What happens when the World’s largest Internet movie subscription service increases their prices without stating a stronger value proposition?

Well, first of all, a lot of people complain, as we can see by looking at Facebook.But are they cancelling or changing their Netlfix plans? Publicly attacked the company on Facebook

      People Tweeted about it
On July 12th (yesterday), Netflix announced that they are ditching their previous $7.99 subscription plan with $2 add-ons for DVDs to two separate packages; your $7.99 subscription for streaming and an addition $7.99 for the DVD package. Netflix is rocking the boat and their once loyal customers are letting the world know.
As TechCrunch rightly reports, the backlash isn’t really over the 60% price increase, but the lack of value tied to it. What is an extra $6 a month for unlimited DVD rentals? Hardly a cost to lose sleep over. But in a competitive world where not only can you up and leave your current provider for another, but also blog, post, and tweet about your disapproval, an increase in price without an increase in value could lead to a lot of unsubscriptions.Oddly, the email Netflix sent to its subscribers does not say WHY they are increasing prices?
Why not tell your valued customers how many more movies are available through online streaming than were available a year ago?

eDataSource through EDS Analyst has been tracking the phenomenon…
Over the past month, the number of Netflix Cancellations has averaged 30,000 per day, in a range of 23,000 to 45,000 according to eDataSource estimates. On July 12, the estimated number of cancellations stayed in that range, coming in at an estimated 34,000. Today (July 13), however, that number jumped to 80,000 as of 5pm Eastern time, and will most likely continue to increase throughout the evening.On the other hand, the average number of Account Updates on Netflix has averaged 26,000 per day over the last month, in a range of 19,000 to 38,000. Yesterday (July 12), that number jumped to an estimated 188,000. As of 5pm Eastern today, the estimated number of Account Updates (i.e. people changing their plan) is 267,000.

In essence, more people are changing their plans than are cancelling at this point.

One has to imagine that the rest are just accepting the increased rates.

Though in actual fact, if you consider that the Open Rate on the Price Increase Notification Email was only 32.68%, that means that the majority of people are at this point are simply going to see a higher credit card charge. This means more revenue for Netflix, not less.

eDataSource will be tracking the Account Updates and Cancellations throughout the week to see how this plays out.If you would like to know how this turns out for Netflix, please contact us for daily updates.

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