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Comment by dasil003 | Hacker News Reader

Looking at the comments I'm amazed at how quickly the sense of entitlement sets in. Netflix cut the cost and hassle of entertainment by 80-90% over what was traditionally available from rental stores and cable subscriptions a few years ago. Big content is seeing their profits evaporate and playing hard-ball with Netflix, and all you get is whining from customers about paying $15/month.

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It doesn't matter that they cut costs compared to "what was traditionally available". What matters is they RAISED costs compared to what they had before. For a long time now, I shared a plan with my parents - they used the DVD's, I used unlimited streaming, and we were happy. Now we have to get two separate plans, and pay more. Since there's no better option, we'll do this, but I think we're fully within our rights to complain.

This may be one of the exact scenarios they are after. I share a Netflix plan with my parents as well - I stream, they get DVDs. By separating the plans, Netflix has the opportunity to cut away at the plan sharing and cater separately to me and my parents.

"I think we're fully within our rights to complain."

Wait, what? You were violating their terms of service and you're complaining because they're raising the price you will have to pay to keep violating their terms of service? It's not like they're even threatening to cut you off.

I'm pissed they're raising my plan, but certainly you must have known you were getting away with something.

Surely it is only a TOS violation if he doesn't live with his parents.

So between you and your parents a few bucks a month is a problem? Since it is clear you live at your parents house, are you aware of the cost of TV service?

I think I have a 'good' deal with DirectTV at $65 (and that only because of a promotion and only having 1 HDTV/DVR box and 1 regular HD box), and it's still 2x the cost of Netflix.

>Since it is clear you live at your parents house

Not really. You don't have to be in the same physical location for streaming. I don't live with my parents and use their login for streaming too.

> I don't live with my parents and use their login for streaming too.

Then you're breaking TOS and the free ride is over. Netflix is no longer the disruptor and getting comfy as an incumbent now.

It depends on what you mean by "better." I have never once watched a Netflix stream without the movie's video freezing while the audio continues on. Usually happens at least twice, and "threatens" multiple times during a movie by the video jagging for a bit.

Amazon's pay per view streaming rental has consistently been all but perfect play.

So Netflix is better on price. Amazon is better on getting absorbed in the movie and not being thrown back into your living room because the movie stopped.

Youtube/Google's streaming rental quality is good, even great, except three out of the four movies I tried suddenly stopped and reported elapsed time as that the entire movie had suddenly been watched. Movie had to be started over, virtually ruining the experience. They did refund the rental fee without question.

> So Netflix is better on price. Amazon is better on getting absorbed in the movie and not being thrown back into your living room because the movie stopped.

For you.

I've watched hundreds of Netflix streams from 4 different states and a dozen internet connections over the last year and I can count the number of freezes on one hand.

Given that you have had a problem with both services, do you think the problem is perhaps with your computer/internet connection? I rarely have a buffering problem on Netflix and have never had the audio and video go out of sync.

It's possible. Then I would say that Amazon is much more tolerant of my problems.

I don't think they've cut costs at all. I pay them $9 a month now or whatever. I didn't spend $9 a month at Blockbuster before they existed, and I don't watch very many more movies now than I did then. Might even be less.

I do it because it's very convenient, not because it's a way to save money. I'll probably switch to DVD only from them now and actually start using whatever free streaming Amazon gives me via prime. The streaming selection sucks anyway, I probably watch more on Blu-Ray or stuff I torrent.

Of course they don't cut costs over something you don't pay for. Talk about a straw man, sheesh.

It was something I did pay for, just not as much. They increased cost by increasing convenience.

If you count 'movies I bought' + 'movies I rented from Blockbuster' they have cut costs for me. I didn't buy or rent many.

But that's not what it's really about. If you cancel your cable and get Netflix, you are saving bundles of money. I know more than a few people doing that, and I am so freaking close to it I'm not sure why I waste the money on TV anymore other than for ESPN & live sports. If not for that, I'd be long gone.

