Netflix takes a beating for its price hike—blame the announcement, not the cost [UPDATED]

Tuesday and Wednesday were days of rage on social media as Netflix customers blasted the company’s pricing changes. But were they angry about the new cost or the company’s tone-deaf announcement? UPDATE: As anger over the announcement simmers online, Netflix Twitter account and blog remain mum.


UPDATE: Two days after dropping its big announcement about price hikes, Netflix remains mum on Twitter and its blog. However, the company’s communications department has unveiled a new deal with Nintendo 3DS, giving subscribers the opportunity to stream the video games. It also issued a press release on a contract renewal with NBCUniversal. In the meantime, anger over Tuesday’s announcement continues to simmer online.

Throngs of people turned to social media on Tuesday and Wednesday to slam Netflix for its plan to raise prices. Predictably, many referred to it as a #FAIL.

Perhaps its biggest failure was its tone-deaf announcement about the price hike.

Netflix announced the price changes in a blog post that went live on Tuesday shortly after 9 a.m. The deal is that starting Sept. 1, customers will have to pay for DVD rentals and online streaming, elements that had been bundled under one price.

The announcement, which media outlets and blogs quickly picked up, elicited the level of vitriol toward Netflix on Facebook and Twitter—and in the comments section to the company’s blog—that seemed more fittingly targeted at a war criminal than at an online movie distributor.

One commenter to the company’s blog writes:

Horrible. EPIC FAIL.

So we now get LESS for MORE.

Idiots.

Seriously, WHO is running the show there? Monkeys?

Just waiting for Amazon Streaming to kick off. Then bye Netflix. You won’t be missed.

F’ing morons in Netflix. Greed has killed another one.

Comments to the Netflix blog have been capped at 5,000, the vast majority of which are negative. Meanwhile, #DearNetflix became a trending topic on Twitter as users blasted the company, and more than 28,000 comments have been racked up on its Facebook page. That’s not really the sort of “customer engagement” a company strives to attain.

Thousands have threatened to cancel their subscriptions.

Such is a price increase in the age of social media.

Certainly any hike will irk customers, but it’s the way in which Netflix announced it that sparked the angry response. After all, as The Washington Post—and some customers on social media—have pointed out, the company’s pricing structure is still reasonable.

“If you do the math, the company still offers a unique service for a fairly low price,” writes the Post‘s Hayley Tsukayama. “While the streaming selection is full of holes, if you’re watching more than a handful of videos per month, it’s still cheaper than renting one-time movies from Amazon or Blockbuster.”

People commenting on social media about the price adjustment have noted that they learned about the change in the media and not from the company itself. Customers received an email from the company after the blog post was published—I didn’t get my email until 11:32 p.m.—giving the media ample time to report on it.

Making matters worse, in its blog post, Netflix opted for a cheerful message that frames the price hike as a positive development, as opposed to giving it to customers straight.

The blog post from Netflix begins:

Jessie Becker, here to share two significant changes at Netflix with you.

First, we are launching new DVD only plans. These plans offer our lowest prices ever for unlimited DVDs – only $7.99 a month for our 1 DVD out at-a-time plan and $11.99 a month for our 2 DVDs out at-a-time plan. By offering our lowest prices ever, we hope to provide great value to our current and future DVDs by mail members. New members can sign up for these plans by going to DVD.netflix.com.

Second, we are separating unlimited DVDs by mail and unlimited streaming into separate plans to better reflect the costs of each and to give our members a choice: a streaming only plan, a DVD only plan or the option to subscribe to both. With this change, we will no longer offer a plan that includes both unlimited streaming and DVDs by mail.

Commenters ripped Netflix for dropping “lowest prices ever” and the notion that now it’s giving its customers a choice. In a press release issued by the company on Tuesday—the traditional element of its announcement—Netflix Chief Service and Operations Officer Andy Rendich says:

“Netflix members love watching instantly, but we’ve come to recognize there is still a very large continuing demand for DVDs by mail. By better reflecting the underlying costs and offering our lowest prices ever for unlimited DVD, we hope to provide a great value to our current and future DVD-by-mail members.”

The company that changed the way Americans rent and watch movies should understand that the way in which we communicate has also changed dramatically. This isn’t a stuffy utility company or government organization. Tolerance for messages that opt for marketing cheer as opposed to straight talk has fallen dramatically. And now, thanks to social media, customers have an outlet to vent their frustration.

The company has yet to respond to myriad tweets. Its last message on Twitter came shortly after the price was announced, stating:

Now you can subscribe to a DVD-only plan from @Netflix for $7.99. Learn about more changes to our plans at: http://bit.ly/NetflxBlogless than a minute ago via CoTweet Favorite Retweet ReplyNetflix
netflix

Will Netflix offer a follow-up today? Pay attention. This is a good case study for the next time you want to roll pricing changes for your customers.

For even more coverage on Netflix’s botched announcement, see this analysis on today’s Ragan.com.

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