"August 31st has been renamed boycott Netflix day!"

"I really don’t understand Netflix’s business philosophy. If it wasn’t for the fact that it makes no sense whatsoever, I would swear that Netflix was literally and intentionally trying to drive away their customers."

"I just cancelled the streeming option. So I will only pay 7.99. Their streeming selection is not that good!!!  I think that was a bad move from their management.  That is their problem."

"Really Netflix….REALLY. You have decided to just take away the plans that we are paying for, change them and add 60% to the price. Are you trying to make sure Blockbuster comes out of bankruptcy?"

I've been reading A LOT of reaction to Netflix's new price hike announcement.  I'm sure you've heard about the new pricing model, if you haven't, basically starting September 1st, if you had unlimited streaming and 1 DVD out combo, that's now split into two plans.  Gone is $10 for both, and now enters $7.99 for each.  So, $15 for both.  An unfathomable, unimaginable, terrible business move to rival the worst business moves of all time apparently if I got the gist right from the general complaining public.

Before I go further, I have to post another comment I found before I go crazy and lose my cool here in the coffee shop.

"Reading through the comments about the Netflix price increase, one thing is incredibly clear: WE ARE A NATION OF SPOILED BRATS."

OK, now I feel better.  I'm not here to attack our fine American citizens, but let's all shake our heads and agree that as a country there is some unwritten rule, for some reason, that allows us to speak out without needing even one bit of knowledge on why whatever one's complaining about happened in the first place.  But hey, that's what makes our nation US I guess.  So, here' s my feeble attempt to help some of you understand Netflix's move, if you'll be kind enough to listen.

I'm no expert, and I wholly agree this move by Netflix had to have been made in desperation, because the timing couldn't have been worse.  No one likes change.  Especially when it's drastic like this move.  But where Netflix really pissed people off is in the fact that they raised prices by 60% with no advanced notice to its consumers, and have literally left nothing to be gained for agreeing to pay the new price hike.  The streaming section is just as lacking in content as before, and the 1 DVD out plan requires a lot more planning of free time to make it worth it, which, if you're like me, isn't really worth it because my one DVD out just sits on my tv stand all month as I stream the entire series of Damages whenever I spontaneously have the time.

I could go on and on why it's a bad move in theory, but that's not my point in writing this.  My point is, just like the music industry, the big wigs in the movie industry have shrugged their shoulders for years, wondering what the big deal was with Netflix as they watched us join it and demand our friends join too like it was some new form of movie crack or something.  There's no money in "streaming" they'd say.  And, like both these industries have done EVERY SINGLE TIME, they ignored the potential of new technology in favor of the usual models of distribution.

Where Netflix screwed up wasn't in raising the prices, it was in their explanation.  They told us the new split packages were something we'd love and passed it off as some sort of new benefit when it clearly isn't.  All they had to say was, "Hey, so the studios are really killing us with streaming licenses so we have to raise prices to making the streaming catalog better.  Sorry guys, but stick with us and it will get better we promise."  That wasn't so hard was it?

Now that the big TV and movie studios have started taking notice of streaming's potential, the game is truly on, and Netflix has officially hit the big time.  I'm not talking about in terms of popularity.  I'm talking about hitting it big time when it comes to paying for streaming licenses.  You only have to look at the numbers to see why Netflix had no choice but to "jack up prices" a whole 60% out of nowhere.

The studios may have ignored the fact that Netflix's stock prices have risen from $3 a share to $193 a share since 2002, and Netflix got away with some pretty ludicrously cheap licensing deals with companies like Starz, which sold most of its catalog to Netflix for a measly $30 million.  That's 40 times less than bigger providers like Comcast had to pay (I'm stealing most of these fact from this great article written back in January, in case someone rats me out for stat theft).  So, that right there irked quite a few people.  Now that the Starz contract is up, you can bet they aren't going to renew that cheap next time around.

Can you see where I'm going with this?  Starz isn't Netflix's only problem.  The renewal for Starz this year will most likely be around $250-300 million, but on top of that the company struck a deal with Disney for content that will cost around $200 million, that is broken down somewhat like this, plus a few more titles:

• All six seasons of LOST – $45 million
• Scrubs – $26 million
• Hannah Montana – $18 million
• Desperate Housewives – $12 million
• Wizards of Waverly Place – $12 million
• High School Musical – $1 million
• Camp Rock – $1 million

(Source for above)

It's pretty obvious studios are now willing to start talking to Netflix, but plenty of companies won't budge.  HBO refused to license out their shows so they could keep exclusivity, and we've seen that lead to HBO Go, their own streaming service.  TBS simply hates Netflix for some reason, which is funny, but you won't see shows like Modern Family any time soon on Netflix.  That's rooted from the fact that studios made so much money, and still do, from cable charging customer $50 on up each month for various packages.  We never complained about paying way more for cable and dish, which don't even let you pick what you want to watch, just give you access to channels you have to rearrange your schedule to if you want to watch exactly what you want like Netflix allows you to for a fraction of the price.

So, complain all you want.  Netflix's streaming catalog sucks, and we all know it.  I understand everyone getting up in arms at how Netflix raised their prices.  Without notice and so drastically.  But when you look at the numbers, this move, in the end, can only mean good things for Netflix subscribers.

We'll get much better content (Hannah Montana anyone?!), over the next couple years, and get it faster.  Netflix does have a man, in Ted Sarandos, whose only job is to take his army of 80 workers and acquire licenses for the streaming Netflix database.  Add to that Netflix's new spending spree, and you can't deny Netflix is doing what they can to get their catalog much, much better.

People will always complain when someone makes them pay more, but I couldn't help but feel sympathetic for Netflix as an army of the misinformed denounced Netflix for the recent price hike.  It's funny reading comments on all these articles I've been gathering numbers from, which were written earlier this year, where the majority of people said they'd be more than willing to pay $20/month if Netflix showed them something and gained more content for streaming.  Hopefully these people stay true to their word once all the grumbling dies down and Netflix unveils all this new content they've spent our subscription money on, and Netflix returns to it's former, respected self.

I'll leave you with my favorite comment of the bunch.  One that could soon be said the same for music streaming sites like Grooveshark.  Studios take note.  The mind behind this comment represents the new generation of music and movie consumers.  Ignore them (and the technology they grew up immersed in) and you'll just be shooting yourself in the foot.

"Dear whoever: I'm a pirate, unless it's on Netflix. So please put your stuff on Netflix so I can cease my seafaring ways."

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