Depending on your ISP, you may have access to espn3.com. Most major sports leagues also offer online streaming packages for something like $100 for a whole season. They don't get you 100% coverage (due to local blackouts, games on TNT or other networks, etc.) but they get you pretty close.

And, of course, there could not be a sense of entitlement either, if your cost of netflix subscription wasn't less than what you used pay.

You call it whining from entitled commenters, I call it feedback from customers who are:

a) Having their subscription prices raised by up to 60%. b) Being told so in a blog posting where that info is buried so far down it needs a snorkel to find the bedrock.

They just told me in an email, and I just canceled my subscription.

I didn't appreciate the way they did it: No explanation of why the increase is necessary, plus idiocy like: "Your price for getting both of these plans will be $15.98 a month ($7.99 + $7.99)." No package discount, and no consideration for having been a loyal customer for six years straight. No, just a form letter and a 60% price hike.

Their post-cancelation survey offered no way to indicate this change as the reason (and no free-form entry). Didn't they anticipate this? Maybe they don't want to know.

This makes me sad. I love Netflix. I'm not saying it's not worth $16/month, and I may even join again someday. But I hope a few million customers slap their corporate hand.

Of course they did. But if you raise costs by a X% and lose Y% of your subscribers, there are plenty combinations of X and Y where you make a boatload more money.

Users have valid criticisms here. Nothing in their post indicates that Netflix's costs have increased, so why would they hike prices by 60%? Why would you expect a positive response to such a move?

Netflix operating costs:

    Q1 2010: $202 Million
    Q2 2010: $203 Million
    Q3 2010: $225 Million
    Q4 2010: $232 Million

    Q1 2011: $300 Million

Their costs have reportedly increased by ~11x

http://money.cnn.com/2011/07/08/technology/netflix_starz_con...

Their licensing costs. And even then, that's a proforma FY2012 guess from an analyst that's not affiliated with the company. It's worth asking if Wedbush Securities has a short position on NFLX.

This is a company that operates dozens of physical warehouses, employs thousands of people, and pays an astonishing amount in postage fees.

Their licensing costs are surely just a fraction of their bottom line.

According to Netflix's 2010 SEC filing, their operations expenses are around $400 million. Adding in development, marketing and general administrative costs, their total non-license costs were around $800 million.

They paid $1.2 billion in licensing costs. It's their most expensive cost, by far.

That includes their physical disc's, doesn't it?

The post I replied to -- and my reply -- was addressing streaming licensing:

Pachter predicts Netflix's streaming content licensing costs will rise from $180 million in 2010 to a whopping $1.98 billion in 2012.

In other words, of that $1.2bn you quote from their 10-K, 1.02bn was physical discs.

You've got that the other way around. In 2010, Fullfillment Expenses cost them 9.4% of their revenue, Cost of Subscription cost them 54% of their revenue.

> It's worth asking if Wedbush Securities has a short position on NFLX.

It doesn't look like they take positions themselves. They seem to be your standard financial services broker/dealer, in which case they do research for clients who take positions.

It's likely they have a "Sell", or at least "Hold", rating if they're writing negative notes. But that's as it should be; I think you have the causality backwards in your implication.

Netflix's subscribers have one valid complaint between cost or quality of content, but they can't complain about both.

As much as everyone thinks that Netflix is going to compete with cable, the only way to truly do so is to start getting first run, quality content and that costs money - boatloads of it. Netflix has gotten a pass for now since it was the only game in town but if they want to compete for your entertainment dollars they're going to have to spend some cash on quality first run content.

I give it less then 2 years before they start offering tiered plans - and maybe something subsidized via advertising. Its the only natural evolution of their model.

IIRC, their streaming costs were based on number of subscribers. With this plan, they ensure that only people who actually use unlimited streaming (and are therefore willing to pay for it) will be included in that subscriber count.

Now this makes sense, thanks for pointing this out, now I don't have to cancel and get cable tv.

