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Netflix Backlash Builds on Many Platforms

  |  July 13, 2011   |  Comments

A whiff of opportunity for RedBox and other rivals, but none have yet seized it.

Netflix customers mounted a collective freakout on Tuesday after the movie-rental company announced it will raise prices without any corresponding improvement in services.

As of Sept. 1, Netflix will split its streaming and DVD services, charging $7.99 a month for each, as opposed to $9.99 for both services bundled.

Judgment was swift and brutal. Comments on the Netflix blog quickly maxed out at 5,000, most of them angry and many threatening cancellation. The scene on Netflix's Facebook page was even worse: As of Wednesday afternoon, the status update announcing the price change had amassed more than 41,700 comments, and continued to add more at the rate of about 15 a minute. (On the plus side for Netflix, about 830 people "liked" the status.)

But Netflix's backlash could be RedBox's windfall. The company behind the DVD vending machines leapt to #17 on Google Trends on Wednesday (among the related search terms was "Netflix price increase 2011.") Hulu and Blockbuster Express showed gains as well.

RedBox, which is owned by Coinstar, was also mentioned frequently by commenters on Netflix's own blog: 65 times in the first 400 comments alone, mostly threats to begin using the vending machines instead of signing up for the altered Netflix services.

Angry Netflix customers vented on Twitter as well, amassing around the hashtag #DearNetflix, which was a top-10 trending topic in the U.S. throughout the day on Wednesday.

"This is ridiculous!" wrote one early commenter on the Netflix blog. "At the very least, we'll be going to streaming only after this epic failure of a decision. We typically only receive 1 or 2 DVDs a month as it is. That is NOT worth an additional $10 a month. Guess I'll be using Redbox from now on for my current release fixes."

Fueling anger over the price change was the perception among customers that the Netflix DVD library served as a necessary back-up service to its streaming library, which is relatively small. By offering the two as a bundled service, Netflix allowed customers to easily order the DVDs for movies that it didn't stream.

But by forcing customers to choose one service - or pay an extra $6 a month for both - Netflix left many customers eager to test out less expensive options.

RedBox has so far remained silent about the Netflix price increase. But the company does show signs of wanting to capitalize on it. An e-mail seeking comment from the company yielded a long list of prices and promotions. A similar e-mail to Blockbuster was not returned.

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ABOUT THE AUTHOR

Douglas Quenqua is a journalist based in Brooklyn, NY who writes about culture and technology. His work has appeared in The New York Times, Wired, The New York Observer, and Fortune.

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