Consumers now dislike Netflix as much as Blockbuster

July 23, 2011 By Mike Flacy

The Netflix price hikes have had a devastating effect on brand perception since announced on July 12th. The streaming giant is now tied for last place with Dish Network's Blockbuster.

In a study this week by YouGov BrandIndex, consumer perception of Netflix plummeted after the company announced a 60 percent increase in pricing by splitting streaming and DVD rentals. YouGov measures the buzz around brands on a scale from -100 to 100. Previous to the pricing announcement, Netflix dominated rivals such as Redbox, DirecTV and Blockbuster with a 39.1 score on the chart. Since the announcement, consumer sentiment plummeted to -14.1 and Netflix is now tied with the previously bankrupt Blockbuster at -6.

Rival Redbox has seen a sizable bump nearly doubling the perception of the brand without having to pursue any marketing. Blockbuster hasn’t seen any major bump in perception since offering a 30-day free trial for Blockbuster Total Access in response to the Netflix pricing. While the Total Access 1-disc-at-a-time plan is $2 more than Netflix’s new pricing structure, consumers have the ability to drop off rentals at physical store locations and there is no 28-day window on waiting for new releases. The plan also includes video game and Blu-ray rentals at no extra cost. However, Blockbuster’s recent announcement of another 200 store closures isn’t likely to help consumer’s opinion of the brand.

Morgan Stanley also released a study this week regarding Netflix consumer loyalty after the price increase. Approximately 50 percent of people surveyed are currently using the $9.99 one-DVD-at-a-time plan with unlimited streaming. Of that segment, more than one in four planned on canceling Netflix service when the price increase goes into effect on September 1. Thirty one percent plan on switching to the streaming only plan while 13 percent are opting for the one-DVD-at-a-time plan. Only 15 percent are planning on upgrading to the more expensive $16 hybrid plan. Promised cancellations were a bit higher with consumer using the two-DVD-at-a-time plan, but fell to about 12 percent for those with three discs or more.

If these numbers from Morgan Stanley represent an accurate depiction of Netflix’s subscriber base after September 1, the company will see a 22 percent decrease in subscription revenue and a 2 percent decrease in revenue per user. Morgan Stanley believes that the survey results could be skewed due to temporary consumer outrage over the price increase and actual cancellation numbers are likely smaller.

Showing 23 comments

barrbuda at 9:00pm 24th July 2011 If customers are so pent up, then they've forgotten how much they used to spend on rentals and late charges. Netflix has saved us from spending gas money and time driving and wandering the isles of our now extinct local Blockbusters or Hollywoods. Not to mention having to put up with the cracky voices of employees who thought they were movie Gods.
otter95 at 6:34am 24th July 2011 We don't get as many DVD's as we did when we first signed up for Netflix but we like the online streaming movies and using the app on our i phone and ipod to watch movies away from home.
James M. Tecco at 12:48pm 24th July 2011 Another issue: used to be able to stream 2 videos at a time; now only one.
Dingledorf at 4:29pm 23rd July 2011 I think a bunch of people forgot they were subscribed to Netflix, and have kept the same few movies out for awhile. I know my parents are cancelling their 4 movie plan they had since Netflix started because of this.
Gil Cottrell at 10:39pm 23rd July 2011 they real you in just to raise the price! Now I hate them!
Jessica Trau at 10:19pm 23rd July 2011 $72 a year is more then enough to pre-order a new video game each year. The big problem is that $6 is 60% all at once. What they should have done was do another $2 hike, and then up the price again in a few months or something if it was really that big of a deal. My main problem is there's still awesome stuff that's not Sreaming, and is DVD only like Big Bang Theory >,<
Lorne Hammond at 9:51pm 23rd July 2011 U do not Speak of thE thiNg which is bEtter than torrenTs.
Scott Aron Bloom at 9:31pm 23rd July 2011 btjunkie.com
Juan Frias at 8:32pm 23rd July 2011 Aparantly It is a big deal if people are pissed off. Let me srtress this again people are pissed off. $6 more a month in a year is $72, little things add up eventually. But who cares right that's nothing.
Michael L.Hopwood at 8:21pm 23rd July 2011 I've said it before--I wasn't concerned about the monthly charge OR the recent price hike--it was negligible--what bothered me was the fact that everything I wanted to see was "disc only".
Rich Hansell at 8:17pm 23rd July 2011 I'm sure this was totally a valid sampling of consumers. Netflix is fine and will be.. Don't bitch at Netflix, bitch at the networks they upped the cost 10x!!
Jon Worrel at 7:58pm 23rd July 2011 But I like Blockbuster way more than Netflix though, because I can walk into a physical store and rent a Blu-ray disc same day! Nevertheless, Hulu Plus is still my preferred delivery method for television!
Cow Layfo at 7:45pm 23rd July 2011 It's not a big deal. In any way. At all. It's a mere 6 bucks. Thats all. Just sixe bucks. Let me stress the SIX BUCKS part again. It's nothing. Nothing at all.
Branden Hebert at 7:13pm 23rd July 2011 @Jose, It's not a "gimmie", it's their subscription plan (or "was" their plan). That's what they wanted to charge. If they made a huge mistake and were losing tons of money, I would think they're big enough for something like a $1-2 hike in plans, but a 60% hike is just ridiculous. Apparently having streaming AND discs is too expensive, but they can afford to do it separately for different people. Meanwhile, they're pissing off a HUGE chunk of their customer base. Good job Netflix, I may be cancelling soon.
Russel Williams at 7:08pm 23rd July 2011 Netflix suxxxxxxx
Michael Lane at 6:56pm 23rd July 2011 I my only bitch is that for a 60% rate hike we should be getting more Streaming options instead of the same. I am happy with them over all and understand they are there to make money. But at least for a charging me 23.99 on what i was paying in Jan for 16.99 at least add more streaming service if thats what the rate hike is "supposedly" for
Ian Mains at 6:54pm 23rd July 2011 I don't see it as that big of a deal really. I guess people are really used to getting stuff for free, or very nearly. So what's the next best thing?
Jose Varas at 5:54pm 23rd July 2011 Its economics. You can't expect a gimmie to last forever. Many people suffer from a case of entitlement, it is really quite sad.
Dean Evan Gordon at 5:51pm 23rd July 2011 Well What the hell did they expect with 60% fare hike
Maria Maldonado at 5:47pm 23rd July 2011 Hulu rocks!!!
Ian Bell at 10:25am 23rd July 2011 "Netflix’s subscriber base after September 1, the company will see a 22 percent decrease in subscription revenue and a 2 percent decrease in revenue per user." Netflix had to predict something like this would happen. Don't companies like this higher firms to give them accurate models for revenue, growth etc for after they make a big change to a subscription plan? I am assuming they do. And if so, then Netflix has to be hedging their bets that people leaving now will either return, or they will same money switching more people over to a streaming-only model?
PeepingTom at 8:54am 23rd July 2011 Despite the statement from Netflix where they said some about we expected to lose customers and those customers don't matter, apparently they do matter and will have a large effect on Netflix' bottom line. I cancelled, have you?
1. Ronald Felder at 3:52pm 24th July 2011 Absolutely am I not cancelling. Now they'll have the money to renew the streaming contracts that they have and will most definltely cost mor the next time. Plus they'll be able to purchase the rights to more movies for streaming.