Netflix is free to set their own prices, and I am free to change my subscription (cancel or drop to streaming/dvd only). However doubling the price of something, and expecting no backlash is silly at best.

In addition they cut the cost and hassle of legal entertainment. With this change they have now increased the cost of legal entertainment.

I'm fine with them upping my costs, as their costs increase, but this seems beyond that.

I suspect it isn't just Big Content. I suspect they are sending more DVDs than they expected, and they have to keep up with costs.

This ends up not affecting me at all, though. The hassle of waiting for the DVD, and then shipping it back, meant that I only ever watch the streaming stuff. (I obviously wasn't a fan of movie rental stores.) And I'm already paying $7.99.

I feel like an entitled brat saying this, but fuck it, I'm moving to DVD-by-mail and ~torrents (or that old news service we're not supposed to mention).

Hopefully, we see more studios learning the lean business principles many of us have adopted in order to bootstrap.

Content costs should be reduced over time given current technological abilities, and there should be significant opportunity for up-and-coming talents to get on the screen with significant viewing audiences.

So you're saying that if a business prices their product too high, you should steal it instead and that this is ok because they didn't follow lean business principles?

I think there is a large class of people who have no moral objections to piracy. The only reason why they pay for something like netflix or itunes is because of convenience. That is, they are paying for the convenience, not the content. Therefore if the price goes up, and exceeds whatever value they are pricing that convenience, they naturally revert to other methods of getting the content (i.e. piracy).

So stealing is not ok because they didn't follow lean business principles--stealing was okay in the first place. It was just a happy coincidence that using netflix wasn't stealing.

I like how the OP of this comment thread is going to continue with half the service, and pirate the rest. Nice doubled standard on the morality of piracy. The thing is, pirating is more convenient than DVDs. Keeping streaming (which is more convenient that torrents) and then torrenting what isn't available on streaming seems to be the most convenient move.

This was in no way motivated by a moral consideration on my part. I do not see it in the moral context at all. This was an issue only because of convenience and ease of use for my significant other.

Okay, so here's a simple example. You can buy a sack of rice anywhere for $2. If you sell the same kind of rice for $200, do you think you'll sell any sacks? You'd go out of business, and deservedly so, right?

The interesting thing in Netflix's case is that the product is (content + convenience), but since the content can be obtained (illegally) for free, the customer sees only the value of the convenience. If you raise the price above what the customer is willing to pay, why would you expect the customer to pay it?

Now sure, piracy is an illegal act, but so is fraud. Yet insurance and credit card companies manage to sustain a working business model.

What pisses me off is that I was perfectly content with Blockbuster, but they broke Blockbuster's back and now I'm stuck with bad service no matter where I go.

Netflix's streaming library is weak, and now that Blockbuster has dropped store inventory and changed their rental periods, I have to watch a movie in a day in order to avoid a late fee.

Bait and switch.

Interesting. You are one of the few people who say they like Blockbuster. I am just curios, what did you like about Blockbuster and how did it (does it?) compare to Netflix?

I like that I can take a movie (after receiving it in the mail and watching it) to the store to immediately pick out a new one with my wife or my kids. It's instant gratification, and I don't have to wait for my best selection (usually).

Also, I get a free coupon every month for an additional in-store game or movie. My kids love this for games.

Lastly, you can now add games to your queue online, so it's like Gamefly + Movies.

How about Redbox?

I clicked Comments to say the exact same thing. They have access to thousands of films and whole seasons of TV shows and people are complaining because it's going to cost a little more. Unbelievable.

http://youtu.be/8r1CZTLk-Gk

To be fair, it's not the first time Netflix has raised prices either. I'm paying much more now than I originally was and I was okay with incremental bumps. But this time they went about it poorly. And people are probably now realizing their prices are going to be raised on a near annual basis while their viewing habits likely haven't changed all that much.

I'd gladly go back to the older system whereby I was give X hours of streaming for my $X DVD plan. But the odds of me paying for a streaming plan on its own are quite minimal given the value of that service.

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