Over the past couple of days, Netflix and its subscribers have been transitioning to the new pricing plan it set in place. Now customers will have to pay for the streaming service and the DVD by mail service separately instead of having them combined together. Customers are in an uproar and the company expects over one million of them (approx 30%) to leave and cut their subscriptions to the service by the end of the month.
Netflix may be going through a time of worry and upheaval, but because they are in a unique position in the marketplace, they are providing an excellent way to learn that the best online schools can’t even offer. Can Netflix survive a maelstrom of negative publicity while waiting for technological updates like Windows 8, the iPad 2, and other mobile devices.
A Lack of Competition
Netflix is an excellent service with almost no competition. There do not seem to be any solid alternatives to Netflix’s stellar selection of movies and television shows. Blockbuster wants to unveil its own streaming service, but must wait on Dish Network to set up a pricing package. Hulu is a free alternative, but only offers current episodes of television shows and has a lackluster selection of movies to offer.
Because they are in such a strong position, a small dent in the number of subscribers can be withstood while they figure out how to create strategic gameplan for the future.
Netflix is in the position of being the best service in town, and expects to break even from its price hike because of retaining enough people to its service. They are not expecting to lose any money over the deal, just the number of subscribers and the company’s growth rate.
By introducing new services like the Netflix for kids and increasing the quantity and quality of their streaming catalog, Netflix might be able to bring some customers back or gain new ones who are interested in the product.
Relying on the Near Future for Ease of Streaming
In an article in Forbes, Cablevision COO Tom Rutledge says that he would love to be able to offer Netflix as part of the cable package subscribers pay for. Instead of having to access the streaming Netflix library through a PS3, Xbox, or Smartphone app; people could have it stream right onto their televisions through their cable provider. As the author of the article stated, it makes perfect sense because the data is already coming in through the wire your cable company provides.
The streaming service is what Netflix is banking on in terms of profitability and user subscriptions. Their DVD service is the most expensive operation it has going right now. With the turmoil of the United States Postal Service and the rising price of gas, it is the safest bet to rely on the Internet for the greatest profitability.
With the emerging dominance of tablets, smartphones, and laptops, having to wait for a DVD to come to your house might seem like it takes too long. The instantaneous nature of the streaming service gives people the best access to what they want. Windows is releasing a new operating system with a metro-style interface which will cater to tablet technology and the iPad 2 will be an even more popular device now that consumers are starting to treat tablets as computing devices and not just frivolous distractions.
According to an article in The Week, about 10 million people subscribe to the streaming service, 2.2 million subscribe to the DVD only service, and 12 million people subscribe to the dual option.
Time will only tell if Netflix is going to meet its downfall with the recent price increase. Streaming video services and other similar startups can use the story of Netflix as a case study. Business majors and students all across the country have gained some excellent material for course papers.
About Author: This post was written by a guest blogger.