May 20, 2014
Latest Netflix Price Increase avoids PR disaster
Anyone who has been following entertainment, technology, and public relations over the past few years is familiar with the Netflix debacle. In an attempt to split its two subscription offerings, Netflix grossly overestimated its customers’ tolerance for paying for its services. When subscribers instantly and unilaterally protested, Netflix reversed its field; narrowly avoiding a PR disaster and needing serious Crisis Public Relations.
It took some time, but now the company believes the smoke has cleared enough to try another rate increase. Ronn Torossian believes that, now, they have chosen wisely. For several reasons.
First, the latest increase is only a buck. A price hardly worth noticing for most consumers who have grown accustomed to paying a dollar premium for a single HD movie on other streaming services. Because the market is already used to paying a bit more, there should be much less backlash.
Another reason Torossian believes Netflix is safe from another PR disaster in the wake of this decision has to do with timing. Amazon recently released an increase in its Prime service, which includes a streaming component. Though the increase is an annual one, it “feels” larger to customers. When most barely blinked – they seem more upset about having to pay taxes for ordered products – Netflix saw an opportunity to nudge its own margins up a tick.
But, Torossian said one of the key reasons why this decision was so easily accepted by the marketplace has to do with Netflix’s successful original programming. With one moderate hit, and one legitimate smash on its hands, Netflix has shown its customers that the company is looking out for their entertainment interests. Instead of the black hole of B-movie entertainment, Netflix has become a true trendsetter in the industry.
Because of these reasons it appears that Netflix will be able to make this increase without incurring the ire of its fans, which is always important, but even more so now that so many other players have entered the streaming marketplace.