Netflix price hike causes drama By CLAIRE ATKINSON New York Post July 13, 2011
Netflix customers pitched a hissy fit yesterday after the subscription movie service jacked up the price of its DVD and streaming video rentals.
The company pulled its popular $9.99-a-month plan, which included unlimited streaming and a one-disc rental. Netflix replaced it with a $15.98 offer that combines a $7.99-a-month streaming-only option and a new $7.99-a-month DVD-only, one-disc rental plan.
Angry customers lashed out at CEO Reed Hastings, dubbing him "Greed Hastings," on message boards and slammed the company for the 60 percent price increase, which comes on top of an additional $1 levied earlier this year.
"You guys better up your instant streaming selection big time," Rush Falknor, a customer on Netflix's Facebook page, warned.
Others at Engadget threatened to switch to rival video services, such as Amazon Prime and Hulu Plus, and supplement streaming video with $1 DVDs from Coinstar's Redbox and Blockbuster kiosks. (Hulu is part-owned by News Corp., which also owns The Post.)
Netflix shared the news in a blog yesterday, explaining, "We are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each."
In a down market, Netflix stock barely budged at $291.27. However, Coinstar got a boost, closing up 3.6 percent to $57.38, with one analyst predicting the operator of DVD-rental kiosks could benefit from the change.
"I am negative on [the price increase]," said Eric Wold, director of research, Merriman Capital, who downgraded Netflix last week to "neutral." "It's a pretty steep hike.
"I think people are seeing Redbox as a beneficiary," he added.
Wold forecast Netflix stock won't go much higher than $330 a share, given that content costs are going to rise considerably and international expansion will affect earnings.
"There's a risk of earnings being impacted in the back of this year and a risk of higher churn."
Netflix has 23.6 million customers; around one-third use the streaming service exclusively.