There has been much discussion of Netflix’s new pricing system. Netflix used to offer both streaming videos and DVDs in the mail for a fixed amount. In July, Netflix changed its pricing scheme. Subscribers interested both in streaming videos and in receiving DVDs in the mail would have to pay twice the former price — once for each service.
This post is not about that, nor is it about Netflix’s multiple fumbles over the two services. Indeed, Netflix first renamed its DVD arm Qwikster so as to separate it from streaming arm Netflix. Earlier this week, Netflix sent subscribers an email that went something like “Dear Marc: Just kidding! LOL – Respectfully, The Netflix team” informing them that there would be no Qwikster after all, and that the DVD service would remain with Netflix.
Rather, this post is about the questionable market segmentation behavior Netflix has seemingly been indulging in toward its existing subscribers.
I will try my best to make a long story short. My wife and I usually watch streaming videos on Netflix before going to bed. Over the last couple of months, we have been alternating between watching “The Adventures of Sherlock Holmes” and working our way through the complete “South Park” series.
Last week, we have mostly been watching South Park, for any and all of the following reasons: it’s mid-semester here at Duke; I was in California to work with coauthors the previous weekend and to give a talk on Monday; I took the red-eye back to Raleigh-Durham on Monday night; I had to teach a review session on Tuesday; students in my development seminar had their midterm on Thursday; and I had to grade on Friday.
It had thus been a tiring week. When I am tired, the flesh is weak, which means that I am particularly likely to indulge in less brainy and more low-brow activities. Like choosing “South Park” over the TV rendition of English-language classics.
On Sunday night, feeling particularly well-rested and thus in a slightly brainier mood after the first two days of this long weekend, I thought we would finish watching the Sherlock Holmes episode we had stopped watching in the middle in order to watch South Park. Here is what awaited us:
That’s right: a series that has been available for streaming as recently as last week no longer is, apparently.
Now, although I am liberal-leaning, NPR-listening, and New Yorker-reading academic, both my parents own their own business; I was trained as an economist; I believe in the price signal; and there is little chance that you will see me occupy Wall Street anytime soon.
In other words, I am sympathetic to the profit motive, and I am often the one to tell friends and relatives to “hate the demand, not the supply” when they are dissatisfied with “unfair” corporate practices.
But to segment the market by restricting access to material that had previously been available? To do so without any explanation or apology? To renege on what appeared to be a pretty straightforward contract on top of a few nights of less-than-ideal service or no service at all?
I did not start this blog to air out the various grievances I might have with corporate America. There are many times where I have felt like writing a long, ranting post about the sorry state of air travel in this country. I have managed to reason with myself every single time.
But for a company that provides a service, Netflix does not know anything about customer service. I didn’t mind when Netflix split its streaming and DVD services into two distinct pricing schemes last summer — subscribers received notification that this was going to happen more than a month ahead of time.
But to alter the terms of the contract without any warning? (And yes, I’m sure I’ve missed the fine print that says Netflix is within its right to do so when I clicked “I accept,” but the fact remains that “because we can” has never been an acceptable reason to do something…)
As a result, we have decided to cancel our Netflix subscription. This way, maybe we’ll spend more time reading before going to bed. That or give our money to a better, more predictable streaming service (here is a whole list of such services).
In short: “Dear Netflix: Stick it – Respectfully, the Bellemare Household.”
Netflix’s Questionable Market Segmentation Behavior
There has been much discussion of Netflix’s new pricing system. Netflix used to offer both streaming videos and DVDs in the mail for a fixed amount. In July, Netflix changed its pricing scheme. Subscribers interested both in streaming videos and in receiving DVDs in the mail would have to pay twice the former price — once for each service.
This post is not about that, nor is it about Netflix’s multiple fumbles over the two services. Indeed, Netflix first renamed its DVD arm Qwikster so as to separate it from streaming arm Netflix. Earlier this week, Netflix sent subscribers an email that went something like “Dear Marc: Just kidding! LOL – Respectfully, The Netflix team” informing them that there would be no Qwikster after all, and that the DVD service would remain with Netflix.
Rather, this post is about the questionable market segmentation behavior Netflix has seemingly been indulging in toward its existing subscribers.
I will try my best to make a long story short. My wife and I usually watch streaming videos on Netflix before going to bed. Over the last couple of months, we have been alternating between watching “The Adventures of Sherlock Holmes” and working our way through the complete “South Park” series.
Last week, we have mostly been watching South Park, for any and all of the following reasons: it’s mid-semester here at Duke; I was in California to work with coauthors the previous weekend and to give a talk on Monday; I took the red-eye back to Raleigh-Durham on Monday night; I had to teach a review session on Tuesday; students in my development seminar had their midterm on Thursday; and I had to grade on Friday.
It had thus been a tiring week. When I am tired, the flesh is weak, which means that I am particularly likely to indulge in less brainy and more low-brow activities. Like choosing “South Park” over the TV rendition of English-language classics.
On Sunday night, feeling particularly well-rested and thus in a slightly brainier mood after the first two days of this long weekend, I thought we would finish watching the Sherlock Holmes episode we had stopped watching in the middle in order to watch South Park. Here is what awaited us:
That’s right: a series that has been available for streaming as recently as last week no longer is, apparently.
Now, although I am liberal-leaning, NPR-listening, and New Yorker-reading academic, both my parents own their own business; I was trained as an economist; I believe in the price signal; and there is little chance that you will see me occupy Wall Street anytime soon.
In other words, I am sympathetic to the profit motive, and I am often the one to tell friends and relatives to “hate the demand, not the supply” when they are dissatisfied with “unfair” corporate practices.
But to segment the market by restricting access to material that had previously been available? To do so without any explanation or apology? To renege on what appeared to be a pretty straightforward contract on top of a few nights of less-than-ideal service or no service at all?
I did not start this blog to air out the various grievances I might have with corporate America. There are many times where I have felt like writing a long, ranting post about the sorry state of air travel in this country. I have managed to reason with myself every single time.
But for a company that provides a service, Netflix does not know anything about customer service. I didn’t mind when Netflix split its streaming and DVD services into two distinct pricing schemes last summer — subscribers received notification that this was going to happen more than a month ahead of time.
But to alter the terms of the contract without any warning? (And yes, I’m sure I’ve missed the fine print that says Netflix is within its right to do so when I clicked “I accept,” but the fact remains that “because we can” has never been an acceptable reason to do something…)
As a result, we have decided to cancel our Netflix subscription. This way, maybe we’ll spend more time reading before going to bed. That or give our money to a better, more predictable streaming service (here is a whole list of such services).
In short: “Dear Netflix: Stick it – Respectfully, the Bellemare Household.”
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Published in Commentary, Economics, Micro and Miscellaneous