming, but you might see it months later…if you’re lucky! I’m still waiting for True Blood.
- Cable started following Netflix example and now offers many instant view movies included in the price of their monthly fee free of charge. Netflix is no longer going to follow it’s own example and will most likely be trampled by its own clones.
- Neither HBO nor Netflix manages to ad a substantial amount of fresh programming on a weekly basis, so we’ll call that one a draw…they’re both losers.
- Your streaming is pretty good, but it does fail…sometimes epically! I have had one movie cut out and start over as much as twenty times before I was able to get through it to the end, cable doesn’t do this, it’s either up or down, but mostly it’s up. It’s really not a pleasurable experience to spend four hours watching a movie that is really only an hour and a half on any other source.
- out of ten thousand items, lets say, for the sake of argument, a person can find 100 movies that they haven’t seen yet, but would really like to watch…unlikely. Out of those hundred you have to find something you are in the mood to watch. Over a short period of time you cut through those continually whittling it down. Before long, once your sign-up spree has ended, you’re back to having a sparse collection with very few new releases coming out. This is barely and I mean barely going to cover your entertainment requirements.
The bottom line is, the combined package of 1 DVD at a time and instant view is basically an adequate replacement for a premium movie channel at $9.99, but if you go to much beyond that, you’re basically taking away the value that your customers see in it. I could see paying two maybe even three dollars extra per month for a service I perceive as getting ever better, if I had received the letter that was more like this:
due to our continual rise in Netflix customers, and our desire to bring you more new releases, it is going to be necessary for us to upgrade our server farm and increase our broadband to insure that everyone continues to receive the high-quality streaming we pride ourselves in. In order to offset our costs, we are going to be increasing our subscription fees by two dollars. To demonstrate the value you will be receiving in return, we have added 10 recently released to DVD movies to our new releases section. Check them out! Thank you for your continued patronage and support.
The letter that we got was more like this;
we have decided to give you half of the product at more than twice the price. A sucker is born every minute, thank you for being one of them. Drive through please .
Conclusion: Netflix will be in decline by their own design and will fade into the bytes of time.
SMOOTH MOVE NETDIX!!!